RAISING THE EFFICIENCY OF SOVIET FARM LABOR: PROBLEMS AND PROSPECTS

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• Publication Date: January 1, 1988
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Raising the Efficiency of
Soviet Farm Labor:
Problems and Prospects
A Research Paper
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,t _4(_ A
Raising the Efficiency of
Soviet Farm Labor:
Problems and Prospects
A Research Paper
This paper was prepared by
the Office of Soviet Analysis,
with a contribution from an external contractor.
Comments and queries are welcome and may be
directed to the Chief, Economic Performance
Division, SOYA,
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SOV 88-10003
January 1988
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Summary
Information available
as of 1 November 1987
was used in this report.
? i?
Raising the Efficiency of
Soviet Farm Labor:
Problems and Prospects
Agricultural employment in the USSR has declined slowly compared with
the declines in other industrialized countries and still accounts for about
one-quarter of total employment. The productivity of farm labor has
remained low and labor requirements high despite large investments in
farm machinery, equipment, and structures. Generous wage increases for
farm workers have failed to stimulate productivity. Thus, Soviet agricul-
ture still experiences labor shortages and has made increasing use of
temporary seasonal help from nonfarm sectors.
The causes of this situation are rooted in the system of state-run
agriculture:
? Under the wage system still prevailing in much of Soviet agriculture, the
size and quality of the harvest and the level of production costs have little
impact on financial rewards for farm workers and managers.
? The low quality and inappropriate assortment of farm machinery has
hindered the mechanization process.
? The slow pace of improvement in rural living conditions has encouraged
younger, skilled workers to migrate to cities.
? The rural education system has not provided the high-quality technical
training needed by workers in modern agriculture.
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Between 1976 and Gorbachev's advent to power in early 1985, Moscow
issued numerous decrees to improve the productivity and regional distribu-
tion of the farm labor force. The Brezhnev Food Program of May 1982 was
by far the most important of these measures, which amounted to:
? Making minor adjustments to the existing system of wages and bonuses.
? Allocating more investment funds for rural housing, roads, and other
infrastructure as well as for the agricultural machinery industry.
? Offering nonmonetary incentives to attract skilled workers to agriculture
and encouraging workers from southern, labor-surplus regions to resettle
in northern areas where labor is insufficient to meet demand.
? Attempting to get the collective contract system of labor organization off
the ground. 25X1
Gorbachev's strategy for increasing the productivity of farm labor builds
on the Food Program, but he has given far more emphasis and support than
did the Food Program to the collective contract system of labor organiza-
tion as a source of the incentives necessary for productivity increases. By
calling for farm labor to be organized into small groups whose financial
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so V 88-10003
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k,onnuenuat
rewards are, in theory, closely linked to quantities produced and costs of
production, Gorbachev is seeking to shift the attention of workers from
piecework wage criteria, such as the number of hectares plowed in a day, to
the quantity and quality of the harvest.
Soviet statistics on the farm sector indicate that efforts to increase the
productivity of farm labor have not yet had a widespread positive impact.
Investment in rural infrastructure picked up sharply in the 11th Five-Year
Plan period (1981-85), but there is little evidence of an increase in the
supply of skilled workers. Furthermore, Gorbachev noted in November
1986 that the development of new farm machinery was still lagging and
that the quality was still very low. Finally, schemes to resettle workers
from labor-surplus republics in the south to northern areas where labor is
in short supply have had no substantial impact on the regional distribution
of farm labor.
The biggest disappointment for Soviet leaders has been the failure, so far,
of collective contracts to stimulate productivity growth and reduce costs to
the extent expected. More than 400,000 contract teams have been formed
since the Food Program was initiated, but many evidently exist in name
only. Evidence suggests that, where collective contracts have been properly
implemented, they have had good results. But Soviet leaders admit that,
for the farm sector as a whole, the anticipated productivity gains have not
materialized.
Plan documents as well as recent speeches and writings of Soviet leaders
suggest that, for the next few years, the strategy to improve labor
productivity in agriculture will consist of better implementation of pro-
grams already in place:
? Raising rural living standards and improving the quality of rural life by
increasing supplies of housing, services, and other rural infrastructure.
? Providing more and better farm machinery.
? Improving implementation of collective contracts to effectively tie finan-
cial rewards for farm workers to the size and quality of the harvest.
If fully implemented, these measures could have a beneficial effect on the
quality of the farm labor force, lessen the use of inefficient manual labor,
and give workers more incentive to work harder and reduce waste.
However, vast improvement is needed in rural living conditions and in the
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quality and assortment of farm machinery to sustain productivity growth.
Such improvement is unlikely to be achieved in the short run under the best
of circumstances. The 1986-90 goal for housing construction may be
threatened by investment allocations too small to cover rapidly rising
construction costs. Although full implementation of collective contracts
holds some promise for at least modest efficiency gains, the leadership
must simplify the complex rules for concluding contracts, give teams real
autonomy to make production decisions, and convince farm managers to
abandon the easily administered piecework wage system.
Fulfilling these conditions will be difficult as long as farms remain subject
to imposed output targets for much of their production and as long as
application of labor, materials, and investment goods are geared to rigid
norms. Furthermore, party and government officials who have been made
personally responsible for plan fulfillment are not likely to risk leaving
major production decisions to farm managers and contract teams until
such a course of action has been demonstrated to be effective. The March
1986 decree on agricultural management and the June 1987 plenum
documents demonstrate that for the present Gorbachev is relying on
changes well within the existing system of central planning, price setting,
and resource allocation. He has not, so far, been able to implement reforms
that would allow a large role in agriculture for market forces and on-farm
decisionmaking. Gorbachev recently stated, however, that a party plenum
this year will be devoted to agriculture. There are no indications yet that
policy toward agriculture will be changed, but, if the plenum is held, it will
provide an opportunity for new initiatives.
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Contents
Page
Summary iii
Scope Note ix
Soviet Farm Labor in Perspective 1
Why Labor Productivity Is Low 4
Pay Not Linked to Performance 4
Machinery Not Effectively Substituted for Labor 4
Low Rural Living Standards 6
Difficulty Retaining Skilled Workers 6
Low-Quality Rural Education Programs 6
Regional Imbalances in Labor Supply 7
Efforts To Cope in the 11th and 12th Five-Year Plan Periods 7
The Food Program 9
Redistribution and Resettlement of the Rural Population 11
Improving Rural Education 11
An Assessment of Progress in 1983-86 12
Initiatives for the 12th Five-Year Plan Period 14
Outlook 17
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Scope Note
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Farm production in the USSR reached record levels in 1986, and 1987 will
be another good year. These gains are due, in part, to Moscow's campaign
to "intensify" agriculture, particularly grain production. Since the initia-
tion of the Food Program in May 1982, the flow of fertilizers, pesticides,
and other industrial goods to agriculture has been accelerated, and more
care has been taken to apply them where they would do the most good. But
the farm sector continues to be exceptionally resource intensive, requiring
large investments and an inordinate number of workers. At the same time,
because of unfavorable demographic trends, other sectors of the economy
are suffering from labor shortages.
This paper focuses on Gorbachev's program to raise the productivity of
farm workers so that fewer will be needed in agriculture and more can be
released to other sectors of the economy. Evidence bearing on the nature
and impact of labor policy in the Soviet farm sector came mainly from
speeches and writings of Soviet leaders and economists, as well as from
published statistical data on the farm sector. Estimates of the number of
farm workers in each of the USSR's 15 republics were prepared by an ex-
ternal contractor, who also helped to assess the likely impact of Gorba-
chev's program.
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Raising the Efficiency of
Soviet Farm Labor:
Problems and Prospects
Soviet Farm Labor in Perspective
Agricultural employment in the USSR has declined
slowly compared with the declines in other industrial-
ized countries, and the rate of decline has slowed
markedly in the past decade. In 1985 the farm sector
in the USSR still accounted for about one-quarter of
total employment-a share even greater than that in
Bulgaria. Countries such as Japan and Italy, which
had employment patterns similar to those of the
USSR in 1950, have experienced a much more rapid
decline in agricultural employment (table 1). Thus,
the transfer of labor from farms to industry has
contributed much less to economic growth in the
USSR than in the West.
The productivity of the vast Soviet farm labor force is
low. Soviet statistics put labor productivity at 20 to 25
percent of that in the United States, but Western
measures put it at only 10 percent. Western research
has shown that Soviet agriculture uses far more
Table 1
Employment in Agriculture as a
Share of Total Employment a
Percent
1950
1970
1975
1980
1985
USSR
53.9
32.2
28.8
26.4
25.4
Italy
43.9
18.2
15.2
13.2
11.2
Japan
51.6
17.4
12.7
10.4
8.7
United States
12.1
4.5
4.1
3.6
3.1
a Data for the United States, Italy, and Japan include agriculture,
forestry, and fishing. For the USSR, employment in forestry has
been added to total employment in agriculture to make the measure
for the USSR more comparable to those for the other countries.
Data for fishing are not available.
1
Figure 1
USSR: Man-Hours of Labor
Used in Agriculture
Percent
fl 970
Collective farm
workers 39.5%
Temporary
workers 1.5%
State farm
workers 23.9%
Private
sector 35.1%
1985
State farm
workers 33.6%
Temporary
workers 4.2%
Collective farm
workers 30.0%
Private
sector 32.2%
315367 12-87
workers per hectare than US agriculture.' Because of
low productivity, Soviet agriculture experiences labor
shortages and has made increasing use of temporary
seasonal help (figure 1).
'D. Gale Johnson and Karen McConnell Brooks, Prospects for
Soviet Agriculture in the 1980s (Indiana University Press: 1983),
p. 166. The authors base their conclusions on data from the 1970
census. The 1979 census was not published in detail sufficient to
make comparable calculations for that year.
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Table 2
Direct Labor Outlays per
100 Kilograms of Output
for Selected Farm Products
Man Hours
Collective Farms
State Farms
1971-75
1976-80
1981-85
1971-75
1976-80
1981-85
USSR
Grain
1.8
1.4
1.3
1.3
1.1
1.3
Beef
61.0
53.0
51.0
46.0
41.0
41.0
Milk
11.0
10.0
9.0
9.0
8.0
8.0
RSFSR
Grain
1.6
1.3
1.2
1.2
1.1
1.1
Beef
58.0
55.0
51.0
44.0
39.0
38.0
Milk
11.0
10.0
9.0
9.0
8.0
7.0
Ukrainian SSR
Grain
1.7
1.3
1.2
1.1
1.1
1.1
Beef
73.4
60.3
57.3
46.4
42.4
41.4
Milk
11.9
10.3
9.9
8.1
7.5
7.1
Belorussian SSR
Grain
2.5
2.0
NA
2.9
2.4
NA
Beef
49.0
45.0
45.0
41.0
38.0
39.0
Milk
11.0
9.0
9.0
10.0
9.0
8.0
Lithuanian SSR
Grain
2.4
1.8
1.4 a
2.3
2.0
1.6a
Beef
35.0
30.0
30.0 a
29.0
28.0
28.0 a
Milk
7.0
5.0
5.0a
7.0
6.0
5.0 a
Kazakh SSR
Grain
1.4
1.1
1.3
1.1
0.9
1.1
Beef
52.0
52.0
55.0
50.0
44.0
47.0
Milk
11.0
9.0
9.0
9.0
8.0
8.0
Uzbek SSR
Grain
10.9
7.4
8.1
7.0
5.0
6.6
Beef
86.0
65.0
71.0
61.0
59.0
69.0
Milk
14.0
11.0
11.0
13.0
11.0
11.0
a Includes 1982-85.
The high labor requirements in Soviet agriculture are
not due to the failure of the state to invest in physical
and human capital, at least in recent years. Since
1970 the stock of machinery, equipment, and nonresi-
dential structures has more than tripled. During
1971-85 the number of agronomists, veterinarians,
and other livestock specialists increased by 86 percent
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over the very low numbers of 1970.2 Despite these
enormous increases in physical and human capital,
the USSR has made little progress in reducing labor
inputs per unit of physical output. In some republics,
labor inputs for farm products have actually increased
in the past decade (table 2).
'In 1985 these workers still accounted for only 4.4 percent of
employment in agricultural work in the socialized sector.
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The Agricultural Labor Force
Agricultural workers fall into three basic catego-
ries?workers and employees on state farms, collec-
tive farmers, and persons engaged in private farming.
The latter keep livestock and work garden plots for
their own use and the local market. Over 35 million
people are principally employed in agriculture?
about 25 percent of total employment in the economy.
The total number of people who participate in some
way in annual farm production, however, is at least
double this figure.
Employment on state farms and in other state agri-
cultural enterprises has more than tripled since 1950,
reaching about 12 million in 1985. Of this number, 11
million Were employed directly in agriculture, while
the remainder worked within the farm sector in farm-
related activities such as repair, food processing, and
so forth. The share of total man-hours in agriculture
attributable to state farm workers has risen sharply
since 1975.
Until 1955 the bulk of agricultural employment was
engaged in collective farming. However, because of
the gradual conversion of collective farms to state
farms, and the creation of new state farms in previ-
ously unformed regions, employment in the two sec-
tors is now almost equal. In 1985 average annual
employment on collective farms totaled about 12.8
million, of which about 10 million were employed
directly in agriculture.
Collective farm families and state employees are
permitted to cultivate small private plots of agricul-
tural land, up to 0.5 hectare in size, and to keep
livestock. According to Western estimates, employ-
ment in private agriculture has remained relatively
stable since 1950?equivalent to between 10 million
and 12 million full-time employees. Restrictions on
private agriculture are now relatively relaxed, but a
gradual decline in the role of private farming is
continuing. Nevertheless, the private sector still
contributes some 25 percent of total agricultural
production.
The Soviet farm sector annually recruits students,
military personnel, and nonfarm industrial workers
to provide temporary help, mostly during the harvest
season. During peak periods in 1984, for example, the
agricultural labor force swelled by 18 million people
sent to farms for temporary labora Enterprises send
roughly 10 percent of their work force for harvest
support. Students and school children also work in
the fields. Some schools close completely for several
months during peak agricultural periods. Despite the
high cost and low efficiency of temporary labor, the
Soviets continue to make heavy use of it. Some Soviet
officials, however, are trying to end this "harvest
drain" on nonfarm sectors. The chairman of the
Tajik Republic agroindustrial committee claimed
that in 1986 this "bad tradition" had been broken,
and Tajik cotton had been harvested without outside
help.
According to official statistics, in 1984 the number of workers
"attached" from enterprises to work on farms was 1.5 million. In
Soviet calculations, the number of people involved in temporary
seasonal activity is derived assuming that each temporary worker
works only one month per year. The figure, therefore, consists of
18 million people working one month each.
Nor can the low level and slow growth of labor
productivity be attributed to the failure to raise farm
wages. Since the death of Stalin, the USSR has
deliberately pursued a policy of increasing farm wages
to enhance incentives and to reduce the large urban-
rural income gap. The gap has narrowed markedly,
but the productivity payoff has been unexpectedly
small. Since 1970 wages for farm workers have risen
twice as fast as labor productivity, contributing to the
soaring costs of production in agriculture.
3
For decades, Soviet policymakers have expressed
great concern about the poor utilization of labor
resources in agriculture, and program after program
has been enacted with disappointing results. Given
Gorbachev's ambitious goals for the economy and the
present stringency in supplies of labor and investment,
a real breakthrough in the productivity of farm labor
is needed to reduce the tremendous burden of agricul-
ture on the Soviet economy and to release farm labor
to other sectors (see inset, "The Agricultural Labor
Force").
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Why Labor Productivity Is Low
Pay Not Linked to Performance. Farm workers are
paid on the basis of an extremely complex system of
wages and bonuses. As in industry, jobs are graded on
the basis of their difficulty and the skills required.'
Each grade is assigned a rate differential over the
minimum wage applicable to the lowest grade. Work-
ers are assigned a fixed unit of work (norm), such as
the number of hectares to be plowed in a day. If the
norms are met, workers are entitled to the basic pay
rate for their labor grades. Numerous complicated
bonuses?for exceeding the norms, for cost savings,
for product quality, and so forth?provide a supple-
ment to the basic wage.
In practice, the norms are set so that it is relatively
easy for workers to meet them. Thus, the size of the
harvest has little impact on incomes. A good harvest
does not raise incomes proportionately, and, in years
of unfavorable weather, the threat of income loss is
minimal. Even when additional work can minimize
the impact of poor weather, there is little incentive for
extra effort. Moreover, the nature of the system for
organizing labor activity, in which each phase of the
production cycle is carried out by different workers,
has hampered efforts to relate individual incomes to
the size and quality of the harvest.
Similarly, there is little incentive to produce high-
quality output or to use inputs more efficiently be-
cause bonuses for product quality and cost savings
are, in practice, a very small share of wage payments,
especially for managers and specialists. Finally, farms
have little opportunity to adjust wages in response to
changes in supply and demand for various kinds of
skilled workers.
Machinery Not Effectively Substituted for Labor.
Manual labor still predominates on state and collec-
tive farms in the USSR and is, of course, routine in
the private sector. Stocks of machinery on farms have
grown rapidly since 1970, but an aggregate measure
of mechanization, such as tractor horsepower per 100
' For example, in 1984 on state farms, 32.9 percent of general
machine operators, tractor drivers, and combine operators met
requirements for Class I?the top skill level. Class II included 28.4
percent of these workers, Class III included 37.3 percent, and 1.4
percent was ungraded.
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Table 3
Comparisons of Tractor
Horsepower in the United States,
USSR, and Eastern Europe
Horsepower per
100 hectares a
1970
1984
USSR
48
96
Eastern Europe
Bulgaria
48
94
Hungary
56
88
East Germany
134
205
Poland
50
234
Romania
59
110
Czechoslovakia
108
179
United States
115
164
a Land is defined as arable land plus permanent crops. Tractor
horsepower data for all countries are from the statistical handbook
published by the Council for Mutual Economic Assistance (Statisti-
cheskiy yezhegodnik stranchlenov soveta ekonomicheskoy vzaimo-
pomoshchi, Moscow, 1985). This handbook does not give the
definition of agriculture used to calculate tractor horsepower.
Cross-checking with data published by the individual East Europe-
an countries suggests that agriculture has been defined to include
state and cooperative enterprises except for Poland, where the
comparatively large private sector has been included.
hectares, shows that the USSR is far behind the
United States and is about at the same level as the
less mechanized agricultural sectors of Eastern
Europe (table 3).4
The lack of effective mechanization is partly the
result of shoddy farm machinery. According to offi-
cials of the Ministry of Tractor and Agricultural
Machine Building, "During the operation of equip-
ment, massive defects are observed in connection with
welded joints, assembly work, adjustments, and pain-
ting." The difficulty and expense involved in obtain-
ing repair services result in large amounts of down-
time. In addition, the assortment of farm machinery is
? When these comparisons are restricted to climatically similar
areas, the gap between the USSR and the United States is
somewhat smaller. According to data presented by Johnson and
Brooks, horsepower per hectare in the USSR is probably about two-
thirds of that in climatically similar areas of the United States.
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Table 4
USSR: Mechanized and Manual Labor
on State and Collective Farms
Percent of farm workers a
Mechanized Tasks
and Supervision of
Machinery b
Manual Labor
(with and without
tools and machines) c
Repair and
Adjustment of
Machinery
Collective farms
Crop raising
1982
23.6
75.2
1.2
1985
25.5
73.3
1.2
Animal husbandry
1982
23.5
73.9
2.6
1985
28.3
68.5
3.2
State farms
Crop raising
1975
24.9
75.1
1982
27.0
71.2
1.8
1985
28.5
69.8
1.7
Animal husbandry
1975
17.7
78.8
3.5
1982
19.4
76.9
3.7
1985
23.6
72.4
4.0
The source of these statistics, Narodnoye khozyaystvo SSSR
1985, does not give definitions of the three categories.
b Soviet agricultural employment statistics suggest that this catego-
ry may consist primarily of tractor, combine, and truck drivers, and
general machinery operators. It probably also includes workers that
supervise mechanized livestock operations such as feed distribution
and milking.
poorly tailored to the particular needs of individual
farms. All machinery deficiencies reduce the produc-
tivity of resources in agriculture, but several are
directly responsible for keeping labor requirements in
agriculture high:
? A lack of attachments for tractors and other ma-
chinery necessitates the use of supplementary man-
ual labor (table 4).
? Too few new machinery models have been aimed at
mechanizing operations presently done by hand.
According to the Minister of Machine Building for
5
c This category almost certainly includes workers using hand
implements such as hoes and rakes. It probably also includes
workers using machines that require a large component of manual
labor, such as feed mixers that are filled and emptied by hand.
Animal Husbandry and Feed Production, the ma-
jority of new models included in the 11th Five-Year
Plan were merely replacements for obsolete models
of existing machines.
? The agricultural-machinery park is not structured
to facilitate "ganging," that is, linking several ma-
chines together to perform several operations, such
as plowing, fertilizing, and seeding, in one trip
through the fields.
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? Shortages and inefficient distribution of spare parts
are legendary, forcing farm workers to resort to
hand operations because machines are inoperative.
Low Rural Living Standards. Although the gap has
been narrowing, quantitative measures of per capita
consumption indicate that rural living standards are
probably between two-thirds and three-quarters of
those in urban areas; anecdotal evidence suggests,
however, that qualitative differences are much larger.'
Particularly trying to rural residents is the paucity of
housing with amenities such as indoor plumbing and
central heat, greatly inadequate recreation facilities,
and lack of personal services of all kinds. Soviet
surveys indicate that improving living conditions on
farms ranks equally with wages as a means of attract-
ing and retaining skilled workers. Inadequate housing
and services were cited as the principal reasons for the
high rate of rural-urban migration of farm workers in
the Ukraine during 1976-80. Low rural living stan-
dards also make it difficult to attract and retain
qualified teachers and medical personnel. As a result,
health care for rural residents is generally far less
than that for urban residents and contributes to
dissatisfaction with rural living. A lack of transporta-
tion, furthermore, makes access to consumer services
difficult and creates a sense of isolation.
Difficulty Retaining Skilled Workers. General Sec-
retary Brezhnev stated in 1982 that less than half of
all trained agricultural specialists are employed on
state and collective farms. Relatively few workers
trained to operate tractors, trucks, and grain com-
bines actually end up doing so. About 35 to 40 percent
of the higher and specialized secondary school gradu-
ates who are directed to farms either do not report for
their assignments or leave shortly thereafter.6 Turn-
over is also high among farm managers and superviso-
ry personnel. A 1983 Soviet article notes, for example,
that, during the preceeding five years, about 85
Per capita consumption includes food, soft goods, consumer
durables, and personal services. Soviet press accounts suggest that
many of the goods and services available in rural areas?housing,
retail trade, personal services, health and education programs,
cultural opportunities, and recreational facilities?are inferior to
those in urban areas.
Many of these graduates avoid farm work by finding jobs in
factories where they operate or maintain industrial machinery.
Confidential
percent of all farm managers in Georgia and Azerbai-
jan changed jobs. The inexperience of many managers
and the poor quality of _others have been cited as
hindrances to agriculture's performance.
In addition to poor rural living conditions, workers
dislike the low prestige of farm occupations, the
irregular working hours, and the poor condition of
equipment. Many agricultural specialists, further-
more, claim to be dissatisfied because they are not
working at jobs for which they were trained. In one
survey, for example, workers complained about the
large amount of time spent performing functions not
connected with official duties, doing the work of
subordinates, and completing paperwork.
Younger women without specialized training have
only a limited choice of farm jobs and are employed
mainly in unappealing manual jobs that have had low
priority in terms of mechanization. Their educational
and employment opportunities are better in urban
areas and m,any migrate to cities. According to Soviet
sociologist Tatyana Zaslavskaya, "A secondary school
graduate who wants to remain in the village has
almost no choice but to become a milkmaid."
Low-Quality Rural Education Programs. Rural gen-
eral education schools are usually small and poorly
staffed. Some schools do not offer even basic courses
because of the shortage of trained staff. Vocational-
technical schools, which train about half of the new
workers slated for agriculture each year, operate in
only 70 percent of rural rayons in the USSR. Further-
more, they have been criticized for neglecting special-
ties in short supply, such as animal husbandry, con-
struction, and repair and technical servicing of
machinery.
In addition to the shortage of schools, the low prestige
of rural agricultural occupations and widespread criti-
cism of the training make it difficult for rural voca-
tional-technical schools to attract students. In the
Baltic republics, about 30 percent of rural eighth-
grade graduates enroll in rural vocational schools,
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while in Central Asia the share is only 10 percent.'
Farm managers are reluctant to release young work-
ers for training because of the absence from work and
the risk that they will not return after graduation.
Education officials accuse farm managers of indiffer-
ence, claiming they fail to stimulate interest in agri-
cultural occupations either through career counseling
or by giving newly trained workers appropriate assign-
ments and equipment.
Significant advances have been made in narrowing
the gaps in educational attainment between the urban
and rural population, but, according to 1979 census
data, 70 percent of collective farmers had not com-
pleted secondary education (10th grade). Moreover,
more than one-third of those classified as engineers
and technicians had no formal technical training.
Low educational standards have a direct impact on
productivity. For example, successful use of the col-
lective contract system of labor organization has been
prevented, in part, because workers are not well
enough trained to assume responsibility for the entire
crop production cycle. Also, lack of good educational
opportunities for their children is often cited by
younger, better educated workers as a major reason
for leaving farms.
Regional Imbalances in Labor Supply. Most of the
migration of younger workers to cities has occurred in
regions with low birthrates, such as the RSFSR, thus
creating shortages of labor on farms in those areas.
According to Soviet writers, some farming regions of
the Non-Black-Soil Zone of the RSFSR have had
their populations reduced by half in the past 25 years.
At the same time, areas with high birthrates and
slower migration trends, such as Central Asia, have
surpluses of farm labor (figure 2). Average annual
employment in agriculture during 1976-80 increased
' After completing the eighth grade, rural students can attend (1)
two-year vocational-technical schools for training in skilled blue-
collar trades such as field machinery operation; (2) two-year general
secondary schools with largely academic programs and some
vocational training; or (3) two- to four-year specialized secondary
schools for semiprofessional training in technical fields such as
agronomy, zoology, and engineering. Graduates of all three pro-
grams may be admitted to institutions of higher education where
they can specialize in agricultural fields such as agronomy, veteri-
nary medicine, and engineering.
7
by 10 percent in the Central Asian republics and the
Kazakh SSR and by 8 percent in the Transcaucasian
republics.
As a result of these demographic trends, in northern,
labor-short areas a comparatively large share of the
rural population is of retirement age.' In 1970, for
example, there were eight regions of the RSFSR
where at least 30 percent of the rural population
exceeded pension age. By 1978 the number of such
regions had increased to 22, including 16 in the Non-
Black-Soil Zone. In regions with relatively high birth-
rates, however, the share of pension-age rural resi-
dents is small. For example, in 1979 the share of
pension-age rural residents in Uzbek SSR was only 8
percent because of the large share of young people.
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Older workers are employed mainly on private plots
and during peak agricultural periods, as well as in
manual jobs unappealing to younger, better educated
workers. Most employed pensioners continue working
for only a short time?one to four years?after
achieving pension eligibility, particularly on farms
that have a low level of mechanization or make no
provision for part-time or less strenuous work.
Efforts To Cope in the 10th and 11th
Five-Year Plan Periods
Between 1976 and Gorbachev's advent to power in
early 1985, Moscow issued several decrees aimed at
improving the productivity and distribution of the
agricultural labor force. The May 1982 Food Pro-
gram was by far the most important. In general,
decrees published since 1976 included measures to:
? Make minor adjustments to the existing system of
wages and bonuses.
? Allocate more investment funds for rural housing,
roads, and other infrastructure as well as for the
agricultural machinery industry.
? Offer nonmonetary incentives to attract skilled
workers to agriculture and encourage workers in
areas of surplus labor to resettle in areas of labor
shortages.
s The retirement age is 60 for men and 55 for women.
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Figure 2
Changes in Soviet Agricultural Employment, 1981-85
Average annual growth rate
over 1.5 percent
0.0-1.5 percent
?1.6-0.0 percent
Non-Black-Soil Zone R.S.F.S.R.
Includes:
Central, Northern,
Northwest, Urals (north),
and Volga-Vyatka
Economic Regions
Baltic
Economic Region
Trans-
caucasus
Economic
Region
Armenia &
Georgia
Azerbaijan
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Central Asia
Economic Region
8
712118 (E00134) 1-88
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? Attempt to get the collective contract system of
labor organization off the ground.
The Food Program. The May 1982 Food Program put
far more emphasis on labor issues than did earlier
decrees, addressing the problems of retaining, train-
ing, and improving living conditions and incentives for
farm workers. The Food Program, in conjunction with
the 11th Five-Year Plan for 1981-85, also called for a
greater share of investment to be allocated to develop-
ing rural infrastructure?housing, schools, roads, and
other services.
In addition, the Food Program established a number
of special incentives for people transferring to work on
farms as managers and professionals. Young profes-
sionals were offered free apartments for three years, a
special allowance for setting up households, and prior-
ity in purchasing cars and motorcycles.
There was also an effort in the Food Program to
tackle regional problems of labor distribution. It
called for expansion of education of engineers, veteri-
narians, and bookkeepers especially in the Non-Black-
Soil Zone, the Central Black-Soil region, Siberia,
Northern Kazakhstan, and the Far East. Further-
more, special wage increments and vacation time were
provided for livestock workers. This provision was to
be put into effect first in the Non-Black-Soil Zone,
Siberia, the Far East, the Ural region, and the
Central Black-Soil region.
The Food Program, as did the 11th Five-Year Plan,
continued the policy of raising farm wages faster than
those of other workers. Managers, semiprofessionals,
and professionals received additional pay raises and
bonuses. Furthermore, agricultural workers were to
receive a larger share of wages in products, primarily
grain, fruit, and vegetables. Policymakers recognized
that payments in the form of scarce or expensive farm
products often provide greater incentive than money
when goods and services that the population wants are
not available.
Mechanization of farm operations was also treated in
the 11th Five-Year Plan and in the Food Program,
which called for 60-70 billion rubles' worth of ma-
chinery to be delivered to farms in the 1980s?almost
double the value of shipments in the 1970s (see inset,
"Mechanization Goals").
9
Mechanization Goals
Top priority for the 1981-85 period was to be the
modernization of grain combines. The Food Program
also provided a comprehensive list of machinery that
was to be developed "at an accelerated rate." By
including small-scale equipment for farms and the
general population on this list, the Food Program
repeated the perennial promise to enhance mechani-
zation in private agriculture. In addition, the Food
Program called for improved quality and reliability
of farm machinery and an expansion of machinery
repair and storage facilities. To support these goals,
investment in the agricultural machinery industry in
the 1980s was to be double that of the 1970s. By 1985
grain production, as well as harvesting of sugar beets
and flax, was to be fully mechanized. The proportion
of potatoes and vegetables harvested by machine was
to increase substantially, as was integrated mechani-
zation at livestock complexes.
An additional measure was taken to ensure that the
farm machinery industry adequately supported the
goals of the Food Program. A special decree, issued
in April 1983, obliged the various branches of indus-
try to provide producers of farm machinery with
high-quality materials and component parts. Produc-
ers of fuel and raw materials were instructed to
supply farm machinery plants as ordered, regardless
of the level of their own plan fulfillment. To help
speed up the expansion of the farm machinery indus-
try, the decree called for limits on investment in this
industry to be raised for the remainder of the 11th
Five-Year Plan period.
The Food Program also advocated the collective
contract approach to organizing farm workers. Collec-
tive contracting has existed largely on an experimen-
tal basis since the 1960s, but it has received new
emphasis and leadership support since 1982. An all-
union conference on introduction of the collective
contract?at which the contract was strongly en-
dorsed by Gorbachev, then party secretary for agri-
culture?was convened in 1983. In his speech, Gorba-
chev stated that "one specific and effective form
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which can be employed for.. . achieving considerable
growth in the production of goods and a savings in
resources is that of a collective contract. . . .In such
collectives the labor productivity is considerably high-
er, production costs are lower, and, it follows, the
return from investments is considerably better."
In this system, semiautonomous brigades or teams,
usually made up of machine operators, work under a
contract with the farm to deliver specified farm
products at a stipulated price per unit. The teams are
given latitude to manage the production process as
they see fit. The farm, for its part, guarantees the
required machinery, fertilizer, and other supplies. The
quantities of these inputs that the team should need to
fulfill the contract are determined in advance accord-
ing to norms.
During the growing season, workers receive monthly
cash advances. Total earnings for the team are deter-
mined after the harvest and depend on quantities
actually produced and the contract price per unit.
Total earnings are increased if the team has used less
than the normed quantities of inputs. Earnings are
reduced by the amount of any overexpenditure. The
excess of total earnings over the sum of advance
payments is given to the team to be divided among
members according to the contribution of each worker
as determined by the team.
According to the Soviet statistical handbooks, the
number of contracting teams increased from 57,000 in
1982 to 420,000 in 1986. There were 1.1 million
workers in contract teams in 1982 and 9.4 million in
1986. Soviet writers claim that, by 1985, teams
operated on 65 percent of arable land on state and
collective farms and grew two-thirds of grain and
forage crops, three-fourths of potatoes and vegetables,
almost all sugar beets, and two-thirds of fiber flax.
Official statistics show that coverage in the livestock
sector was somewhat less-34 percent of cattle, 42
percent of hogs, 73 percent of sheep, and 56 percent of
poultry.
In the early stages of Gorbachev's campaign for team
contracting, promising results were claimed. Accord-
ing to the Central Statistical Administration, in 1984
grain yields of contract teams were 16 percent higher
Confidential
and labor outlays per unit of grain and other crops
were 8 to 10 percent lower than those obtained
without using contract teams in 1984. Production per
head of livestock was also higher-22 percent for the
fattening of cattle, 14 percent for hog raising, and 12
percent for sheep raising. In the summer of 1987,
furthermorevisitors to eastern regions of the
USSR observed contracting teams working overtime
and doing whatever was necessary to complete the
harvest with minimum losses.
Despite the glowing claims for the benefits of collec-
tive contracts and their rapid spread, the productivity
record and speeches by Soviet leaders suggest that the
impact of contracting teams on agriculture as a whole
thus far has been small. Soviet writers admit that
many contract teams exist in name only and that
there are some barriers to full implementation.9
First, Soviet authors point out a number of problems
associated with forming teams. Potential productivity
gains are eroded and wage costs are kept high because
teams often include more workers than called for by
norms.' Some teams, furthermore, are allowed to
"migrate," that is, work in several areas of the farm,
spending only 20 to 30 percent of the time in their
own fields. In these cases, contract earnings are only a
small share of their total receipts, giving the workers
little interest in the final harvest results. The effec-
tiveness of teams is also undermined by a high rate of
turnover among machine operators.
9 The absence of substantial productivity gains for agriculture as a
whole and complaints by Soviet leaders about poor results from
contracting are somewhat puzzling in view of the higher yields
claimed for teams in 1984 and subsequent years. Lack of overall
gains would be consistent with the good results claimed for teams if
(1) yields for teams referred only to those achieved by properly
organized teams, which have performed well but are few in number;
(2) yields and productivity were declining on lands not worked by
teams; or (3) yields claimed for teams were substantially exaggerat-
ed.
1? Contracting teams are, in theory, small, voluntary groups. Ac-
cording to Soviet statistics, in 1984 teams averaged 15 workers. By
1986 this average had risen to 22. Furthermore, it is likely that, as
the campaign intensified, fewer teams were formed strictly on a
voluntary basis.
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Second, teams have been unsuccessful in some cases
because farms do not supply the necessary inputs.
Either the farm does not receive the inputs in the first
place or switches them to other uses. Furthermore,
farm managers, under pressure to meet plan targets,
limit the decisionmaking authority of the team. The
salaried farm managers and professionals, who re-
ceive no reward for introducing collective contracts,
have no great incentive to turn control over to team
leaders and thus jeopardize plan targets. In some
areas of the RSFSR and the Ukraine, farms have
withheld teams' payments to keep from overspending
the wage fund.
Finally, there have been financial problems. In theory,
the team is supposed to divide the advance payment
and the postharvest settlement among its members. In
practice, however, many farms have not left this
decision to the team and have continued to use
individual piecework payments, which are compara-
tively easy to administer, to allocate the advance
payments. Dividing the postharvest settlement also
has proved cumbersome and contentious, because
each worker's share is supposed to be determined
according to "labor participation coefficients," which
involve complex calculations that take into account
everything from skill levels and job difficulty to the
worker's attitude toward the job. Teams have also
faced difficulty and even disbanded because inappro-
priate or inaccurate norms have been used to calculate
the quantities of fertilizer and other inputs that the
team should need to fulfill the contract.
Redistribution and Resettlement of the Rural
Population. Because the system of labor and wages in
agriculture does not allocate available labor resources
efficiently, policymakers have supported resettlement
schemes to help correct regional imbalances in labor
supply. In the southern republics, where there is a
surplus of labor on many farms, rural outmigration
has been encouraged, and more rapid development of
industrial enterprises in rural areas has been prom-
ised." At the same time, programs are being designed
" More rapid industrial development in all rural areas is also
important for providing off-season employment for farm workers
who are either idle or engaged in menial tasks during winter
months. More off-season employment opportunities are intended to
make farm jobs more attractive, particularly to young women and
to skilled machinery operators.
11
to increase educational attainment and vocational
training to expand employment opportunities outside
of agriculture. Despite efforts to resettle rural Central
Asian families to farms in labor-short areas such as
the Non-Black-Soil Zone in European Russia and the
Far East, strong ethnic and cultural traditions, large
family size, and language barriers provide strong
barriers to success.
Past attempts to encourage resettlement have been
costly and ineffective. For example, the Komsomol
promoted a resettlement program involving mass mo-
bilization of Central Asian young people. However,
during 1981-84 only one-third of the Uzbeks recruited
to the Non-Black-Soil Zone had settled there. Among
the reasons for leaving, the returnees cite poor organi-
zation of food and consumer services, a large share of
manual labor, and shortages of equipment, machin-
ery, and construction materials. The cost of programs
of this type, moreover, is probably extremely high.
According to a Soviet lecturer, the cost of relocating a
single worker is more than 12,000 rubles. It is clear
that no
significant redistribution of population from south to
north is occurring.
Another longstanding resettlement program, designed
to eliminate sparsely populated settlements and cen-
tralize support services and social infrastructure,
called for closing down 348,000 small villages?the
so-called futureless hamlets. The plan has not worked,
however, largely because of opposition from villagers
who were reluctant to move or, when they did so,
moved to larger cities instead of to regional centers as
was intended. Indeed, the program, because of its
unpopularity and considerable expense, appears to
have been abandoned.
Improving Rural Education. Several special measures
were designed to upgrade the quality of the farm
labor force through better education. Graduates of
general secondary schools with training in animal
husbandry who enroll in rural vocational-technical
schools were to receive monthly stipends of 96 to 104
rubles. Also, state farm and other agricultural enter-
prises were to pay rural vocational school graduates
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Table 5
USSR: Growth in Wages and
Productivity in Socialized Agriculture a
Percent
1980.82b 1983_85c
Monthly Productivity Monthly Productivity
Wages Wages
USSR
9.0
?2.4
17.8
11.3
RSFSR
9.9
?1.6
20.7
15.7
a Data on average monthly wages on state and collective farms are
weighted together using numbers of employees to derive a single
estimate of average monthly wages in socialized agriculture. Pro-
ductivity growth is calculated from official Soviet indexes. Data are
from Narodnoye khozyaystvo SSSR and from the statistical
handbook of the RSFSR.
b From 1977-79 base.
c From 1980-82 base.
who accept employment in agriculture lump sum
grants of 500 rubles, equivalent to about 30 percent of
their first year's pay. Rural youth were to be given
preference for admission to these schools. The quota
for females was to be set at one-third of total enroll-
ment, and training in nonagricultural occupations was
to be expanded to keep young females from migrating
to urban areas.
In 1981 the admissions policy in higher schools was
changed to provide for noncompetitive admission to
the correspondence (home study) division for rural
students sponsored by farms. Educators readily admit
the qualitative drawbacks of part-time education, but
they believe that workers sponsored by their farms for
training in the home-study programs will be more
likely to continue working on those farms once they
have completed their education.
An Assessment of Progress in 1983-86
According to Soviet official statistics, growth in the
productivity of farm labor has picked up since the
Food Program was initiated (table 5). However, these
gains were not enough to offset growth in wages, and
labor costs have continued to rise. Furthermore, slow
progress in reducing the hours of labor needed for
production of major farm products on state and
collective farms has kept demand for labor high, while
employment has continued to decline at previous slow
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rates (table 6). Little progress has been made since the
Food Program in raising productivity because Soviet
policies toward agricultural labor have not yet been
implemented sufficiently to improve incentives and
mechanization, or to increase the proportion of skilled
workers in farm employment.
Soviet statistics suggest that at least some progress
was made in boosting investment in housing, roads,
and other infrastructure. Average annual investment
for these purposes in 1983-86 was 40 percent above
1980-82 levels. Gains were made in expanding the
stock of rural housing.'2 During 1983-86 average
annual commissionings of housing by collective
farms?nearly one-fifth of rural commissionings?
were 50 percent above those in 1980-82. Progress in
improving the quality of rural housing, however, has
evidently been slow. As recently as 1985, new housing
built by farms was remarkably primitive. A survey of
such housing showed that only 30 percent had water,
sewer, and central heat. A very large proportion of
this housing (42 percent) was built with none of these
amenities."
Other Soviet statistics that shed light on rural living
conditions show mixed results for recent years. For
example, after the Food Program, there was a sharp
jump in the number of rural preschool spaces commis-
sioned and in the number of enterprises providing
consumer services to rural residents. But the number
of rural movie theatres, clubs, and cultural facilities
declined. The Food Program promised 130,000 kilo-
meters of new general rural roads and 150,000 kilo-
meters of new internal farm roads, but few data are
available to assess progress in this important area.'
'The 1981-85 plan called for 176 million square meters of rural
housing to be commissioned. Actual commissionings during the
period were 167 million square meters?about 13 percent above
commissionings during 1976-80.
' Shares of housing without water, sewer, or central heat varied
widely by region, ranging from a high of 63 percent in the Kazakh
SSR to a low of 2 percent in the Baltics. The Slavic, Transcauca-
sian, and Central Asian regions all averaged about 40 percent. I
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Table 6
USSR: Growth in Agricultural
Employment, Selected Periods a
Percent
1976-80
1981-82
1983-85
Total
State
Sector
Private
Sector
Total
State
Sector
Private
Sector
Total
State
Sector
Private
Sector
USSR
-0.7
-0.8
-0.5
-0.5
-0.2
2.1
-1.0
-0.8
-1.3
Baltics
-0.6
-0.8
-0.4
1.1
-0.1
2.4
-0.3
0
-0.5
Slavic republics
-1.3
-1.4
-1.1
-0.4
-1.2
1.3
-1.5
-1.3
-1.8
RSFSR
-0.9
-1.1
-0.6
-0.2
-1.0
1.5
-1.2
-1.0
-1.6
Ukraine
-1.9
-1.9
-1.7
-0.8
-1.6
1.0
-2.1
-2.0
-2.2
Transcaucasus
1.2
1.0
1.4
2.2
1.2
3.8
-0.1
0.4
-0.3
Kazakhstan
0.9
0.7
1.5
1.5
0.8
3.2
0.8
1.2
0.1
Central Asia
1.9
1.9
2.1
4.9
2.8
6.7
0.5
0.6
0.2
a Average annual rates of growth.
Source: Soviet statistical handbooks publish data on total average
annual employment on collective farms and in state agricultural
enterprises, including both work in agriculture per se and in
industrial, construction, and service activities. Published data on
the share of agricultural work alone in the total for the USSR as a
whole were used to obtain similar numbers for the republics, on the
assumption that the proportions did not differ among republics.
Growth rates shown above for the state sector refer to employment
Retention of skilled workers is still a serious problem.
The number of machinery operators actually declined
slightly for the country as a whole during 1983-86. All
of the decline occurred in the Slavic republics. In
other regions, the number of these workers increased.
While the number of machine operators was declin-
ing, furthermore, the inventory of tractors and grain
combines on farms was increasing at an average
annual rate of 2 percent per year (figure 3). Thus, the
already existing gap between the number of operators
and the number of machines widened further.'
The number of professionals with higher and special-
ized secondary education, an additional indicator of
labor force quality, has shown only small gains since
"Machinery operators are brought in from industry during peak
periods to meet demand for tractor drivers and combine operators.
13
in agriculture per se and exclude other activities. Private-sector
employment is estimated using official statistics on area sown and
numbers of livestock in the private sector. The estimates assume
that each hectare and each animal require a specific amount of
labor per year. The ratio of private-sector employment to total farm
employment (agriculture per se and other activities) that prevailed
in 1975 were then used to estimate private-sector employment in
other years.
the Food Program was initiated. The number of
agronomists per farm, for example, declined between
1983 and 1985. The largest gains in professionals per
farm were made in the engineering-technical category
(table 7).
Despite efforts to improve agricultural machinery,
Gorbachev noted in November 1986 that the develop-
ment of new machinery was still lagging and that
quality was still very low. Complaints by farmers
about the newest grain combines, which were devel-
oped and produced on a high-priority, well-publicized
basis, suggest that the Food Program and subsequent
initiatives have not yet had substantial effects on the
quality of farm machinery. There were also shortfalls
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Figure 3
USSR: Number of Tractors and Grain Combines
and Number of Tractor Drivers, Combine Drivers,
and General Machinery Operators
Thousands
Tractors,
grain combines a
Machinery
operators b
4,000
3,600
3,200
2,800
2,400
2,0001975
77 79 81 83 85 87
a As of 1 January.
As of 1 April.
315368 12-87
in goals to mechanize farm operations. According to
Soviet statistics, in 1985 harvesting of flax and sugar
beets was still not fully mechanized, and less than half
of the potatoes were harvested by combine, instead of
the 65 percent targeted for 1985.
Recent speeches by Soviet leaders suggest that their
biggest disappointment is in the failure so far of
collective contracts to stimulate productivity growth
and reduce costs to the extent expected. Speaking to a
January 1987 Central Committee conference, party
secretary Nikonov stated that "When looking at the
figures [people nominally working under collective
contracts], it would appear that the march of labor
contracting. . . is victorious; however, the high. . .
productivity of labor of the proposed scale is not
there."
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Initiatives for the 12th Five-Year Plan Period
According to plan documents, the entire increase in
the output of agriculture is to be achieved by raising
labor productivity. Soviet plan data imply a reduction
in average annual labor inputs during 1986-90 far
greater than the reduction achieved during earlier
five-year plan periods.
A key facet of the government's strategy to boost
labor productivity is the program to raise rural living
standards and improve the quality of rural life. In his
speech to the 27th Party Congress, Gorbachev put the
matter thus, "It is clear that the main motive force of
progress, its soul, has been and will remain man.
Today, as never before, agriculture needs people with
an interest in working actively, with high professional
skill and innovative bent. The strongest guarantee of
our successes is constant concern for the agricultural
worker's everyday working conditions. Our plans are
aimed at this, and it is important that they be fulfilled
rigorously."
In line with that sentiment, the various documents
giving plans for raising living standards?notably, the
omnibus Consumer Goods and Services Program an-
nounced in late 1985 and the directives for the 12th
Five-Year Plan?explicitly attach priority to the
countryside in a number of areas. Retail trade in rural
areas is slated to increase by 25 percent during 1986-
90, compared with 18 to 22 percent for the economy
as a whole. Similarly, paid services of all kinds are to
be developed at "priority" rates in rural areas. In a
kind of do-it-yourself approach, consumer coopera-
tives (operating mainly in rural areas), state farms,
and collective farms are tasked with expanding the
production of simpler kinds of consumer goods, using
off-season farm labor and providing a sharply
stepped-up flow of services to rural workers.' Such
services are supposed to rise by 70 percent by 1990.
16 A party-government decree published in January 1986 provides
details of the tasks that consumer cooperatives are expected to
carry out.
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Table 7
USSR: Professionals With
Higher and Specialized Secondary
Education Per Farm a
Agronomists
Veterinarians b
Engineers, Technicians
1983
1985
1983
1985
1983
1985
USSR
1.9
1.8
2.1
2.2
3.3
3.6
Baltics
2.5
2.6
2.4
2.7
4.5
4.1
Slavic republics
1.8
1.8
2.1
2.2
3.3
3.6
RSFSR
1.7
1.7
2.0
2.1
3.2
3.5
Ukraine
2.1
2.0
2.2
2.2
3.6
3.7
Transcaucasus
1.7
1.8
1.1
1.1
1.6
1.8
Kazakhstan
2.5
2.7
3.9
4.2
4.2
4.6
Central Asia
2.7
2.8
2.0
2.1
4.1
4.7
a As of 1 April.
b Includes veterinarians and veterinary workers.
Source: Derived from various issues of Narodnoye khozyaystvo
SSSR using tables that show (1) the number of professionals, (2) the
share of professionals with higher and specialized secondary educa-
tion, and (3) the number of state and collective farms.
Perhaps the most touted goal is for rural housing
construction. The number of square meters built is
slated to increase by 27 percent, double the growth
achieved in 1981-85. The goal is to be accomplished
with only a 30-percent increase in investment, imply-
ing an intent to curb the rapidly rising construction
costs.
Finally, plans call for a further narrowing of the gap
between wages of collective farmers and those of
state-sector employees working in industry, agricul-
ture, trade, and other branches of the economy.
Wages of collective farmers are to rise by 18 to 20
percent compared with 13 to 15 percent for state
workers. By 1990 the real income per capita (includ-
ing social benefits and income from private plots) of
the two groups is supposed to be approximately the
same.
The regime is also continuing to emphasize invest-
ment in industries producing farm machinery. Plan-
ners have allocated 12.3 billion rubles for these
industries, nearly two and a half times the amount
allocated for 1981-85. The regime is counting heavily
15
on a new quality control program-the state accep-
tance service-to prevent factories from shipping
defective machinery to farms.
The direction of future labor policy has also been
indicated in three decrees issued since Gorbachev's
advent to power. The first decree, issued in November
1985, established the USSR State Agroindustrial
Committee (Gosagroprom) by merging five ministries,
one state committee, and elements of three other
ministries. The next decree in March 1986 dealt
explicitly with incentives for farm workers. First, it
sought to strengthen self-financing of farms by tying
the size of the wage fund directly to the planned gross
value of output." The norms used to determine the
Self-financing requires enterprises to finance their operations out
of their own revenues. If it is properly implemented, self-financing
creates positive incentives for producers and is a prerequisite for
managerial autonomy. To date, self-financing has been implement-
ed largely in name only, and is undermined by the continuation of
such practices as writing off debts of unprofitable farms, issuing
cheap bank loans, and paying high minimum wages. The system of
central allocation of industrial goods and the price system also
weaken self-financing.
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Family Contracts
The family contract is a form of collective contracting
in which the farm concludes a contract with a family
unit. Thejamily may be assigned a single phase of
production, such as weeding, or the entire cycle of
cultivation. The family contract is also being used for
livestock production. As in any collective contract,
the farm?in return for a set amount of produce at a
predetermined price?agrees to provide whatever fa-
cilities, machinery, and other inputs the family can-
not provide and to pay a bonus for any above-plan
amount produced. In crop farming, the family re-
ceives monthly advances and a final settlement after
the harvest. With the present emphasis on self-
financing, the family is charged for materials and
services provided by the farm and keeps any revenues
left after expenses are deducted.
From the government's point of view, the family-
based unit has a number of advantages over a regular
team:
? Families are more likely to bring private plot
motivation to the socialized sector?to see the same
direct tie between effort, results, and reward that
exists in private agriculture. The regime is counting
on these incentives to reduce losses and raise
productivity.
? Family contracts are easier to administer because
families will not disband as readily as teams over
squabbles about dividing payments. Furthermore,
recordkeeping is simplified and the need for mana-
gerial oversight is reduced.
? Families can take on some farming activities that
are not suited for regular teams, such as the
management of remote dairy operations or moun-
tain homesteads, which otherwise would be
abandoned.
From scattered reports in the press, it is evident that
family contracts are growing in number and that
some involve fairly large-scale operations. A variety
of problems, however, has come to light as the use of
family contracts has expanded. Most of the com-
plaints are directed at farm managers for failing to
live up to contract agreements, particularly in the
supply of feed. Other reports indicate that farm
managers take advantage of families by "relying on
their enthusiasm alone," saddling them with dilapi-
dated premises and broken-down machinery. As a
result, some families work hard for a year or so and
then leave.
Family contracts have the potential to encourage
better use of areas where large-scale or highly mech-
anized agriculture is not practical. Nevertheless,
their role is limited because the USSR remains
firmly committed to large-scale industrialized
?
agriculture.
wage fund were to be set so that wages did not
increase faster than labor productivity. Should this
occur, cost overruns were to be made up out of bonus
funds. Next, the decree called for all subunits of
farms, processing enterprises, and other organizations
to use collective contracts and self-financing. Family
and personal contracts were encouraged (see inset,
"Family Contracts"). Also, farm leaders were empow-
ered to allow workers in contract teams to keep 25
Confidential
percent of above-contract production?a bonus-in-
kind?to be paid in addition to the team's monetary
earnings. Finally, the system of paying monthly cash
advances during the growing season, with a? posthar-
vest payment depending on actual production, was
extended to include managers and professionals work-
ing on farms.
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Many of the provisions of the March decree merely
tinkered with the existing system of wages and bonus-
es and resembled provisions in earlier decrees. For
example, state farm directors were authorized to
increase wage rates by up to 50 percent, depending on
crop yields and livestock productivity, as long as
overall wage costs per unit of output did not go up.
Formerly, these wage rate increases were limited to
30 percent. Similarly, the portion of cost savings that
can be channeled into bonus funds was increased.
Finally, the March decree gave a boost to private
housing construction by allowing state farm directors
to pay for half of construction materials purchased by
workers for this purpose. The decree recommended
that collective farms set up a similar program.
The third decree, issued in December 1986, consisted
chiefly of complaints about the unsatisfactory pace of
implementation of collective contracts and self-
financing on farms. The decree denounced the "irre-
sponsibility and formalism" that are hindering the
introduction of these measures and restated the im-
portance of linking the pay of all farm personnel?
including managers?to end results. This decree also
called for more opportunities for workers to take on-
the-job training at farms where collective contracts
and self-financing are operating correctly.
Outlook
To sharply accelerate the release of labor from agri-
culture while achieving plan goals for growth in farm
production would require a breakthrough in raising
productivity of farm workers (see inset, "The Impor-
tance of Productivity Gains in Meeting 1986-90 Plan
Targets"). The programs now in place, or planned,
that are intended to bring this about seem inadequate
to the task. Additional measures, however, probably
will be introduced after a party plenum scheduled for
this year, which Gorbachev recently announced would
be devoted to agriculture.
Some progress may be made under programs that are
already on the books, but the many measures intended
to improve the living conditions of farm workers?and
thus, hopefully, their work attitudes?could founder
on the shoals of insufficient investment. The alloca-
tion to housing, for instance, may be insufficient to
17
meet the construction target, given that the cost per
square meter has been rising for decades at more than
3 percent per year. Additional funds evidently have
been made available for housing and services in the
1988 plan, but it is not clear how much has been
earmarked for rural areas or whether new allocations
will be sufficient to offset rising construction costs.
Over the next few years, rural amenities are likely to
remain few and their quality poor relative to those in
cities. Finally, the largely do-it-yourself approach to
increasing the quantity of goods and services for farm
people is not likely to result in a substantially larger
supply of high-quality consumer goods and services in
rural areas. The farm sector would benefit from more
opportunities for off-season employment, but impos-
ing large, year-round tasks, such as producing con-
sumer goods, adds to the burden of farms and diverts
them from their primary mission?efficient farming.
Hence, in 1990, as now, the quality of rural life is
hardly likely to appeal to the best and the brightest of
rural youth.
Neither is a near-term breakthrough in the cards for
relieving the drudgery of most farm jobs by mechani-
zation. The regime is counting on more investment
and strict quality standards to raise the quality of
agricultural machinery. Modernization, however, is a
lengthy process. The state acceptance service, further-
more, is being undermined by industrial enterprises'
discovering new ways to sidestep quality control.
Without stronger economic ties between farms and
producers of machinery, there is likely to be only slow
progress in improving the quality and assortment of
farm machinery.
Gorbachev's remarks to the June 1987 plenum indi-
cate that the leadership is still pinning its hopes for an
upsurge in farm labor productivity on the mandated
adoption of various forms of the collective contract,
including family contracts and the so-called intensive
brigade.'s Gorbachev cited numerous examples of
"There are several variants of the collective contract. Intensive
brigades are merely very small contract teams?usually two or
three machine operators.
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The Importance of Labor Productivity
Gains in Meeting 1986-90 Plan Targets
Soviet plans call for annual average farm production
in 1986-90 to be 14.4 percent above that of 1981-85.
According to our econometric model of the farm
sector, this target will be out of reach unless attempts
to improve labor productivity in agriculture are at
least somewhat successful.
Projections of average annual net farm output in
1986-90 using the model initially assume that:
? Labor inputs (including the private sector) decline
at 1.7 percent per year?the rate planned for the
socialized sector during 1986-90.
? Weather is average.
? Deliveries of industrial goods such as fertilizer,
spare parts, and feed ingredients continue to grow
at rates that have been achieved since the Food
Program began.
? Labor productivity and on-farm technology improve
only at the long-term average rate.
With these assumptions, the model indicates that
average net farm output in 1986-90 is likely to be
about 9.8 percent above that in 1981-85?far short of
the plan target.
Sources of growth other than labor productivity are
unlikely to be sufficient to close the gap between this
projected growth rate and the plan. Success in mod-
ernizing the plant and equipment delivered to agricul-
ture over the next several years, for example, would
not provide the gains needed to meet the plan target.
Under the very optimistic assumption that new capi-
tal stock delivered to agriculture is 50 percent more
efficient than that already in place, the model pro-
jects that the 9.8-percent growth rate would rise only
to about 11.3 percent.
Very favorable weather would have a larger impact,
but would not, by itself, bring growth in production to
planned rates. For example, the model shows that
weather conditions so favorable that they have only a
10-percent chance of occurring would raise the
growth rate from 9.8 percent to 12.8 percent.
The need for more rapid growth in labor productivity
could be considerably greater if for example, the
planned decline in labor inputs were accompanied by
very unfavorable weather and no improvement in new
capital stock. Under these conditions and assuming
labor productivity grows only at the long-term aver-
age rate, the model projects that net farm output in
1986-90 would average as little as 6.6 percent above
that in 1981-85.
successful family contracts and intensive brigades,
operating mainly in the labor-short northern areas.
Collective contracts have had some success in raising
yields and lowering costs where they have been imple-
mented fully, but there are many conditions that must
be met before widespread, successful use can occur.
First, suppliers of machinery and other inputs must be
made more responsive to farm needs so that farms and
collective contract teams have the goods and services
they need to carry out farm operations on a timely
basis. As long as industrial enterprises are rewarded
for fulfilling gross output plans and machinery is
Confidential
rationed to farms, the link between farms and suppli-
ers of industrial goods is likely to remain weak. The
regime has announced its intention to solve this
problem by revamping the wholesale trade system,
but positive consequences for agriculture are not
likely to be realized over the next few years (see inset,
"The June 1987 Plenum and Agriculture"). Second,
the rules, regulations, and legal procedures for formu-
lating collective contracts must be simplified if many
thousands of these contracts are to be concluded each
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The June 1987 Plenum and Agriculture
The June plenum produced a lengthy document out-
lining the main themes of Gorbachev's economic
reform program. The plenum also endorsed the new
law on state enterprises, which will apply to state
farms. The plenum document and the enterprise law
do not specifically address the problem of low labor
productivity in agriculture. They are to influence the
farm sector indirectly by a general restructuring of
economic incentives, prices, and wholesale trade. In
addition, the enterprise law provides for the election
of leaders?presumably including leaders of con-
tracting teams.
It is unlikely, however, that productivity in agricul-
ture will be affected by these measures over the next
few years. Any gains from these measures probably
will not be apparent before the first years of the 13th
Five-Year Plan period, 1991-95:
? The documents spelling out details and specific
procedures for the various reform elements outlined
in the plenum document have yet to be published.
Once these documents become available, the entire
scheme must be implemented. Even if this lengthy
process goes smoothly, it will take several years.
? Some of the changes in economic incentives deemed
important in the plenum document and in the
enterprise law have already been applied in agricul-
ture. In particular, the March 1986 decree on
agricultural management called for all enterprises
in the agroindustrial complex to utilize collective
contracts and self-financing.
? The plan to revamp wholesale trade is still vague
and is scheduled to take four to five years to
implement. The plenum document provides no basis
on which to judge whether farms ultimately will
have better access to goods and services for use in
production.
? The short discussion in the plenum document of
prices for farm products suggests that the sched-
uled "radical" reform of prices is likely to result in
prices similar in nature to the rigid, centrally
determined procurement prices now in effect. Al- _
though prices are to be determined on the basis of
contracts, there are to be strict guidelines for
forming contract prices and close monitoring to
prevent inflation. Furthermore, if the method pro-
posed for determining prices in industry is also
applied to agriculture, prices for farm products sold
to the state would be determined in advance of the
harvest, probably on the basis of anticipated pro-
duction costs. Such prices would remain in effect
for several years.
year as planned. Also, workers must be trained to
manage the entire production process and not simply
one phase of it. Finally, there must be willingness on
the part of all concerned to tolerate year-to-year
fluctuations in the incomes of farm workers.
Extending the principles of self-financing to Soviet
farms will be a tall order; enormous differences exist
among farms in growing conditions, product prices,
capital stock, and profitability. In 1986, a good year
for agriculture, over 6,000 farms-12 percent of the
total?operated at a loss. If formally implemented,
19
self-financing could encourage farms not to waste the
inputs that have been allocated to them. But self-
financing is unlikely to produce the intended efficient
resource allocation, given the dubious nature of prod-
uct prices for inputs and output and the limited real
autonomy of farm managers. Even under allegedly
more liberal rules, farms remain subject to the dic-
tates of imposed output targets for much of their
output. Furthermore, under these rules, many of the
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high-quality, scarce materials and investment goods
needed by farms will continue to be centrally
allocated.
Interference by regional officials in day-to-day farm
operations continues to undermine efforts made thus
far to improve incentives for farm workers and man-
agers. In January 1987 party secretary Nikonov
complained that "leading officials. . . who are person-
ally responsible for the improvement of the economic
machinery in the agroindustrial complex, sometimes
have only a superficial knowledge of the new provi-
sions and, at times, display an irresponsible attitude
toward their implementation. This is the only way to
explain the never-ending flood of paperwork, de-
mands, and instructions accumulating on farms."
Proper implementation of collective contracts holds
some promise for at least modest efficiency gains, but
prospects are dim for any regional redistribution of
farm labor. There have been no substantial new
incentives to foster migration from the southern,
labor-surplus areas to northern areas. If the leader-
ship were to pursue such a policy, it would be costly
Confidential
and would encounter strong resistance?both from
the sending regions and from the regions that would
have to absorb large numbers of new migrants with
radically different cultural, ethnic, and educational
characteristics. Expansion of industry in Central Asia,
however, could absorb excess labor. In fact, the 12th
Five-Year Plan calls for above-average economic
growth in most republics with fast population growth.
But investment patterns are not shifting to support
industrial development in these areas. Statistics for
the 12th Five-Year Plan suggest that, on a per capita
basis, the relative investment position of the RSFSR
will continue to rise and that of most of the other
republics will fall, especially those in Central Asia. In
general, there is little sign of any consistent policy to
effect the transition of released rural labor into the
industrial and service sectors.
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