1985-629-9-granick

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FINAL REPORT TO

NATIONAL COUNCIL FOR SOVIET AND EAST EUROPEAN RESEARCH

TITLE:

Job Rights in the USSR: Their

Effect on the Organization of

the Total Soviet Economy

AUTHOR

David Granick

CONTRACTOR

The Board of Regents of the University of Wisconsin

System

PRINCIPAL INVESTIGATOR David Granick

COUNCIL CONTRACT NUMBER

629-9

DATE

October 8

9 8 5

The work leading to this report was supported by funds provided

by the National Council for Soviet and East European Research.

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EXECUTIVE SUMMARY

1. The Soviet rate of separations of industrial manual

workers was about 30 per cent in the 1970 s. Separations are

from the individual enterprise, and include those due to all

reasons from quits to retirements and deaths. This 30 per

cent figure seems normal, after adjustment for definitions

between countries, in comparison with the United States, the

United Kingdom and West Germany during full employment

periods.

The Soviet quit rate (included in separations) has

run some 16 to 21 per cent, and also seems normal compared

to the American figures (no data are available for the other

countries).

These facts have the following implications:

a. There is no reason to think of quits as

constituting a particular problem of work discipline in the

Soviet Union, despite the considerable Soviet literature

which implicitly assumes that it is.

b. The separation rate is sufficiently high so as

to permit considerable wasteage in the employment of

individual enterprises, when this is desired, despite

restrictions on dismissals.

2.

The Soviet blue-collar industrial absentee rate

(full day absences from all causes) is about the same as

those in West Germany and the Netherland s, countries most

comparable to the Soviet Union in the degree to which

absences from sickness are paid. The rate is greatly less

than the Swedish, but substantially higher than the American

and, even more sharply, than the Japanese.

The conclusion is that no special disciplinary problems

are indicated by Soviet absenteeism. Similarly, the figures

do not indicate the results one would expect if forced

monetary savings by blue- collar industrial workers had

accumulated to a large degree.

3. In labor recruitment throughout the economy, three

quarters is done by enterprises. Another 14 per cent in

1980 consisted of the assignment to a first job of graduates

of special education of one sort or another. The residual

categories are negligible.

Together with (1) above, this shows the existence of an

active labor market.

4. Although an obligation is placed upon members of

the healthy population of laborforce age to work in the

socialist sector, this obligation is far from absolute.

Comparisons of the 1959 and 1970 population censuses show an

increase of working women from 68 to 82 per cent of the

relevant group. Rates of growth were particularly high

among the older but pre-pension-age women. The sharp rise

in real earnings over the decade provides no unambivalent

causation. Most significant, there is no indication that

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this increase was motivated by any change in government or

social pressure.

5. The Soviet employer is, in practice, very sharply

restricted in the degree to which he can either dismiss

workers or oblige them to change their trade or geographic

location within the same enterprise.

a. The obliging of a Soviet worker to change

trade or location within the enterprise is constrained by

the same legal protection as applies to dismissal. The

concept should be assimilated to that of dismissal.

b.

Disciplinary dismissals constitute some 1 to 2

per cent annually of the industrial labor force.

c. Dismissal for incompetence of workers and

employees other than professionals and managers seems in

practice to be virtually non-existent after a very brief

probationary period, running normally between one week and

one month.

d. Redundancies during the second half of the

1970 s were at an annual rate of 1.2 per cent of the labor

force in a very substantial sector of industry, but one

selected on a basis that would lead us to expect this rate

to be higher than average. Redundancies are defined as

those workers forced either to leave their production shop

(not their enterprise) or change their trade within the

shop. Some half of these redundant employees remained in

the same enterprise after redundancy, a proportion that was,

if anything, low for redundancy by the standard of West

Germany in the early 1970 s.

6. The combination of job-quits, period between jobs,

and time between the completion of fulltime education and

the taking of a first job together resulted in an estimated

2.3 per cent unemployment rate at the end of the 1970 s.

This is probably close to an upper-bound estimate. A range

of 1 1/2 to 3 per cent would seem to be a fairly-safe

estimate for unemployment.

Frictional-unemployment rates at this level were fairly

normal for many developed capitalist countries (but not for

the United States) from the 1950 s through the mid 1970 s.

This rate does not represent a peculiarity of the Soviet

Union or of socialist economies.

7.

The most important limitation upon the operations

of a labor market in the Soviet Union is the practice,

organized entirely outside Soviet law, of temporary

seconding of employees to agricultural work as well as to

lowpaid sectors such as maintenance of streets and

buildings. Temporary seconding to agriculture showed a very

large increase in the 1950 s (by 150 per

cent),

and during

the 1970 s (by 117 per cent), although it had been fairly

stable (17 per cent increase) during the 1960 s.

Sectors receiving such seconded temporary labor are

able to meet at least their minimum labor force needs

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without being competitive on the labor market. Data exist

only as to those seconded temporarily to agriculture; they

constituted 11.3 million urbanites and 5.5 million rural

employees in 1982. The probability of such mobilization

sometime during the year for urban males under age thirty-

five must have approached 25 per cent.

8. Earnings of manual workers in industry bear only a

loose relationship to their wage rates (base rates plus

supplements for regional and longevity purposes, etc.).

This has the following explanation and implications:

a. In contrast to the situation in all other

markets

in the Soviet Union except that of collective

farms, both supply and demand in the labor market are price

elastic. On the supply side, this is because of the very

active and relatively unrestricted labor market. On the

demand side, it is because the only serious constraint for

employers in bidding for labor is the total wage fund of

each enterprise. Quantitative restrictions on the number to

be employed within a given enterprise are without importance

as a binding constraint.

b.

If the allocation of labor to different

enterprises were to be carried out according to relative

prices that are kept stable for a decade or more, such

allocation of a major factor of production would be very

inefficient from the point of view of Soviet leaders. Yet

this is what would occur if relative earnings were to be

linked closely to relative wage rates, since the latter are

set centrally and thus cannot be changed frequently.

c. Wage rates are directly important only in

their influence upon the total wage fund allocated to

individual enterprises. However, through such wage funds

they influence relative earnings as between those

occupations that are bound to particular industrial branches

and that constitute a significant part of total employment

in these branches.

d. Enterprises face a trade-off between the

number of employees that they can hire and the proportion of

employees with enterprise-specific skills. This is because

an enterprise can use its given wage fund to pay higher

earnings,

thus reducing the quit rate of existing employees,

or alternatively use it to provide funds for the employment

of a larger labor force that turns over rapidly.

Presumably, the preferred point on this trade-off function

differs as among managements of different industries and

individual enterprises.

e.

The secular increase in egalitarianism of

earnings'

levels within Soviet industry provides no evidence

as to the desires of Soviet leadership. Apart from the

periodic raising of the minimum wage, this is a development

which may simply have been imposed upon the leadership by

the changing nature of the labor force (sharply increasing

educational level) and the market mechanism used to

determine relative earnings.

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iv

9. Considering the sum of net declines in employment

of manual workers in individual occupations as between the

1959 and 1970 population censuses, and aggregating within

each occupation on a national basis, the total of such

declines which would be regarded by any workers as

constituting a reduction in desirable work opportunities has

an upper bound of 0.5 per cent per annum of total manual

employment in 1959.

10. Soviet education was by the 1980 s either

internationally unique or, at a minimum, highly unusual, in

providing the relevant current generation with an almost-

universal (90 per cent) academic secondary school education

without any significant amount of elective courses. In West

Germany, for example, only one-fifth of the age cohort of

the 1980 s received academic education as recognized by the

Abitur degree.

11.

Graduates of higher educational institutions by

1983 constituted 20 per cent of the latest age cohort. This

figure is somewhat low by American standards, but is almost

double the West German percentage. Differences in level of

education attained at graduation, however, make it difficult

to evaluate such a comparison of these national figures in a

reasonable fashion.

12. The inability of the Soviet economy effectively to

utilize its trained manpower is shown most sharply by

figures relating to graduates of junior colleges (tekhnikum)

employed in industry. The proportion of such graduates

working as blue collar workers rose from a few per cent in

1952 to 20 per cent in 196 8, an d then steadily to 33 per

cent in 1975. It is clear that this increase was a result

of the absence of appropriate

jobs.

13. The study hypothesizes that the national top

Soviet leadership pursues -- either by desire or because it

is forced to do so by the terms of an implicit social

contract with labor -- a conscious policy of providing

overfull employment at the level of each individual

locality, and a very high degree of job security for all

employees who do not voluntarily renounce it by quitting

their existing posts. The implementation of such a policy

is only possible given certain characteristics of the

economic system, as well as economic policies in other

spheres that would otherwise be unwelcome to a top

leadership concerned with efficiency and high growth rates.

The implication of this hypothesis is that, if Soviet top

leadership should one day decide to accept a reduction in

the level of overfull employment and of job security, the

Soviet economy might make marked strides in easing the

specific dysfunctional characteristics and policies

described below in

a

...

d .

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a. Although Soviet planners set annual product-

mix production targets for enterprises, they are

administratively limited to doing so only within broad

aggregates of products. Within each such aggregate,

producing enterprises determine their detailed product mix

in terms of relative product prices that are normally

changed only once every decade and a half -- and which thus

do not represent accurately during at least most years

either relative real costs or the relative preferences of

planners. From the point of view both of planners and of

the economy as a whole, product-mix decisions within each

planning aggregate are made anarchically.

i. This situation could be changed,

introducing much greater economic rationality into

produ ction , without the planners sacrificing any control

whatsoever that they are currently able to exercise.

b.

Fixed investment within Soviet industry has

not been directed so as to substitute for labor. This

statement applies both to substitution for unskilled labor

such as in internal transport and war eho using) and for

skilled labor machine maintenance and repair). Such

absence of capital/labor substitution has continued even as

labor shortages have caused a steady reduction in the

utilization of industrial capacity as measured by the proxy

of shift coefficient).

Given the constraints upon the freedom of changing the

composition of industrial investment without jeopardizing

the job security objective, it is not surprising that in

recent decades the output/capital ratio has shown steady

regression.

c. If one adopts the viewpoint that Soviet

expansion of educational opportunities other than in general

secondary education should be judged as an investment in

human cap ital, one may conclude that such investment has

been far too high during the last two decades. This is not

so much a question of overinvestment as judged by

international standard s, but rather of overinvestment in

formal education in terms of the ability of the Soviet

system -- given all of its current constraints -- to use

such skills.

i. On the hypothesis that Soviet leaders aim

at overfull employment, but with this not necessarily being

at the maximum skill level of the individual, such overfull

employment is much easier to realize if individuals are

overtrained and if many of them thus could -- and would be

eager to — move to new jobs with higher skill requ irements.

d. The slowness of expansion of the SHCHekino

movement is directly explicable by the failure of planners

to provide stable wage funds to enterprises over several

years. The result has been a major limitation upon the

ability of the economy to generate improvements in labor

productivity. The underlying ca use, however, can be viewed

as concern for maintaining job security.

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INTRODUCTION

This Report is a portion of a larger study of overfull

employment and job security in the Soviet Union. It

concentrates upon the factual aspects of the Soviet urban

labor market, and particularly upon the degree and way in

which this market is cleared through the use of market-

determined prices. These prices are the actual earnings of

individuals,

as opposed to the base wage rates that are

determined by the state. The most fundamental position

taken here is that there exists only a very loose

relationship between either the absolute or relative

earnings of individuals and their base wage rates. The

labor market is viewed as a genuine market, reasonably well

equilibrated. In this respect, it stands along with the

collective farm markets as constituting the only two major

exceptions to the permanent disequilibrium of Soviet markets

and to the zero elasticity with respect to price of supply

and demand on such markets.

In addition to the treatment of the market aspects of

the Soviet labor scene, this Report presents factual data as

to the extent of job security in individual enterprises;

such security is accompanied by the right of the worker to

refuse transfer either to a different type of work or to a

different geographic location within the same enterprise.

Since these are major mat ters, and since the Report presents

new data and interpretations, it has seemed best to document

reasonably fully the case presented -- even though this can

only be done at the expense of sacrificing the wider

coverage of the total study. Major conclusions not covered

in the Report are presented in the Executive Summary.

To summarize the broader study, a particular hypothesis

is expounded to explain the observed facts of overfull

employment on a locality-by-locality basis as well as the

extremely low probability even for an overheated economy)

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of individuals being dismissed from their current jobs. It

is argued that these facts can best be explained by the

hypothesis that top Soviet leaders have a lexicographic

preference (that could, alternatively, be described as a set

of constraints upon the maximization of their remaining

preference function) for these results. It is irrelevant in

this study if such lexicographic preference arises out of

the particular maximand of the welfare function of the

Soviet leadership or if it is part of an implicit social

contract with workers and employees in the State sector.

What matters is that the leadership ensures that the

necessary actions are taken throughout the economy to make

possible the maintenance of such a high level of overfull

employment and job security, and that it accepts the high

costs that accompany such actions.

A rival hypothesis , elaborated particularly at the

conference on Soviet labor markets held in June 1984 at the

University of Birmingham, is that the observed facts

concerning employment are simply results of overheating of

the economy. Such overheating, in turn, can be explained by

the insatiable investment drive posited for socialist

planned economies in general by Janos Kornai.

The study proceeds to test its own hypothesis against

the rival primarily on the basis of the breadth of the

domain of the two theories. The study's hypothesis is used

to explain negative phenomena in a broad range of Soviet

economic life on the basis that these are either necessary

direct act ions , or byproducts of such ac tio ns, that are

taken in order to satisfy the lexicographic preference

function studied. Areas examined are those of pricing of

both consumer and producer good s, the composition of fixed

investment within individual economic sectors, the over-

investment in human capital in formal education, and various

aspects of the labor market not included in the original

data that served as a base for the two hypoth ese s.

Alternative hypotheses, both systematic and ad hoc, are also

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examined to explain the observed facts in each of these

areas of the economy. It is concluded that the study s

hypothesis does particularly well against competitors with

respect to the breadth of the domain covered.

This analysis of malfunctions of the Soviet economy

over a broad area has been described above in terms of

hypothesis testing. An equivalent description, however, has

more direct policy implications. If Soviet leaders were at

some point to become willing to accept both a higher degree

of frictional employment and a significant increase in the

dismissal rate of state workers and employees, a number of

the malfunctions of the system which currently seem

intractable could then be eliminated. The performance of

the system could be substantially improved without changing

the degree of centralization or the nature of planning and

administrative procedures. The costs of such change would

be high both in the sacrifice of what has long been publicly

perceived in the Soviet Union as a major advantage compared

with capitalism, and in terms of social and political

consequences of tearing up what has been described by

various Western political scientists as an implicit social

contract. But the possibility of eventual acceptance of

such political costs by the Soviet leadership should be

permanently kept in mind. The potential gains of such

policy change could be major in terms of growth in national

income.

I. THE EXISTENCE OF A LABOR MARKET

The fact that the very existence of a genuine labor

market in the Soviet Union is not universally acknowledged

is shown by the writing of Peter Wiles, who distinguishes

Soviet labor policy from capitalist policies by the

following features inter alia: (1) An unwillingness to come

to terms with supply and demand, indeed, to admit that a

labor market exists at all. (2) A tendency to neglect, at

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least in theory, the role of differentials in earnings in

enticing workers to jobs in which their marginal

productivity is highest. (3) A further tendency, once more

at least in theory, to direct or nearly direct people to a

job. It is true that the above statements may be

interpreted more as an interpretation of Soviet theory than

of practice with regard to labor markets, but they would

seem at a minimum to imply that Soviet theory in this regard

has at least some carry-over.

In contrast to Wiles' apparent position, support of the

appropriateness of the labor market notion in application to

the Soviet Union's practice stems primarily from two well-

documented phenomena: (1) the high rate at which individual

workers leave state enterprises through quitting; (2) the

low proportion of job vacancies that are filled through any

form of planned hirings.

The quit rate. The most reliable Soviet labor turnover

data refer to quits plus dismissals. The dismissals

portion refer only to dismissals for reason of violation of

labor discipline; such dismissals are in the range of 6 to

10 per cent of the total. Quits do not include departures

for military service or for fulltime studies; these are

instead treated as transfers. They exclude retirements.

Nor do they include refusals to sign up again for employment

at the end of a fixed-term contract.

The most reliable data as to quits plus dismissals

are for manual workers in industry (Soviet definition, which

includes extractive industries, logging and fishing — and

thus might be expected to yield somewhat higher figures than

for manufacturing alone). The most reliable figure is for

1967, when it was 22.1 per cent on an annual basis. The

figure may have been reduced to about 18.6 per cent by

1978.

6

The total proportion of the industrial manual labor

force that leaves its existing enterprise in a given year

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for all reasons combined is unknown; but commonly referred

to is a guess by the Research Institute of Labor that it is

7

in the neighborhood of 30 per cent. .

Table 1 places these figures into an international

perspective. Here it is the crude 30 per cent separation

rate for all employees in industry which seems to lend

itself best to comparisons.

Table 1

SOVIET ANNUAL QUIT RATES AND TOTAL-SEPARATIONS

RATES IN INTERNATIONAL PERSPECTIVE

Country Total Quits

Separations

Percentage of labor force)

5

a. These figures are calculated on the assumption

that dismissals for violation of labor discipline

constituted 6 per cent of all quits+dismissals

in 1967, and 9.6 per cent in 1978. See

Otnoshenie k trudu

1970),

p.9 and L. Kartashova

in P.Kh.. 1984, 9, p.84.)

Soviet Union

manual workers in industry

1967 20.8

a

1978,Russian Republic 16 .3

a

1970s 30

United States

all employees in manufacturing

1958-74 range across years

47-59

b

13-32

b

1958-74 range adjusted to

approach Soviet definition

39-50

c

United Kingdom

all employees in the economy

1971-72 range

males 32-34

d

females 52

d

German Federal Republic


1959-62 range

34-38

e

German Democratic Republic


1965 15

f

1978 and 1980 7-8.1

f

Australia

all employees

in the economy,1974 6 6

g

52

g

in manufacturing,1974 85

g

67

g

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b. U.S., B.L.S., Employment and Earnings, 1909-75. In

contrast to the Soviet data, but in accord with

the data for the U.K., the B.R.D. and

Australia, the termination of temporary jobs is

included.

c. The adjustment is made by eliminating temporary

jobs:lS and 13 per cent of all separations in 1955

and 1961 respectively (Wages and Labour Mobility

(1965), p. 61 ).

d. United Kingdom. Department of Labour Gazette.

January 1975, p.24 .

e. Amtliche Nachrichten der Bundesanstalt für

Arbeitsvermittlung und Arbeitslosenversicherung

(ANBA), 1963, 3,

p.152.

f. All data include disciplinary dismissals. The

1965 and 1980 data are from J. Stolzel in

Wissenschaftliche Zeitschrift des Hochschule fur

Okonomie Bruno Leuschner Berlin, 1982, 3, p.21 and

. are taken from a doctorate dissertation by G.

Pietrzynski. The 1978 figure is from K. Lubcke in

Arbeit und Arbeitsrecht, 1980, 4,

p.152.

The

definition is from Belwe

(1982),

pp.1 and 21-25.

Schaefer et al. (1982), p.26 refers to a large

number of studies of individual units, and thinks

of the average as currently lying between 7 and 8

per cent.

Other data are also given by Lubcke, but they

should probably be ignored. Although the data

appear to refer to the entire economy, 0. Aninova

in S,T, 1983, 3, p.126 interprets what is almost

certainly the Lubcke 1978 figure as referring only

to industry. Both the Russian Aninova and the

West German Belwe seem to take the 1978 figure of

8.1 per cent seriously. I am indebted to Dr .

Belwe for having supplied me with the sources from

the German Democratic Republic.

g. Australian Bureau of Statistics, Labour Turnover,

March 1974 (Canberra;

looseleaf),

pp.5- 19. The

original data are surveys for March only; the

March data are multiplied by twelve by me to give

an annual rate, and seasonality may cause this

approach to be grossly misleading.

Note. Other United Kingdom data with regard to

separations are given on the basis of quarterly

data, and show very low separations data.

However, these are based on quarterly surveys

which disregard all separations of employees hired

in the same quarter. Data used suffer from the

same exclusion, but it is on a monthly basis.

For France, separations data for 1958-60 are given

as being in the range of the American figures

(Wages and Labour Mobility (1965), pp.50 and 257-

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58).

However, in view of other comments as to the

quality of French separations data, they are not

cited here

The data of Table 1 suggest that Soviet separation

rates are of the same order of magnitude as those of the

United Kingdom and the German Federal Republic. The Soviet

figure is understated relative to the others because it

excludes the ending of temporary

jobs;

on the other hand,

one might guess that manual workers have a higher separation

rate than white-collar employees.) The Soviet figure

appears,

on the other hand, to be low compared with the

American and, particularly, with the Australian data. With

regard to the quit rate, the Soviet figures stand in or near

the lower third of the American annual range and are low by

Australian standards. American-Soviet comparisons are

influenced by the fact that parttime employees and thus

fulltime students during the school year who might be

expected to have a high quit rate) are included in the

figures for both countries, but that there are very few

parttime jobs in Soviet industry. As to summer employment,

Soviet students are much more likely to take jobs for

specified periods -- and thus to be excluded from both the

quit and separation figures.

I would sum up these data by suggesting that Soviet

separation data look quite normal in comparison with those

of developed capitalist countries in non-depression times,

and that the quit rates are normal compared to the American.

Only with regard to the Australian and German Democratic

Republic data does the Soviet Union appear to be

distinctive, and too little is known by me about the figures

for either of these countries for such comparison to be

taken too seriously.

Thus,

with respect to both quit rates

and total separation rates, Soviet industry — and,

probably, the Soviet economy as a whole -- seems to have a

labor market with a quite normal degree of activity as

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judged by the standards of developed countries.

Planned hirings in the filling of job vacancies. Table

2 presents 1970 and 1980 data as to the channels used for

the hiring of personnel in the Russian Republic.

Presumably, but not explicitly, collective farms are

excluded. The data are aggregate, combining all sectors.

The quantitative results are entirely consistent with more

spotty data for the Soviet Union as a whole that covers a

wider period.

Table 2

CHANNELS USED FOR HIRING PERSONNEL IN ALL SECTORS OF THE

ECONOMY OF THE RUSSIAN REPUBLIC

(Per Cent of all Personnel Hired)

Channel 1970 1980

Assignment to work of graduates completing

fulltime studies in

vocational school 5.9 9.3

junior colleges 2.0 3.0

higher education 1.1 1.9

Transfers . 4.3 3.8

Organized recruitment of manual workers 0.6 0.7

Social recruitment ... 0.5

Organized agricultural resettlement 0.2 0.2

Placement of youth by local commissions 4.7 2.8

Hiring by enterprises through labor

offices 3.5 9.7

Hiring by enterprises directly 77.6 68.1

Note: 1970 percentages are all slightly overstated,

because they are calculated on the assumption

that social recruitment was zero in 1970. These

percentages are also subject to rounding error

in comparison with the 1980 data.

Source

A. Kotliar in E.N., 1984, 3, pp.53 and 56 . The

1980 column is given directly; the 1970 column was

calculated. Data, at least for 1980, are from a

sample study carried out by the Central Laboratory

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of Labor Resources of the State Committee of Labor

of the Russian Republic (Zaniatost naseleniia

(1983) PP.3 and

45-46.

What is important here is that 78 to 81 per cent of all

hirings were done by the enterprises themselves, either

directly at the gate or through the employment bureaus

created since 1968-69. By 1980, the proportion hired

through the employment bureaus had risen to 10 per cent, and

one might query the degree to which these bureaus have used

their centralized information as to job vacancies in

individual cities so as to channel job applicants to

particular employers in line with planned objectives. The

principal Soviet author dealing with labor mobility

recognizes this potential and implicitly seems to favor its

use.

9

However, it seems unlikely that such powers have in

fact been used.

his is

shown first by the fact that,

about 1980, nationally only some 29 per cent of new hirings

in cities serviced by employment bureaus were of persons

referred by these bureaus. Job applicants and/or

(presumably both) prospective employers retained rights of

refusal, as shown by national data: of all job applicants to

the employment bureaus, the percentages placed by these

bureaus were 58 per cent in 1971, 65 per cent in 1973, and

still only 72 per cent in

1981.

11

II.

GENERAL LIMITATIONS ON THE WORKING OF THE

LABOR MARKET

If one can assert that Soviet labor distribution is

determined essentially by market forces (on which, of

course, central planning impinges at least through

determination of the wage funds available to the different

organizations),

the next step is to examine the limitations

on the operation of this market.

1 . The obligation to work in the socialist sector

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Soviet authors have constantly asserted the general

obligation of Soviet citizens with specified exceptions) of

labor force age to work fulltime in the socialist sector.

Nevertheless, this obligation to work is far from absolute.

It is particularly interesting to compare 1959 and 1970

Census data as to female workforce participation by age,

contrasting it with American data.12

Here there are two things of interest. The first is

that the most rapid growth in the laborforce participation

rate of the female population was in the age groups 40-54 --

i.e., right up to pension age and well beyond the age of

mothers caring for preschool children. Indeed, while the

increase in the total female participation rate is somewhat

exaggerated, such exaggeration does not apply to these age

groups.) Second, the Soviet 1959 participation rate for

pre-pension-age 50-54 year old women was not much above the

United States 1961 figures for the same age group; after the

Soviet pension age for women, the Soviet participation rates

were below the American. These results prove that, at least

in 1959, the obligation to work in the socialist sector for

women without young children has been far from absolute.

What occurred between 1959 and 1970 to raise the female

participation rate so dramatically? The only Soviet

explanation that I have seen points exclusively to factors

3

of labor demand.

2.

Restrictions on change of the specific job

There are legal restrictions on the employee which

arise out of his status as a recent graduate of particular

educational institutions, of his having signed a labor

contract for one or more years, or of his being a collective

farmer.

The restrictions that one might have thought could

be very important, but which from all accounts is not

binding, is that of housing.

The above are restrictions placed upon the employee.

But equally interesting are restrictions placed upon the

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11

employer in changing the tasks set for the individual

employee. This discussion will be limited to Soviet law.

Both the particular trade, and the locality within a

multi-plant enterprise at which an individual employee can

be used, are limited by the employment arrangement

established when the individual was first hired, unless the

14

employee agrees to a change. With regard to trades, it is

sp et si al no st ' that is determinant, and this is so

narrowly defined that in 1973 alone there were 6 300 such

trades listed for industry alone. Locality is defined by

a population point; there may be several such within a

17

single administrative district (raion).

The above restrictions apply to permanent job transfers

within the enterprise or to other enterprises. Indeed,

transfer within an enterprise refers to any change in

trade,

skill, duty, scale of earnings, privileges,

8

advantages, or any other existing conditions of work.

Such transfers cannot occur against the employee's

will,

nor

can he be dismissed on the ground of refusing such

9

transfer. Indeed, even refusal of permanent transfer to

another trade for disciplinary reasons has been rejected as

a ground for dismissal by the Russian Republic's supreme

20

court.

However, dismissals can occur when an individual is

unable to carry out his work properly because of either lack

of skill or health, or when the enterprise has a surplus of

21

workers in a given trade. Thus in these major cases, the

individual who does not accept transfer is liable to some

probability of dismissal. Nevertheless, it should be noted

that surplus of workers in a given trade can be narrowly

defined; in one court case at least, such redundancy was

denied by the court on the ground that it existed only

because others in the enterprise were working in such a

22

fashion as to combine trades other than their own.

In case of redundany of personnel, the law lists

individual labor productivity and skills as the two prime

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criteria for determining which workers would be dismissed.

Only if there is equality among individual workers in these

regards

are other criteria such as seniority in the

23enterprise or the family situation to play a role. From a

purely legal point of view enterprise managements in this

respect have greater freedom than would most American

managements operating under trade union contracts.

3. Obligation to change the specific job

In contrast to permanent job transfers temporary

transfers -- both within an enterprise and between

organizations -- are permitted without the consent of the

worker. Such transfers are limited to one month per

calendar year and must be due either to idleness of the

factory or shop or to production conditions which could not

have been foreseen; the main exception refers to

transfers for disciplinary reasons where duration can now

be three months.

By far the most important of the temporary transfers

however occur entirely outside the law. Urban workers are

sent on a very large scale to work in farming not only at

25

the height of the season but throughout the year. Others

are mobilized in urban areas for unloading and storage work

26

connected with agriculture or are sent for street and

27

building maintenance work by their own towns. Still

others are seconded by their own enterprises to suppliers as

the only means for the sending enterprise to obtain certain

goods or services; construction work and construction

materials are particularly singled out as fields for which

? 8

such seconding is essential. These missions are not

covered under the law treating temporary transfers since it

is not production necessities in the sending enterprise or

absenteeism of a specific worker in the receiving one that

are the cause. Expert commentators say that although

tractorist-machinists and truck drivers are obliged to

accept agricultural missions under pain of violating labor

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13

discipline, no legal sanctions can be taken against other

workers who refuse and only social pressure can be exerted

29

on them. Yet the amount of such agricultural work

increased by 150 per cent between 1950 and 1960, by 20 per

cent between 1960 and 1970, and by a further 117 per cent in

the following decade.

If we limit ourselves only to personnel detached by

their State organizations for temporary agricultural work,

we can estimate their number as 11.3 million urbanites and

16.8 million urban and rural employees in 1982. These

constituted 11 and 16 per cent respectively of all state-

employed workers and employees in the Soviet Union whose

principal employment was outside of agriculture. When we

remember that we are not including temporarily-mobilized

labor for non-agricultural purposes, and particularly when

we note the fact that older people and mothers with young

children must have been largely exempt, one can see that the

probability of such mobilization sometime during the year

for urban males under age thirty-five must have approached

something like 25 per cent. Of course, the quantitative

dimension of this restriction is much less when measured in

efficiency units for farm work as opposed to number of

persons;

a reliable Soviet demographer reports that farm

managers are agreed that the proportion in efficiency units

must be reduced by at least two thirds.

Not only the sending of urban personnel to work

temporarily in agriculture, but also its use within urban

areas,

has grown greatly within recent yea rs. Such seconding

has clearly become much more than a response to seasonal

labor needs. Instead, it is a widely used non-market method

of getting work done that is low-skilled, physically hard,

and unattractive at prevailing earning levels. An author

who is deeply concerned with certain negative effects of its

extension, nevertheless rejects the market solution of

raising the earnings for these

jobs;

such a solution, he

insists, would violate the principle that earnings should be

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directly proportional to the quantity and quality of

work. .

Currently, this obligatory secondment seems to be one

of the most important limitations on the working of the

Soviet labor market. Soviet attacks upon it are not made on

the basis of its interference with the Soviet citizen's

right to choose his occupation provided that he can find an

employer; rather they stress the inefficiency of the system

in terms of cost effectiveness to the State. The nature of

these attacks probably reflects the basis for Soviet leaders

choosing by and large to maintain a market for labor: the

market as the means for distributing this factor of

production is considered more efficient from the viewpoint

of the ultimate buyer (the state) than would be centralized

methods. The welfare of the labor supplier is not the

issue.

4 . Job Dismissals

Three categories of job dismissals can be

distinguished. The first is for violation of labor

discipline, and its subjects can be reasonably assimilated

to workers who voluntarily quit their job and thus renounce

their right to it. The latter two are those most subject to

protection under Soviet practice.

Although, as we shall see below, industrial personnel

subject to obligatory change of job within the enterprise or

to dismissal totalled only 5 per cent of total departures

from enterprises during 1976-80, the figures may be

considerably higher for special groups. It is striking

that, of pension-age research personnel in nine Academy of

Science institutes in Moscow and Kiev studied during 1975-

76

one third of those who had actually retired gave

reduction in staff as the reason.

34

This would suggest

that pension-age personnel may be peculiarly liable to

dismissal.

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Violations of Labor dis cip line. Table 3 presents the

best available aggregative data on this subjec t. Although I

have little confidence in any of the individual estimates --

partly because they repres ent an uncer tain combination of

manual and white -coll ar emp loy ees , and of industrial and

other state-sector emp loy ees , and partly because only in the

cases of Maslova and, perh aps , of CHernova do the original

data appear trustworthy -- all the estimates are both

reasonably independent and consistent.

They suggest that disciplinary dismissals have constituted

something of the order of 1 to 2 per cent annually of the

industrial labor force.

Table 3

ANNUAL DISCIPLINARY DI SMISSALS AS A PROPORTION OF

THE AVERAGE LABOR FORCE

Year Coverage Percentage

965 66

all industrial enter prise s in the Russian

Republic 1.3

1967 all indu strial enter prise s in the

Kirgizian All-Union Republic

in Central Asi a) 2.3

b

1967 all worke rs and emplo yees in the city of

Vilna in Lit hua nia ) 1.3

c

1971 all those seeking jobs through employment

offices in thirteen cities of the Russian

Republic 1.3

d

1971 all those working in the city of Kaluga 1

c. 1978 all industrial manual workers in the

Russian Republic 2.0

I

1980 all industrial enterprises in the Soviet

Union 1 . 8

g

a. Otnoshenie k trudu 1970), pp.9-10. I have

used the 1967 figure of quit s+di smissal s of

industrial manual workers for the Russian

Republic L.M. Danilov in Dvizh enie 1973),

p.128), and made the usual Soviet assumption

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that total separations are 5.0 per cent larger.

b.

CHernova (1970), pp.184-86.

c. B.P. Gailgalas in Sotsial'nye problemy truda i

obrazovaniia (1969), pp.54-58. The same

supplementary assumption was made as in footnote

(a) above.

d. Maslova

(1976),

p.179. The 1969 figure of

quits+dismissals of industrial manual workers

for the Russian Republic (Danilov in Dvizhenie

rabochikh kadrov (1973), p.128) was combined

with the Maslova data.

e.

Kaluga was then a city of 200,0 00, located

in the Central Region of the Russian Republic.

The raw data provided are the number of

disciplinary dismissals (Trud, February 2 , 1972,

p.2).

Depending upon assumptions as to the size of the

city's total labor force, the percentage falls

within the bounds of 0.7 and 1.2 per cent.

f. Z.R. Kuprianova in Formirovaniia (1982), p.214

for an indeterminate period, presumably in the

late 1970's, for disciplinary dismissals as a

proportion of quits+disciplinary dismissals.

Quits+dismissals in 1978 in the Russian Republic

is from A.G. Sozykin in CDSP, XXXII, 32

(September 10, 1980), p.20 combined with

Rusanov (1971),

p.111.

g. L. Kartashova in P.Kh.. 1984, 9, p.84

combined with my estimated 18.6 per cent

figure of quits+dismissals of manual

workers in the Soviet Union in 1978 (see

Chapter 2 ) .

Inability Properly to Perform the Job. Although no

statistical data exist as to the loss of jobs for reasons of

incompetence, all indications are that such losses are

minimal.

This statement applies, at a minimum, to ordinary

manual and white-collar workers after an original

probationary period.

As a Moldavian Republic prosecutor wr ite s, There is a

widespread opinion that it's impossible to fire someone

whose work is poor.

35

In a study that was probably

conducted in the early 1970's as to the practices of various

enterprises, not a single case was found of the legally-

permitted transfer of a worker to a lower-level job, with

dismissal if he did not accept this demotion, due to the

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17

worker's failure to fulfill work norms because of his own

fault. Incompetence, as opposed to deliberate

disciplinary infractions, seems well protected by Soviet

custom. As Soviet lawyers hasten to point out, however,

such absolute protection is not provided by law.

Redundancy. The first step in examination of the

significance of dismissals for redundancy is to obtain some

notion of the dimensions of redundancy. Since I know of

37

only one Soviet study in which the term was def ined, and

even here partly by implication, one can use Soviet

redundancy statistics only with the greatest hesitancy. The

definition that was used in the above study takes the

production shop as the unit of anal ysis . Workplaces that

were previously occupied by a worker of a given narrow

trade,

but that have now been eliminated due to the

installation of new equipment, a change in the production

process, or rationalization are counted as redundant. The

concept is gros s; it ignores any offsetting substitute

increases in workers with different trad es, or of the same

trade in another shop of the same enter prise. On the other

hand, it ignores the effect of output expansion in the given

production shop on the need for workers of a given trade who

would otherwise have become redu ndant. All redundant

workers either leave the production shop or work within the

shop in a different trade.

38

Unfortunatel y, due to the

basis of selection of the shops and enterprises studied, the

degree of total redundancy created is of no special

interest.

A broader study is that of the State Committee of Labor

and the Central Statistical Office of the Soviet Union,

covering about 45 per cent of all industrial employees in

the Soviet Union. The enterprises and industrial

associations studied were chosen on the basis of having

introduced by 1980 at least some part of the SHCHekinskii

method of economizing on labor; thus it seems reasonable to

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assume that the degree of redundancy in these enterprises

was greater than that for industry as a whole. While

redundancy is not specifically defined, all redundant

employees either were shifted to other posts within the

enterprise or left the enterprise; thus it would seem that

the definition employed was either similar to the one

described above or was broader. Thus, if we assume the

above definition of redundancy, we should be obtaining a

maximum estimate of the degree of redundancy in Soviet

industry.

Of the total number of redundant workers, 45 per cent

were transferred to other positions in the same enterprise.

Somewhat higher proportions are typically shown in earlier

Soviet studies. But there does not seem to be anything

particularly striking, for a full employment economy, in

such rate of internal transfer. The only data of which I am

aware that come from a developed capitalist country relate

to the German Federal Republic during 1972. For a

representative national sample of all employees, the

employers were questioned as to whether reduncancies

(economizing of labor) had occurred during the previous

year. It was reported that 74 per cent of their redundant

personnel had been given other positions within the same

39

enterprise. Thus the very limited comparative statistical

evidence available provides no basis for believing that

those Soviet workers who in fact become redundant are

peculiarly likely to take other jobs in the same plant.

III. WAGE RATES VERSUS THE WAGE FUND

If,

as argued above, the distribution of labor in the

Soviet Union is carried out primarily through the

marketplace, there are very significant efficiency

advantages to be gained if relative prices are such as to

clear the closely interconnected markets for each type of

labor. It is true that one might conceive of a central

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19

authority, provided that it possesses considerable knowledge

of the supply of each type of labor skill within each small

region, as setting a quantity of each sort of labor for each

enterprise as the maximum that it can employ. Given that a

single individual can usually perform various kinds of work,

one might conceive of relative prices that are above the

market-clearing set existing for the more skilled jobs with

individuals sorting themselves out into specific jobs

through queuing. But the information demands of such a

system, both with regard to the supply of labor and to the

tradeoff among different kinds of labor in the individual

enterprises production functions, would make reliance on

such a queuing system of labor distribution peculiarly

unsatisfactory. In any case, Soviet authorities have never

attempted to establish a large set of labor inequalities for

each enterprise. (The furthest that they have ever gone is

to establish such inequalities for three aggregates of

labor.)

On the other hand, the State Committee of Labor has

twice in the postwar years worked out very detailed

compilations of wage rates. Since these wage rates , like

producer prices of products, are expected to remain

unchanged for fifteen years or so, one could hardly expect

them to be market clearing during most of their lifetime

regardless of how accurately they were originally set. The

difference, however, between stable relative wages and

stable relative producer prices is that the latter set does

not operate within a marketplace but rather is accompanied

by physical allocation to receiving organizations. Relative

wages are much more important. We are thus left with the

puzzle: How can Soviet authorities afford to rely upon

centrally-determined -- and

thus,

inevitably, extremely

sticky -- prices for labor under conditions of the

distribution of labor through the marketplace?

The answer, it seems to me, is that they neither can

nor seriously try to do so. It is labor earnings, not wage

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rates,

that should be considered as the price of labor.

Incentive pay, that is not regulated from the Center with

regard to particular types of labor, constitutes a large

propoprtion of total earnings. This is illustrated in Table

4.

Table 4

STRUCTURE OF EARNINGS OF INDUSTRIAL MANUAL WORKERS, USSR

Note:

Incentives paid from the material-encouragement

fund are included. Sickness pay is excluded

from the total.

(a) This includes reclassification of workers to

higher skill categories, and so can include

an element of what is really incentive. But

McAuley (p.249) has shown this to be insignificant

Sources :

Machinebuilding and metalworking: V. Markov in

S.T., 1980, 1 p.101 .

All industry: Estimated in McAuley (1979), pp.

247-49.

Very similar proportions for 1961 and

1971 are given by R. Batkaev in S.T., 1973, 4,

p.89.

From Alistair McAuley's original table that serves as

the base for the all industry part of Table 4, we can

Source of Machinebuilding All Industry

Earning

Metalworking

(probably end 1957 1961 1965 1968 1970 1972

of 1970's)

Determined

by the

Center. 68% 65% 84% 79% 79% 73% 68%

Of

this:

Minimum

wage 43 33 43 39 51 46 43

Payment

above the

minimum

according

to wage

rate

a

16 23 30 28 17 17 16

Supplementary

payments 10 9 12 11 11 10 10

Incentive

payments 32 35 16 21 21 27 32

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calculate the ratio of the increase in average incentive pay-

to the increase in total average earnings of manual workers

in industry. The ratios show considerable scatter between

periods: 1957-61: -126* (absolute decline of incentive

payments);

1961-65: + 81%; 1965-68: + 16%; 1968-70:

+ 91%; 1970-72: 98%. Of all five periods, only in 1957-61

and 1965-68 was the rate of growth of average earnings

dominated by growth of wage rates set by the Center.

From these data I conclude that it is not the sticky

wage rates that are of primary importance in determining

relative earnings, but rather the allocation as between

employees of the available funds for incentive payments.

This conclusion points us toward concentrating on the wage

fund and the material-encouragement fund, from which such

payments are made, that are available to each enterprise.

Moreover, virtually all manual workers in Soviet

industry have a substantial component of incentive pay built

into their wage system. Between 1965 and 1982, it is true

that pieceworkers constituted only some 54-58 per cent of

all manual workers, but time workers not on a bonus

scheme — and this is the truly relevant portion of the

40

manual labor force — declined from 5 to 1 per cent.

McAuley interprets his data in terms of wage drift

which is most likely to be undesired (by the Center) and

41

unplanned. This strikes me as a curious view, since it

is the Center that determines the wage fund, and to some

degree the material-encouragement fund, available to each

enterprise. It seems to me more appropriate to hold that

the Center determines the total change in incentive payments

each year -- but not the distribution of such payments

within the individual enterprise. It is not sheer accident

that,

when we cosolidate McAuley's periods above into four

of roughly equal length, the two in which the incentive

portion declines or grows negligibly in absolute terms are

the same two in which the centrally-determined portion grows

most rapidly as expressed in rubles.

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In the Pechorskii coal basin of the far north,

producing 4 1/2 per cent of Soviet underground coal at this

42

period, average earnings for coal mining workers

increased by 5.8 per cent annually between 1959 and 1963.

However, the total amount of this increase was due to the

sharp expansion in the average period of employment in the

basin for which a wage supplement was paid. Despite the

fact that labor productivity grew by 18 per cent over this

period, there was no increase either in the wage rate for a

43

given skill grade or in per capita incentive payments.

How can we account for this complete absence of wage

drift during these years after wage rate and piecework norm

revision had been completed here? Presumably, by the fact

44

that piecework norms were further revised downward.

Yet why should such revision have occurred, quite contrary

to usual Soviet practice, immediately after the general

revision was over? It can probably only be explained by the

pressure upon the management of the basin to remain within

its assigned wage fund -- which had to cover all of the

increases arising out of the expansion of seniority of the

labor force in the basin. Such expansion of seniority may

have been desired, but it could scarcely have been planned

(as opposed to being predicted).

Assuming that my explanation is correct so far, the

interesting question is why the basin's wage fund did not

expand so as to permit incentive-payment increases to

accompany productivity growth. McAuley's logic would

suggest that in setting the wage fund, the Center was

unaware of, or at least took no account of, the dramatic

increase in seniority that was occurring. My logic is

rather that the Center believed that 5.8 per cent annual

increase in average pay was sufficient -- whatever the cause

of such increase. Clearly either explanation might be

correct for a particular instance such as

this,

but as a

generalization covering many specific cases I find it

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difficult to credit either the ignorance or benign neglect

explanations .

The pattern of changes in the structure of total

earnings stands out most clearly in the analysis of

piecework payments. In the periods of wage-rate revision in

industry of 1956-60 and 1973-75, basic wage rates paid for

one hundred per cent fulfillment of work norms were raised

significantly, but these raises were each accompanied by a

sharp increase in the amount of production required for

fulfillment of the pieceworker's basic quota. During the

1973-75 reform, the average percentage of norm fulfillment

was reduced to 118 per cent from the 135 per cent (155 per

cent in the large sub-sector of machinebuilding) to which it

had crept since circa 1960. This was accomplished by

raising the norms of piecework by 23 per cent at the same

time that the basic wage rates were being increased by 28 to

45

30 per cent. The result of these offsetting revisions,

but also of the increase in the minimum wage, was that the

rate of growth of average earnings of manual workers in

industry rose by 11 per cent compared with the previous four

years — certainly nothing spectacular. Thereafter, the

percentage of norm overfulfillment once more began to

46

mount.

Similarly, in three out of four industrial branches

listed, the average skill grade of manual workers fell

during the period of the 1973-75 wage reform. The authors

of the article presenting these data of the Central

Statistical Office comment that reductions of grade of

47

individual workers are frequent in such a period, playing

t

same role as the increase of piecework normatives.

This is not to argue that the periodic wage rate

changes are irrelevant to relative earnings, although one

48

labor economist comes close to arguing

this.

Particularly

in sectors of the economy like education and health, where

earnings are primarily of a straight-salary nature, there

seem to be large percentage increases

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across the board that are granted only every few years.

Furthermore, it would be surprising if relative changes in

wage rates both within and between enterprises had no effect

at all on relative earnings. It is clear that relative

earnings will be affected directly by the fact that the

floor of earnings for any individual worker is determined by

the base wage for his category, and that some workers

(although probably very few aside from those at the minimum

wage) will be affected by a change in this base. But we

would also expect an indirect effect, both through the

influence on higher authorities in terms of the total wage

fund granted to a given enterprise or other organization,

and in terms of the psychological effect on enterprise

managers (and trade union leaders) in their determination of

relative earnings among the personnel within their unit.

Officially recognized wage supplements were linked at

an early stage to the SHCHekino movement (see

below),

were

•generalized in the 1970 s, and have been further extended in

experiments during 1984. But commentators describe their

significance as being that of giving both manual and white

collar personnel the belief that their individual work

discipline, their initiative and creativity will be

recognized and rewarded regardless of their production

results which can depend on other factors as well -- e.g.,

on supply of materials. In short, wage supplements do not

directly affect total earnings within the enterprise;

rather, they perform the same function for the individuals

as do base wage rates in protecting them against reductions

in these items if the enterprise s actual wage fund falls

below expectations. They are removed from the large

residual category constituted by bonuses of various types

paid from the wage fund.

Despite the likely effects of the sum of base wage

rates and supplements on the planned wages of enterprises,

it is not uncommon for Soviet writers to argue that actual

relative earnings of individuals are determined on the labor

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market rather than through centrally-determined wage rates.

It is true that the language used tends not to be that of

the marketplace. Thus SHkurko says that the wage rates take

into account only a limited number of indicators of work,

and totally neglect others (such as the monotony of the job)

which today are of major importance in determining actual

earnings. It is through considering these other (and

quantitatively unweighted) elements of work that he comes to

the conclusion that relative earnings must and in fact do

deviate from relative wage rates so as to secure a

correspondence of earnings with work don e. Yet SHkurko goes

on to make his market logic reasonably explicit: Any other

relationship in the enterprise, he writes, would simply

lead to many categories of personnel simply disappearing

from the enterprise; production would stop. While there

may be confusion in Soviet normative evaluations of the

logic of the marketplace with respect to labor, there seems

little disagreement among Soviet labor experts as to what

forces are actually dominant in the enterprise.

Here we find a fundamental difference between the

position of the individual enterprise, deciding how to

distribute its wage fund among individual suppliers of

different kinds of labor, and the state in distributing the

national wage fund among organizations. In the former case,

there is no way to avoid market pressures. In the second,

it is possible (although at a serious efficiency loss) to

find nonmarket solutions to the problem of the absence of

market-clearing relative wages because of insufficient wage

funds for organizations making particularly heavy use of

certain kinds of labor. As we saw in the previous section,

the temporary assignment of workers from one organization to

another is the current prominent nonmarket solution — but

temporary assignment to particular jobs within the

organization is not a solution usually available to the

individual enterprise, because of the worker's ability to

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respond by resigning and going to work elsewhere in the same

locality.

Data for piecerate earnings of different categories of

workers in the electrical equipment industry as a whole are

presented for an unstated year that is presumably in the

1980 s.

These earnings have been converted by me into

relative terms for different aggregated trades and skill

levels in Table 5. Within a given trade, they indicate very

little correlation between skill grade and earnings. Within

a skill grade, the differences between trades are striking -

- but not systematically related to the possibilities for

skill improvement within the trade and thus to investment by

the worker in improving his own human capital. Although

these differences may be partially explained by variation as

between grades in average work conditions, or in average age

and thus willingness to work overtime, it seems difficult to

believe that such factors can explain much of the results

taken at the level of an entire industrial branch. It would

thus seem reasonable for us to follow SHkurko in attributing

these differences to market forces.

Table 5

RELATIVE EARNINGS OF PIECEWORK MANUAL WORKERS IN

THE ELECTRICAL EQUIPMENT INDUSTRY

Trade Skill Grade

(in order of

skill) Lowest 2nd 3rd 4th 5th Highest

(metal turner of lowest grade = 100)

Machine tool

setup man 148 130 126 129 138 203

Metal turner

(machinist) 100 105 127 146 167 159

Workers knocking

off the spurs

of castings 117 125 154 128

Workers engaged

in manual loading

and unloading 141 126 119 -

Note:

The skill grades listed cover virtually

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were in the direction of following the observed earnings

differentials between skill categories.

In between the periodic revisions of wage rates these

market forces, as we would expect, exert their influence

through a wide variety of payments. Regional percentage

supplements to wages for special construction and production

projects have grown over time with a growing general labor

shortage; the proportion of senior specialists to rank-and-

file specialists, as well as the number of staff managers

among specialists, have increased as a joint recruitment and

labor-retention device; annual payments from the material-

encouragement fund of the enterprise are differentiated

according to the relative shortage of different trades in

54

the enterprise. Supplements to pay are allowed to workers

who learn new trades and practice them in combination with

their old. The theory is that this will better fill up the

work day. But a statistical analysis in the chemical

industry showed that manual workers in low-skill categories

constituted the absolute majority of those receiving such

supplements, and were overrepresented in numbers of such

recipients by 240 per cent in relationship to their number

in the workforce of the industry. The explanation given was

that such supplements were used as a device for reacting to

market pressures. The earnings of bus drivers in Moscow

and Leningrad have been pushed up to some 150-180 per cent

of the average earnings of manual workers in Soviet industry

by the introduction of a whole series of supplements and

bonuses since piece rates are not paid to these drivers).56

It is true that SHkurko complains that it is easier for

market forces to work through piece rates than through these

57

other mechanisms, and that thus equilibrium earning rates

are not attained. The justification of this complaint is

quite believable, and such imbalance would constitute a

significant imperfection in the Soviet labor market. Still,

it is doubtful that this imperfection is any greater than

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One might reasonably ask whether my emphasis upon the

wage fund in the individual enterprise does not unduly

neglect the role of planned constraints upon the number of

personnel who may be hired in an enterprise. It is my

belief that physical planning of effective demand in the

field of labor, in sharp contrast to the physical planning

of such demand in the area of intermediate products, has

generally not acted as a constraint upon the hiring

practices of enterprises. At least this has been true

during the recent decades that I have studied.

During the period from at least 1972 through 1979,

enterprises received approved plans from their ministries;

but these plans were non-binding on the enterprises, and

were used only to calculate labor productivity which was a

significant indicator in affecting the size of the material-

stimulation fund. Between 1971 and 19 77, the sum of the

approved plans for the total number of employees exceeded

the actual number available (and the previous calculation of

the State Planning Commission of the Soviet Onion) by some

1.3 to 2 million. If we assume that these numbers refer to

industry alone, the plan excess was some six per cent. This

is consistent with the Soviet calculation for the late

1970's that in the Russian Republic the number of approved

working places in industry exceeded the number of

employees by ten per cent. I know of no similar data for

the 1980's when binding manpower plans were once again given

to enterprises. But in a recent period (presumably

1983),

industrial ministries whose total employment was less than

provided by plan were able to hire only 94 per cent of the

total separations they incurred, while those ministries

whose employment was greater than plan hired 107 per cent of

their losses.

It is also significant that I have seen no Soviet

claims of an improvement in the ratio of planned to actual

numbers of employees, despite the reading of materials where

such a claim would have been appropriate. Furthermore, both

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21

in 1982 and during at least part of 1983, one-fifth of all

industrial enterprises in the Russian Republic had average

employment exceeding their allowed limits. For industrial

enterprises in the Soviet Union as a whole in 1982, the

figure was also one-fifth. Although sanctions for such

excess are legislated, I infer from the Soviet discussion

that they are enforced only unusually and then with very

mild effect.

63

2.

The Wage Fund

Each state enterprise in the Soviet Union is given a

single planned wage fund for each year. The actual wage

fund available to it may differ from the planned fund as a

result of the enterprise overfulfilling or underfulfilling

its production targets during the planned year, but such

deviations are also governed by centrally predermined norms.

Although the material-encouragement fund is an important

source of earnings for professional and managerial personnel

in industry, this is not so for manual workers or for the

labor force as a whole. In 1975 and 1977 for all personnel

in industry as a whole, 91-92 per cent of earnings came from

64

the wage fund. For manual workers alone, the figure was

roughly 96 per cent in 1975-77. These magnitudes

constitute my justification for concentrating here upon the

wage fund as the source of earnings for an enterprise's

labor force as a whole.

Three problems concerning the use of the wage fund by

the enterprise are of particular interest in the current

context. The first is the fungibility of the wage fund

within a given year. The second is the degree to which a

given year's wage fund is a hard rather than soft

constraint, to use the language of Kornai. The third is

that of the ratchet effect : what is the effect upon the

planned wage fund for year (t+1) both of the use made of the

wage fund of (t) and of the ratio during (t) of actual to

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32

planned labor productivity?

Fungibility of the wage fund. Concentration will be on

fungibility at the level of the enterprise. Ministries

appear from all indications to be fairly free from control

by higher authorities as to how they allocate their own wage

fund to their member enterprises. To the degree that this

is not so, the difficulties of fungibility for ministries do

66

not seem to extend beyond those existing for enterprises.

As a generalization, it seems that the wage fund of an

enterprise is completely fungible provided that all

employees receive at least the salary or wage rate provided

for their category. Thus a 1982 Soviet writer declares that

savings out of wage funds simply do not occur; when the

management sees that it may have such savings in a given

trimester, it takes all measures needed to avoid them,

...all the more so since such liquidation of savings is not

difficult.

67

Rules as to allowable bon use s, supplements to

salaries, and piece rate norms do not serve as effective

constraints on the freedom of the enterprise to allocate its

total wage fund as it sees fit.

Some suppport for this view is found in statistical

studies. A 1967-68 study of 15,000 manual workers in

eighteen machinebuilding enterprises showed that 35 per cent

of them were performing work graded at a higher level than

the grade at which the worker himself was classified and

6

paid. If the wage fund of these enterprises had been

larger, it would have been easy for the managements to have

justified raising the skill classification of these workers.

While supplemental payments to employees for combining

trades are allowed, they are most widely found -- and in the

highest proportions to their wage rates -- in those branches

of industry where labor shortage is the greatest; moreover,

in one of these major industries the maximum permissible

supplemental rate is frequently grossly violated through

reclassification.

69

A study of forty-nine enterprises with

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33

an employment total of over one hundred thousand showed that

40 per cent of the enterprises gave special privileges with

regard to the standard norm on which piece rates were based

to women over forty-five years of age — so as to attempt to

keep them working after the legal retirement age of forty-

70

five or fifty for such workers.

70

The point here is the

even split among the number of enterprises adopting this

practice, and the fact that it took a special

study -- rather than simple questioning of the branch

ministry concerned -- to reveal this diversity of practice.

Finally, it is pointed out by the head of the labor section

of the State Planning Commission of the Soviet Union that no

regulations exist which restrict the proportion of the wage

fund that can be paid in bonuses, that this situation exists

both at the level of the ministry and of the enterprise, and

that as a result there are sharp differences as between

71

industrial branches.

Counter evidence as to fungibility principally relates

to the increase in the average wage fund per employee in an

enterprise as a result of the number of employees being

fewer than had been assumed by higher authorities when the

planned wage fund was assigned. Can such increases be paid

out freely as supplements and bonuses?

In retail trade, it is implied that the answer is

categorically affirmative. Indeed, most state retail stores

were said in the mid-1970 s to have fewer personnel than

indicated in setting the planned wage fund, and the

72

personnel received the extra income. However, the source

is not explicit as to whether 100 per cent of the planned

wages of the missing personnel are divided up among the

personnel working. Presumably, the legal justification for

the higher average income is the right to wage supplements,

that can be up to 100 per cent of the wage funds that would

otherwise have been economized, as a result of replacing

absent workers.

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For the 1950 s, one reputable source tells us that the

answer was negative at the ministerial level; a ministry

could not subdivide its own wage fund among its enterprises

in such a way as to increase the average planned earnings of

personnel in an enterprise which had reduced the number of

73

its employees. In 1984, a legal opinion in a journal

refers to a 1965 decree as still being in force; this decree

referred to the setting of salaries of white collar

personnel of enterprises as being constrained by the average

planned earnings of all personnel in the enterprise. But

once the SHCHekino experiment had begun in the late 1960 s,

and particularly as its reward features were generalized

during the 1970 s, the ministerial restriction became

increasingly formal rather than substantive. Given the room

for salary-supplements and bonuses for white collar

personnel, the restriction upon their basic salaries also

seems to have little substance.

More significant as counter evidence is the experience

with the SHCHekino experiment. Enterprises which reduced

the number of their personnel in comparison with specified

standards have been permitted to keep 50 to 90 per cent of

the resulting wage-fund economies -- the exact percentage

75

depending upon the standard employed in the comparison.

In fact, however, such enterprises have regularly used less

than the permitted moneys for wage fund expenditures during

the course of the same year. A study conducted during 1975

in 326 industrial enterprises that were operating on the

SHCHekino principle showed that, of the funds generated

during January-October of that year, 45 per cent remained

unused at the end of 1975 and thus were lost to the wage

fund. This lost portion constituted 0.5 per cent of the

total wage fund and, during the year that this study was

conducted, the implication of this failure to spend the

available moneys was that they were permanently lost to the

enterprise and reverted to the State budget.

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Nor was this a phenomenon of a single year. The

pattern of permanent loss to the enterprise of unused funds

was introduced in 1971, four years after the beginning of

the SHCHekino experiment, and lasted through 1976. Then for

two years, only half of the unused funds were lost to the

enterprise. Since 1979, the enterprise has been legally

allowed to keep all of the unused portion (transferring it

into its material-stimulation

fund);

nevertheless, a 1983

article writes of the legal provision of transfer not being

77

carried out in the Bellorussian Republic. It is clear

that throughout the years a substantial portion of the

earned sums has remained unspent during the current year.

Although the non-use of the funds did lead to an increase in

profits,

and thus positively affected the material-

stimulation fund, this effect was far from fully

compensating. The question of interest is : Why were these

funds not used by the enterprises?

If one takes Soviet authors literally, this was a free

decision by the enterprise managements themselves. One

explanation offered for this decision is that if supplements

are added to salaries or wage rates, these supplements are

viewed as relatively permanent -- while the funds may be

unavailable in future years. This explanation is hard to

credit, since paying the money in the form of bonuses would

avoid this problem. Other explanations provided are that

part of the labor savings were achieved through investments

assigned without cost to the enterprises, and -- most

significant of all -- that there was no production

necessity compelling the enterprise to pay out all the

79

funds allowed. It seems to me reasonable to believe that

these latter explanations are more to the point, and that

they were more likely persuasive to higher authorities than

to the enterprise managements themselves.

If one adopts the view, as I do , that the reason that

the enterprises did not spend all the funds legally

available to them was that there was pressure upon them from

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higher autho riti es not to do so, then this cou nte r-e vid enc e

to the thes i3 of fun gi bil it y of the wag e fund d is ap pe ar s.

One instead rei nte rpr ets the evid ence as ind ica tin g that the

eff ect ive increa se in the wage fund from the red uct ion in

the labor force comp are d to sta nda rd has bee n in fact o nly

half to two- thir ds of the amount legally gran ted . But

with in this eff ect ive inc re as e, there is no ind ica tio n of

constraints on fungibility.

The wage fund as a hard co ns tr ai nt . Jano s Korn ai is

the father of the term inol ogy di scr imi na tin g betw een hard

and soft constrain ts on sociali st ent erp ris es, the latter

refe rrin g to res tric tio ns on beh avio r that can be

transgressed without serious con seq uen ces . Basing himse lf

prima rily upon the Hug aria n expe ri en ce , he con sid ers the

wage fund and its co un te rpa rt s el sew he re to be har d

cons tra ints . In con tra st, one Soviet author in 198 4,

writi ng spe cifi cal ly of the Sovi et eco nom y, con side rs the

wage fund as a sof t co ns tr ai nt . He bases this sta tem ent on

the fre que nt revi sio n of the wag e fund by hig her au th or it ie s

8

1

when it would oth erw ise be ov er sp en t. Wh at cred it should

we give to these contr ast ing view s?

Let us for the moment put aside revision by the

ministries of the planned wage funds of the enterprises, and

consi der only ove rex pen dit ure s of the wage funds as they

wer e fin ally ap pr ov ed . Her e we are told that ov er -

expendi tures that remained unrepaid constitut ed during 1975-

80 about 0.7 per cent of the wage fund; these data

pres umab ly refer to the entire sta te-o wne d ec ono my, alth ough

8 2

they may refer only to industry.

Which orga niza tion al level has made whate ver repay ments

do occ ur? Acc ord ing to one Sovie t wr it er , it cann ot be the

ministry since its wage fund is simply the sum of that of

all of its sub ord ina te or gan iza tio ns and none of these will

83

fail to spend full y its all oca ted wag e fu nd. Ev en tak ing

this stat eme nt with the due deg ree of sa lt , it woul d seem

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that repa ymen ts must be made primar ily by the in div idu al

ent erp ris e. The ince ntiv e for such rep ayme nt does not exist

for man ual workers -- their wage rate supplement and bo nus es

are una ffe cted by unrep aid ov ere xpe ndi tur es of the wage

84

fund -- but managers do have such an in ce nt iv e. All

man age rs (a ppare ntly roug hly above the forem an level ) can be

dep rived of up to 50 per cent of the bon use s they hav e

earne d if the wag e fund for their unit has been ove r-

expended, but half of their loss is returned to them if the

85

bonus fund ove rex pen dit ure is made up wit hin six mo nt hs .

Give n the high pro por tio n of man age ria l ear nin gs that

consists of bon use s, this provisi on should provid e

man ager s with a stron g person al ince nti ve to avoid

overe xpend iture s of the wage fund, and particular ly unrepaid

ones. It would thus seem that the 0.7 per cent unrepaid

ove rex pen dit ure s at the nati onal leve l are unl ike ly to

repr esen t more t han , pe rh ap s, 1 per cent at the level of

aggr egati on of the indiv idual enter pris e. This degree of

slip page does not seem ex ce ss iv e, and is con sis ten t with

treating the wage fund as a hard co ns tr ai nt.

The rea l iss ue here is the ext ent to whi ch plan ned wag e

funds of ent erp ris es are rev ise d. As indi cate d ab ov e, it

seems unlikely that the individual ministry can find on its

own the funds needed to permit it to do this. Wha t we have

no inf orm ati on a bou t, ho we ve r, is the degr ee to whi ch the

minis tries them selves are granted suppl ement s to their

planned wage funds.

Since this key que sti on canno t be ans wer ed , what we

must ult ima tel y appeal to is the exce lle nt post -19 55 Sovi et

recor d with regard to nat ion al infl ati on (both open and

hidden),

at least until the late

1970's.

87

We have seen

that the man age men ts of ent erp ris es com pete with one ano ther

for wor ker s in a reasonably free labor mar ke t, and that no

subs tan tiv e restr ict ion s exist with regard to their wage

offers other than their allotted wage

funds.

If the wage

funds al lotted to them at the begi nning of the year wer e

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33

treated by them only as soft constraints, it seems

impossible to explain why Soviet inflation rates have not

been at the very high levels of the 1930's. It is for this

reason that I conclude that the constraints are hard.

The ratchet effect on the wage fund. The wage fund

of a given year nay be fungible, as I have argued above,

without this fungibility property holding across years. Yet

clearly both enterprise managers and employees are concerned

with the inter-temporal dimension.

Here, there seems to be a ratchet effect in that labor

productivity in year (t) in enterprise (k) affects the size

of the planned wage fund in

(t+1).

There is an effort by

planners to keep the size of the per capita planned wage

fund of (k) in (t+1) independent of the actual per capita

wage fund received in ( t ), the latter being affected by the

ratio of actual to planned labor productivity in (t ) . This

fact has its implications for the amount of effort put forth

by the individual employee. We may think of the employee as

attempting to equalize his marginal earnings per unit of

effort (the purest case of this is the piece worker) with

his personal opportunity cost of effort. The issue is: What

is the individual's earning rate?

If we think of the individual as an isolated being, his

earnings per unit of marginal effort during (t) consist of

what he actually receives during period ( t ). He need not

worry about any effects of his actions on the earning rate

in (t+1), since Soviet enterprises are typically large and

no ordinary individual's effort will have a significant

effect upon the total labor productivity of the enterprise.

We have here the counterpart of perfect competition in a

capitalist product marke t, where each firm produces so as to

equate marginal cost with the price of the product and

ignores the effect of output on the price.

On the other hand, the individual is also a member of a

group.

The combined membership of a shop or enterprise

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group can place infor mal pres sure upon each' ind ivi dua l to

res tri ct his ef fort in such a way as to take acco unt of its

effect on the planned wage fund per unit of effort in (t+1).

Thus it is impo rtan t to ask what the ind ivi dua l's earn ing

rate is whe n he is con sid ere d as a mem ber of a gr ou p.

Def ini ng his mar gin al ea rning rate in (t) as an

isolated bein g as w

1,t

, his ear nin g rate per unit of eff ort

as a mem ber of a grou p is w where this is def ine d as :

2 t

and m is the time pe ri od , r is the rate of time dis co un t, i

refers to the indivi dual empl oye e, N

t

are the num ber of

employ ees in period ( t ) , and E is effor t.

Thus the group alw ays has an eco nom ic int eres t in

keeping labor produ ctivi ty in (t) below what the indi vid ual ,

if he wer e to act as an isolated bei ng , would wis h. What is

of int ere st here is the fact th at, to some d eg re e,

ent erp ris e and sho pfl oor mana gem ent can be viewed as the

uphol der of group val ue s. The working grou p, through socia l

pressure,

is the enf orc er of att ent ion to

w

2,t

rat her than to w

1 , t

; but man ag eme nt, through dir ect

admi nist rati ve pres sure upon the indi vidu al (e.g., in the

way that it all oca tes good vers us bad jobs for

piecework, or distributes bonuses), is in this respect the

ally of the gr oup . Mo re ov er , to the degr ee that wage funds

should be viewed as being given only to ent erp ris es rather

than to sma lle r work gr ou ps , while on the othe r hand it is

only the small er work grou ps that can place eff ect ive

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pressure for work restriction upon the individual worker,

management is an essential ally in this respect of the

combined workers of the entire enterprise.

The reason for this managerial role is that bonuses of

managers -- far more than is the case for any other group in

the enterprise -- depend upon the fulfillment of the various

elements of the production plan while remaining within the

planned wage fund. If planned per capita marginal earnings

in (t+1) (defining these as ) become sufficiently low

so as to cause reduction in the enterprise s labor force

through excessive quits and/or cause reduction of per capita

effort, it is the earnings of managerial personnel at all

levels of management that will suffer the most both in

absolute and in percentage terms. One might even

hypothesize that -- defined as marginal return to

effort which managers would like individual employees to

equate to their opportunity cost -- is even lower than the

group

THE TRADE-OFF AVAILABLE TO ENTERPRISE MANAGEMENT

The maximization problem of the enterprise management

can be stated in the following terms:

Maximize the Objective Function (o) subject to:

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where o is a vector expressing all of the rewards and

punishments imposed upon enterprise management in relation

to the enterprise results; is the reward function; f is

the production function; P is the performance plan;

represents utilization of a particular piece of capital

equipment while represents its availability;

represents the utilization of a particular type of material,

semi-fabricate or energy source and represents its

allocation; is an employee of a given type skill), and

represents the availability of a given number of

employees of a particular type s), and is a function of

-- the average earnings of s) and of

is the planned wage fund plus material-

encouragement fund of the enterprise, while W is the

realized sum of these two funds.

The maximization problem can be viewed inter-

temporarily, in which case the dependence of and h

in t+1) upon decisions made by enterprise management in t)

must be considered. But it is simpler to treat the problem

as limited to one-period, and this simplification will

create no difficulties in the analysis of this section.

The distinctive part of the problem as posed here is

that inputs other than labor are treated as non-fungible,

while labor inputs can be meaningfully expressed in

fungible, monetary terms. Given this statement of the

problem, we can concentrate upon a major joint-decision

problem of the enterprise management: how should W be

apportioned among the individuals employed, and what is the

optimal size of

We have already treated this problem partially in terms

of apportionment of per capita earnings among occupations

and skill grades. The determination of and consequently

the size of depends upon the marginal rates of

substitution between and given both the objective

function and the constraints of vectors and of and

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Here,

s represents the occupation-skill category of

labor which is to be paid What is new here is that we

depart from the conventional wisdom of Western writers about

the Soviet labor market who treat enterprise managers as

though their demand for number of employees was unbounded

upward. Given the relevant constraints which do not

include the central determination of the maximum numnber of

employees for a given

enterprise),

management-desired

is a well-determined number.

Let us now turn to a treatment of the labor categories

and along another dimension. This will be the

dimension of whether a given employee has also been working

in that same enterprise during the previous period. Here we

are using the conventional wisdom in human-capital theory

that many skills are enterprise specific, and thus that a

new recruit to an enterprise must go through a learning

stage. Thus,

within a given occupation-skill category, a

current worker is viewed as more valuable than would be his

replacement if he quits.

Seen in this dimension, enterprise management is faced

with a trade-off between the total size of the labor force

and the proportion of old to new workers for a given

matrix of relative numbers in given occupation-skill grades.

If the enterprise chooses to be a low-paying employer, it

can expect its quit rate and thus its turnover rate to rise;

the quality of an average employee will be lower, but the

number of employees that it can afford will be higher, than

if it were to adopt a different strategy. By using its

power to manipulate bonuses, wage-rate supplements, and

piece-rate norms, enterprise management in the Soviet Union

can enjoy the same freedom of choice of strategy as does the

non-unionized capitalist firm. As suggested by the Western

literature on dual labor markets, it might be hypothesized

that a Soviet management which decides to be a high-paying

employer for certain jobs may optimally determine to fill

other jobs on the basis of paying low wages.

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All of this can be summarized by saying that the

enterprise management, given its other constraints, will

optimize by distributing its wage fund in such a fashion as

to maximize its objective function. This implies that the

number of employees engaged will not be maximized. Soviet

constraints on the enterprise are not those supposed by

writers who conceive of management as having an unbounded

hunger for more employees, and who for this reason suppose

that the Soviet Union is inevitably faced with a permanent

labor shortage. As in any market system, demand must be

effective to be relevant to the market place; enterprise

demand for labor is effective only within the constraint

of its realized wage fund.

Of course, none of the above has any direct bearing on

the demand of enterprise management for inclusion of

additional personnel in its labor force plan. This demand

is indeed upwardly unbounded -- not particularly because of

t

implications for the number of personnel, but rather

because the formation by higher authorities of the

enterprise's planned wage and material-encouragement funds

(and thus its cost and profit plans) takes this figure into

account. The expression of such demand is a free good for

management (except as exaggeration awakens the suspicion of

higher authorities), and the concept of effective demand

has no place here.

It is true that, if such demand is accepted by higher

authorities, the increase in the planned wage fund for the

enterprise will normally (under the optimization process

described earlier) also lead to an expansion in the

enterprise's actual labor force. But this is because of the

change in the enterprise's former wage fund constraint, not

per se because of the increase in the planned number of

personnel.

Here we must make a sharp distinction between

enterprise demand for labor as expressed in requests to

higher authorities, and enterprise effective demand

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through offers made on the labor market. The first is

indeed unbounded upward, but higher authorities have the

choice of whether to accept or reject such requests. The

second is bounded upward by the constraint of the wage plus

material-encouragement funds, and such bounding is essential

from a macroeconomic standpoint since the higher authorities

are powerless in this area once they have set these planned

funds.

The writing of Janos Kornai easily lends itself to

misinterpretation in this regard. He writes that

enterprises are subject to an expansion drive which is not

at all restrained by labor becoming more expensive, and that

the firm is not particularly responsive to relative wages in

its choice of employment mix. He also regards managers at

all levels from the shop floor to the individual ministry,

but not higher, as acting as the representatives of their

own workers in wage claims on higher authorities. These

phenomena are ascribed particularly to the soft total

budget constraint under which managers operate; i.e., to the

relative unimportance of total costs, profits, and balance-

sheet position per se as opposed to nonfinancial

objectives.

88

But the above must be reconciled with Kornai's other

views,

expressed in the same chapter, that the wage-fund

constraint is a hard one and that in socialist economies

the Center is almost completely successful in resisting

89

wage-drift pressures to increase average earnings. The

reconciliation, it seems to me, is that Kornai's discussion

supporting the thesis of the soft budget constraint on

labor relates exclusively to requests to higher authorities

for future planned wage funds, rather than to the shortrun

situation where the enterprise must live within the wage

fund that it has been granted. My concern, instead, is with

the shortrun. If we accept Kornai's view as to the wage

fund, we should reject any shortrun application of his view

as to the irresponsiveness of managers to relative wages.

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FOOTNOTES

1 Schapiro and Godson (1981), p.17.

2 Tekuchest

.

3 L. M. Danilov et al in Problemy ispol'zovaniia (1973) ,

p.204.

4 Otnoshenie

(1970), pp.9-10.

5 Rusanov (1971), p. 1 1 1 .

6 This figure is obtained by assuming the same

proportional decline in the Soviet Union as a whole as

in the Russian Republic. In 1967, the figure for the

Russian Republic was 21.4 per cent -- 97 per cent of

the figure for the entire country . (Compare Rusanov

(1971), p.111 and A.G. Sozykin in CDSP. XXXII, 32

(September 10, 1980), p.7.)

If one assumes that the figure in Markov

(1980),

p.145 for decline in quits plus dismissals refers

only to manual workers, then the 1976 figure was about

18.3 per cent.

7 See Danilov et al in Problemy ispol'zovaniia

(1973),

p.156;

Maslova

(1976),

p.19; Sukhov

(1981),

p.98.

This 30 per cent is alternatively described as one and

one-half times quits plus dismissals.

8 The most significant difference in the definition of

quit

between the two sets of statistics is that

separations due to leaving for fulltime education are

treated as quits in the American data but not in the

Soviet. (Even this difference is modified by the fact

that a fair proportion of the Soviet leavers will quit

in order to study for the entrance examinations.)

Those workers having unauthorized absences for more

than seven days at the end of the month, or never

having reported to work after being hired, are treated

as quits in the American data but as dismissals in the

Soviet. However, due to the existence in the Soviet

Union of workbooks in which dismissals are supposed to

be entered, these types of dismissals are probably rare

except in those cases where the Soviet worker has no

legal right to quit.

9 Maslova (1976), p.183

10 I.S. Maslova in S.T., 1981, 7, p.67.

11 Maslova (1976), p.175 and I.S. Maslova in Problemy

povysheniia effektivnosti

(1983),

P.235.

12 See TsSU, Naselenie SSSR 1973 (1975), p.143; Tatarinova

(1979), p.10; M. Sonin in Problemy ratsional'nogo

(1973), P.356; L. CHizhova in S.T.. 1984, 8, p.90.

13 G.P. Sergeeva in Trudovye resursy: sotsial'no (1976),

pp.108-19.

14 Smirnov

(1969),

pp.21-23 and L. Okun'kov in S.T.

1975,

5, pp.131-34.

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33 Brovin in S.T.. 1984, 9, pp.81 and

84-85.

34 M. IA. Sonin and K.A. Lainer in S.I,. 1979, 1,

PP.130-33.

35 I. CHeban in CDSP.

XXXII,

39 (October 29, 1980), p.9.

36 Trudovoe pravo (1972), p.123.

37 L.M. Danilov and I.I. Matrozova et al. in Dvizhenie

rabochikh kadrov

(1973),

PP.5,

89-90.

38 V. Fil ev in V.E .. 1983, 2, p.59.

39

Bunz,

Jansen and Schacht (1973),

pp.104,

245-46.

40 V.S. . 1976, 10, pp.91-95 and 1983, 6, pp.60-68.

41 McAuley (1979), p.246.

42 KHarchenko, Minevich and CHaika

(1970),

pp.7-11.

43 Kaminskii (1967), pp. 96, 99, 102.

44 Bonuses for manual workers in Soviet industry were

fairly small in this period.

45 S. Novozhilov in S.T,. 1979, 1,

pp.9-11.

46 D. Dymentman in P.Kh., 1980, 8, p. 111 and M.E. Belkin

in EKO, 1982, 10, p.111.

47 V. Moskovich and V. Anan ev in V.E .. 1979, 6, p.5 8.

48 S. SHurko in P.Kh., 1983, 8, pp. 74-80.

49 L. Bliakhman and T. Zlotnitskaia in S.T.. 1984, 1,

p.86.

50 P.Kh., 1983, 8, p.75.

51 V.V. Skvortsov and V.V. CHichilimov in Sotsial nye

problemy truda i obrazovaniia 1969), pp.102-07.

52 IU. Anan eva in S.T.. 1979, 10, pp.88-89.

53 L. KHeifets in V.E., 1982, 6, pp. 37-38.

54 SHkurko in P.Kh.. 1983, 8, pp.76-78.

55 S.Efremov in S.T,. 1977, 1, p.75.

56 SHkurko in P.Kh.,

1983

. 8,p.76.

57 Ibid, p.78.

58 B.P. Gailgalas in Sotsial nye problemy truda i

obrazovaniia (1969), p.56.

59 N.V. CHernina in Izvestiia sib, otd, . 1981, 11

(vypusk 3 ) , pp.130-131.

60 One would expect such a relationship to be particularly

sharp for Soviet enterprises, whose wage-paying

constraint is a relatively fixed over-all wage fund.

But the only two relevant studies for the United States

that seem to have been written by 1981 (see R.B.

Althauser and A.L. Kalleberg in Berg (1981) p. 143)

claim to have found either that not many enterprises

consistently pay high or low wages across the whole

spectrum of occupations (Rees and Shultz

(1970),

p.46)

or that the hypothesis must be rejected of equal wage

effects on each of four aggregative categories of the

labor force as a result of working in a particular

industry (R.M. Stolzenberg in American Sociological

Review, 40 (1975),

pp.655-57).

Here, I would

speculate, we have a similarity across socio-economic

systems among individual production units operating

within a labor market.

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61 A. Dadashev in V.E., 1979, 8, pp. 41-42, The figure of

two million is also reported as current by A. Solov ev

in S.T.. 1980, 7, pp.104-05.

62 A. Kotliar in Pravda. May 13, 1984, p.2.

63.

Tkachenko et al. in P.Kh., 1983, 11, PP.91-94; L.A.

Kostin in EKO. 1984, 1, p.35; N. Zenchenko in P.Kh. .

1983, 6, p.26;, and Zaniatost naseleniia (1983),

PP.32-33.

64 IU. Artemov in V.E., 1980, 11, pp.65-66 and Markov

(1980), p.32.

65 Calculated from Artemov in V.E., 1980, 11, pp.65-67 and

V. Rakoti in P.Kh., 1982, 12, p.72.

66 See A. Katsenelinboigen in Revue d études comparatives

est-ouest, 9, 4 (1978), p.17 for a 1950 s example.

67 A.P. Zaitsev in EKO. 1982, 9, p.120.

68 Aitov (1972), pp.3-4 and 70-71.

69 Dubovoi and ZHil tsov (1971), PP.33-40.

70 L. SHokhina in Pered Vykhodom (1982), pp.69-70.

71 N. Rogovskii in S.T.. 1981, 1, pp.20-21 and S.T. .

1982,

1, p.37.

72 Lokshin (1975), pp.20-21.

73 A. Katsenelinboigen in Revue d études comparatives

est-ouest. 9, 4 (1978), p.17.

74 S.T.. 1984, 8, p.109.

75 SHkurko (1971), p.57. The figure was raised to

100 per cent in 1977 U . S . KHeifets in Izv. AN SSSR,

1978, 1,

pp.47-48).

76 S. Ivanov in S.T.. 1977, 4, pp.13-17.

77 KHeifets (1974), p.72; KHeifets in Izv. AN SSSR. 1978,

1, pp.47-48; G.E. Schroeder in Adam (1982), p.14; F.

Gershtein in S.T.. 1983, 6, p.41.

78 SHkurko (1971), pp.56 and 63. See also G. Kulakin and

Z. KHabarin in S.T.. 1982, 6, p.92.

79 SHkurko (1977), p.130.

80 Kornai (1980), Chapter 16, and especially pp. 377-78,

405-06,

408.

81 D. Ukrainskii (head of a section of Gosplan USSR) in

P.Kh., 1984, 4, p.51 .

82 V. Rakoti in P.Kh. . 1982, 12, p.73.

83 A.P. Zaitsev in EKO, 1982, 9, pp.119-20.

84 S.T., 1980, 12, p.116; L. KHeifets in V.E .. 1982, 6,

P.35.

85 S.T., 1980, 1, p.113 and 1980, 12, p.116.

86 IU. Artemov in V.E., 1975, 8, p.4 2.

87 According to Richard Portes, Western estimates show an

annual rate of 0.8 to 1.2 per cent for 1955-70. He

thinks it would be difficult to make a case for more

than 1.5 to 2 per cent for the 1970 s (Cambridge

(1982) p.363).

88 Kornai (1980), pp. 391, 396, 400-406.

89 See footnote 80 for sources.

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BIBLIOGRAPHY

Abbreviations Used

CDSP Current Digest of the Soviet Press

E.G. Ekonomicheskaia gazeta

EKO Ekonomika i organizatsiia promyshlennogo

proizvodstva

E.N. Ekonomicheskie nauki

Izv. AN SSSR Izvestie Akademii Nauk SSSR, Seriia

ekonomicheskaia

Izv. sib. otd. Izvestiia sibirskogo otdeleniia AN SSSR,

Seriia obshchestvennykh nauk (Seriia

ekonomiki i prikladnoi sotsiologii from

1984 on)

Narkhoz SSSR TsSU pri Sovete Ministrov SSSR. Narodnoe

khoziaistvo SSSR v...

P.Kh. Planovoe khoziaistvo

S.I.

Sotsiologicheskie issledovania

S.T. Sotsialisticheskii trud

V.E. Voprosy ekonomiki

V.S. Vestnik statistiki

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