These trends of wages and employment reduction were not uniform across the territory of Belarus. In Minsk, the crisis‐adjustment occurred through employment more than in other parts of the country, while local labor markets outside Minsk relied more on wage cuts (Chubrik, 2019).

The negative effect of labor market trends on cash incomes (Figure 4) of households was partly offset by public transfers that are less subject to the volatility of the business cycle. Real pensions as well as social benefits were falling at much lower rates than wages. The flipside of this rigidity was a much lower pace of recovery of pensions in 2017 in comparison with the wages. In general, wages grew very rapidly in the second half of 2017, and it was only partly related to the economic recovery. Another factor determining the rapid increase in wages was a short‐term stimulation of the economy that targeted average wage levels of BYN 1,000 by the end of the year (Kruk, 2018).

_Figure 4: Employment and cash income of households_ <!-- Start of picture text --> 20 %, yoy % 49.0<br>48.5<br>15<br>48.0<br>share of employed<br>10 47.5 population, right axis<br>47.0<br>5<br>wages<br>46.5<br>0<br>46.0<br>-5 45.5 pension<br>45.0<br>-10 44.5 money income of<br>households<br>-15 44.0<br>2014m1 2014m3 2014m5 2014m7 2014m9 2014m11 2015m01 2015m03 2015m05 2015m07 2015m09 2015m11 2016m01 2016m03 2016m05 2016m07 2016m09 2016m11 2017m01 2017m03 2017m05 2017m07 2017m09 2017m11<br><!-- End of picture text --> Source: Shymanovich, Shcherbina, Chubrik (2018) However, the dynamics of household incomes do not correspond fully to the dynamics of household consumption (Figure 5). The scale of consumption reduction during the crisis years was much lower than the scale of income reduction, and it started with a half‐year delay. This difference can be attributed to savings behavior. The volume of bank deposits stopped growing in the second half of 2015 and steadily diminished afterwards if measured in relation to the cash income of the households. The spike at the beginning of 2016 is explained by currency exchange rate movements: as most of the deposits were denominated in US dollars, the depreciation of the national currency was reflected in their growth if measured in relation to incomes in Belarusian rubles.

An additional piece of evidence suggesting that households used up their savings during the crisis comes from the currency market data. In 2015, households became net sellers of foreign currency, selling US$130 million (for comparison, households bought US$1,385 million in 2014). This tendency continued in 2016 and 2017, when households sold US$1,895 million and US$1,759 million, respectively, according to the National Bank of Belarus. The currency sold may have come from cash and deposit savings as well as from remittances. Since the majority of remittances to Belarus come from Russia, and Russia also experienced an economic crisis following a major devaluation in 2014, remittance inflows to Belarus in 2015 and 2016 dropped to US$932 million and US$937 million in 2015 and 2016 compared to US$1,231 million in 2014 (World Bank, 2019).

Furthermore, the faster recovery of consumption in comparison to income is believed to be supported by consumer lending. Chubrik (2018) argues that consumer lending accounted for 1.2–1.5 percentage points 5