Manual Real Wage Adjustment in the Former Soviet Union: 93

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Wage reform in the Soviet Union, – - Wikipedia

International Monetary Fund Bolero Ozon. Since , the economies of the former Soviet Union have experienced sizeable shocks that have pushed equilibrium real wages far from pre-transition levels. This paper sets out a framework in which to assess the degree of real wage adjustment needed to restore equilibrium, and discusses practical problems in applying wage targets and monitoring real wage developments.

Soviet authorities hoped that this would encourage a Stakhanovite spirit of overfulfillment of quotas among the Soviet workforce. In , approximately 75 percent of Soviet workers were paid under such a piece-rate system, [5] so the majority of Soviet workers could significantly boost their earnings by increasing their output.

Average wage rates in the Soviet Union were published relatively rarely. Some academics in the West believed this was because the Soviet government wanted to conceal low average earnings. Alec Nove wrote in when wage statistics were published for the first time since the Second World War that the lack of transparency surrounding average wages was intended to prevent Soviet workers from discovering the huge disparities that existed between wages in different sectors of the Soviet economy. The piece-rate approach to wages had been introduced in the first Five-Year Plan in and had changed very little since then.

Economy of the Soviet Union

In practice the piece-rate system led to many inefficiencies in Soviet industry. Each Soviet ministry or government department would set its own rates and wage scales for work in the factories or enterprises for which they were responsible. Within one ministry there could be great variation in pay rates for jobs requiring largely identical responsibilities and skills, based on what the factory was producing, the location of the factory and other factors that Moscow considered important.

Historian Donald Filtzer wrote of one s machinist who in one month completed 1, individual pieces of work. Amongst these had been differing tasks, all of which had been assigned a basic individual payment rate of between 3 and 50 kopeks each 1 ruble was equal to kopeks. Time workers—workers who were paid for the time they spent working rather than by how much they individually produced—also received bonuses based on performance.


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Factory managers, who did not want these workers to lose out to their piece-rate colleagues, often manipulated output figures to ensure that they would on paper overfulfill their targets and therefore receive their bonuses. The erratic and seemingly arbitrary way that quotas had been set across different industries led to a high level of uncompleted production in industries where it was more difficult to overfulfill production quotas. Even without managerial manipulation, quotas were very often low and easy to overfulfill. Quotas had been lowered during the Second World War so that new workers would be able to fulfill their output expectations; in industries such as engineering, it was common for workers to double their basic pay through bonuses.

After the death of Stalin, the Soviet Union went through a process of moving away from Stalinist policies known as de-Stalinization. The purpose of de-Stalinization included not only ending the use of terror and the Gulag system that had existed under Stalin, but also reforming the economic policies of the Soviet Union. Firstly, basic wages were increased so that there would be less pressure to overfulfill quotas, and therefore less pressure to manipulate or distort results.

It was also hoped that wage rises for lower paid jobs would encourage more women to enter industry and that freezes on higher paid jobs would deter people from leaving employment. Secondly, quotas were raised to limit the ability of workers to overfulfill targets. In the case of time workers, this was sometimes done by keeping quotas the same but reducing hours; for example, coal miners saw their working day shortened to six hours. The number of wage rates and wage scales was drastically reduced; this not only cut bureaucracy, but also ensured that workers would be more eager to take on a wider range of tasks.

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Time workers, for example, would be paid the same regardless of which task they carried out during their shift. This allowed managers to better distribute labour and reduce the frequency of bottlenecks occurring in production. They could do this because workers would be paid a similar rate no matter what they undertook, so it became easier to move workers between tasks.

A major change was made in the way overfulfillment was rewarded. Progressive piece-rates, where rates increased as outputs grew, were ended, and workers were paid a one-off bonus upon overachieving a quota. For example, in engineering, bonuses could not exceed 20 percent of their normal earnings. Lastly, workers whose tasks were considered too important to be paid on a piece-rate basis were moved to a time-rate method.

This was largely done in consideration of safety grounds and usually applied to those conducting maintenance or the repair of equipment. The reform's clearest effect was to reduce the proportion of Soviet industrial labour that was paid by piece-rate, and by August , Around half of those who remained on piece-rates would continue to receive some kind of bonus payment, but the progressive piece-rate bonuses were mostly eliminated, with only 0.

By , workers' basic wages had risen to an average of about 73 percent of their total earnings; piece-rate workers saw an average of 71 percent and time workers 76 percent of their earnings as their basic wage. Summary of When I'm Sixty-Four: When to Rob a Bank. Raising the Consumption Tax in Japan: The Secret Language of Money: Little Green Apples Publishing.

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