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Main - Economic liberalization - Mandatory application of the Unified Wage Grid cancelled




The Directive of the President of the Republic of Belarus of December 31, 2010 No 4 “On the Development of Entrepreneurship and Stimulation of Business Activity in the Republic of Belarus” (hereinafter - the Directive No 4) pinpoints the necessity to end excessive regulation of labour market.

In order to actualise provisions of subparas. 7.1 and 7.2 of the Directive No 4, on 10 May, 2011 the Ordinance of the President of the Republic of Belarus No 181 “On Some Measures to Improve State Regulation of Wages” (hereinafter - the Ordinance) was enacted.

Provisions of the Ordinance:

stipulate voluntary application of the Unified Wage Grid (hereinafter - UWG) for employers in the Republic of Belarus, and provide more rights for businesses with regard to setting conditions of remuneration of labour;

broaden employers’ rights with regard to raising base wage rates (salary) of employees, and establishment of incentive-based payments;

facilitate streamlining of existing legislation that regulates terms of remuneration.

It should be noted that provisions of the Ordinance do not abrogate application of the UWG in determining remuneration of labour, but give employers the right to choose whether to use the UWG or not when they set wages for employees.

Apart from voluntary application of the UWG, the Ordinance introduces the following novelties:

in line with provisions of para. 1 of the Directive No 4 concerning preservation of state regulation of prices of monopolies’ products, the uniform standard of 80 per cent of funds allocated for payments of bonuses and allowances is set only for state monopolies;

conditions have been created for all businesses, including state-owned, to increase base wage rates (salaries) of employees depending on efficiency of management and actual financial capacities, while conditions for such increase provided by the law also remain (e.g. timely payment of taxes and other payments to the national budget, state purpose budget funds and the Social Protection Fund of the Ministry of Labour and Social Protection, as well as absence of arrears of wage payments).

The measure that gives employers the right to choose whether to apply the UWG or not in determining remuneration of labour will make for:

development of market incentives for innovation activities of all businesses;

promotion of transparency and simplicity of payroll accounting by setting wage levels that correspond to personal contribution of every employee to the overall performance of the enterprise, thus stimulating initiative, quality and productivity of labour;

attraction and retaining of highly skilled professionals;

improvement of investment attractiveness for foreign investors as they are now able to determine on their own the size of wages for different categories of workers as well as the whole system of incentives for workers;

adoption of world best practices in the sphere of incentive wage policies.