Soviet Wages Far Outstrip Productivity

Soviet wages grew more than twice as fast as productivity in the first quarter of 1989, further aggravating unsatisfied domestic demand for consumer goods, official data released today showed.

Nikolai Belov, first deputy chairman of the state statistics committee Goskomstat, speaking at a news conference, also reported statistics showing a slowdown in industrial production, a decline in exports and an increase in imports.

The figures appeared to confirm that the Kremlin’s liberalizing economic reforms, criticized by some Soviet economists as half-hearted, have been unable to bring a quick solution to the country’s mounting economic problems.

Economic Imbalance

In the short term, at least, the greater freedom the reforms have given state enterprises to set wage levels for their workers has apparently exacerbated the economic imbalance, which Belov described as “a very alarming phenomenon.”

Belov said average wages grew at an annualized rate of 9.4% in the first three months of 1989, while productivity grew by 4.5%.

“The Soviet economy is going through a complicated, sometimes contradictory process,” Belov said, although he maintained that the main tendency was positive.

“It is necessary to control the growth of money incomes so it is in line with the growth of productivity.”

Modify Taxation

In particular, Belov said, plans were being made to introduce a coefficient tying wage increases to productivity increases at state enterprises, where the majority of citizens work.

He said there were also plans to modify taxation, which would also help curb disposable income of the 1.7 million people--out of a total work force of 120 million--who are employed in the booming cooperative sector.

The jump in wages--which at an average $377 per month are still extremely low by the standards of other industrialized countries--has further exacerbated the imbalance between supply and demand in the economy.