STRAINS IN THE SOVIET LABOR FORCE

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• Collection: General CIA Records
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• Document Creation Date: December 22, 2016
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• Sequence Number: 1
• Publication Date: March 1, 1987
• Content Type: MEMO

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cr`
Central Intelligence Agency
DIRECTORATE OF INTELLIGENCE
March 1987
STRAINS IN THE SOVIET LABOR FORCE
Summary
Gorbachev's effort to push the Soviet economy onto a path of faster
economic growth coincides with a period of very slow labor force growth. This
represents a critical challenge to the Gorbachev regime. The Soviets must now
rely to a greater extent than before on increases in labor productivity rather
than labor force size to obtain their economic goals. The inefficient use of
labor, slack work effort and low labor productivity that characterize Soviet
industry must be overcome or industrial modernization and technological
advance will be disappointingly slow.
A number of labor force trends will exacerbate the difficulties Gorbachev
faces in successfully implementing his industrial modernization program:
o The working-age population of the European republics of the USSR is
actually declining and will continue to do so through 1995.
o There is little prospect of boosting labor force growth in the USSR
through increased labor force participation rates. These rates--record
highs for developed industrial economies--achieved peak levels in the
early 1970's and have been largely flat since then.
o Growth in labor supply will come primarily from the Central Asian
republics, while labor demand will be concentrated in the western
industrialized regions of the country, Siberia and the Far East.
This memorandum was prepared byl (Office of Soviet Analysis.
Comments and queries are welcome and may be directed to the Chief, Economic
Performance Division, SOVA
Information available as of 1 February 1987 was used in this report.
SOV M-87-20015
_ F1
DATE 4
DOC NO-SOY
OIR -
P $ PD I
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o The problem of slow labor force growth for industry is compounded by
the energy sector's increasing demand for manpower. Labor requirements
in energy-rich Siberia, for example, have generally been met by workers
drawn from the western industrialized USSR. While total industrial
employment increased an average 0.6 percent per year in 1981-85,
employment in the fuels branch grew twice as fast, at 1.2 percent per
year.
o In 1982-83 Moscow restricted educational deferments, effectively giving
the military a larger share of the declining pool of 18 year-old
males. Military manpower has been maintained at a level of about 6
million persons.
Gorbachev has approached the labor problem on several levels: through
administrative measures to encourage more efficient labor utilization; through
"human factor" policies such as the discipline and temperance campaigns to
boost work effort; through a wage reform aimed at improving work incentives;
and through planned mechanization of many tasks presently performed
manually. Gorbachev is counting on these measures to dramatically increase
labor productivity and economic growth in 1986-90. While he can expect some
positive results--some gains were apparently realized in 1986--there are a
number of impediments to the long term success of this approach:
o Administrative measures to save labor are vulnerable to footdragging at
the ministry and enterprise levels--where a labor hoarding mentality
persists.
o Efforts to make wages better reflect skill and performance tend to be
circumvented by enterprise managers who use wages and bonuses to bid
for workers in a labor short market, rather than to reward work effort.
o The discipline and temperance campaigns--intended to spur the economy
until gains from mechanization kick in--will probably fade away as
sources of further productivity growth after 2 or 3 years, once the
most glaring faults are corrected.
o In Soviet industry there is a strong tendency for investment to go into
the creation of new jobs rather than the mechanization of old ones
because of the heavy emphasis on boosts in output. Unless basic
incentives in the economic system can be turned around, the reduction
of manpower needs through large-scale mechanization is likely to
continue to be a slow process.
Slack performance and continued imbalances in the demand for and supply
of labor could lead Moscow to more seriously consider policy options thus far
resisted, such as cutbacks in military manpower or more coercive efforts to
resettle Central Asians in labor deficit regions. Another option would be to
push the reform effort much farther, for example, allowing bankruptcy and some
degree of unemployment, thereby increasing worker motivation by reducing job
security.
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Given the importance of labor in the Soviet economic growth equation we
carried out a thorough review of statistical and other indicators of the labor
force environment facing the Gorbachev regime over the next 15 years. This
memorandum-represents a compilation of tables, graphs, and other information
which illustrates the strains and imbalances in the Soviet labor force that
Gorbachev will have to address if his program of economic revitalization is to
succeed.
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Soviet Leaders' Perceptions of the Labor Problem ................1
Demographic Constraints .........................................4
The Military Bite ...............................................7
The Regional Manpower Imbalance ................................. 9
Low Mobility of Central Asian Nationalities .................... 13
National Labor Force Participation Rates Level Off .............15
Central Asians' Participation in the State Sector Lags ......... 19
Employment Trends ..............................................24
Gorbachev's Labor Force Strategy ...............................29
Efforts to Improve Labor Utilization .......................29
Mechanization ........................................30
Human Factor Policies ...................................... 33
Wage Reform ................................................34
Tables
Table 1. Increases in Soviet Able-Bodied Population by
Demographic Region ............................... 10
Table 2. Distribution of the Soviet Union's Major Central
Asian Nationalities ..............................14
Table 3. USSR: Labor Force Participation Rates by
Sex.and by Age Group ............................. 16
Table 4. Central Asia: Proportion of the Able-Bodied
Population Employed in the State Sector and on
Collective Farms .................................20
Table 5. USSR: Employment .............................26
Table 6. Manual Labor in Soviet: Industry, Agriculture
and Construction ................................. 31
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Figures
Figure 1. Ryzhkov's Estimates of Labor Demand in 1990......3
Figure 2. USSR: Increments to the Soviet Working-Age
Population and the Civilian Labor Force .......... 5
Figure 3. Increments to the Pension-Age Population ......... 6
Figure 4. Draft-Age Males and Conscript Demand .............8
Figure 5. Soviet Demographic Regions ...................... 11
Figure 6. Increments to the Working-Age Population by
Demographic Region .............................. 12
Figure 7. USSR: Shrinking Potential of Reserve Labor ..... 17
Figure 8. Employment in Socialized Agriculture Compared
to Total Civilian Employment ....................25
Soviet Comments on the Central Asian Rural Labor Surplus ....... 22
Soviet Leaders on the Progress of Mechanization ................32
Soviets Cite Benefits, and Costs, of Temperance Campaign ....... 35
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The Soviet centrally planned system has been characterized by both labor
shortages and overmanning. To meet high output targets, ministries tend to
channel investment into new production facilities--using funds to create new
work places rather than to mechanize existing jobs. Managers in existing
enterprises hoard surplus labor as a hedge against (1) steadily rising plan
targets, (2) periodic demands to supply temporary labor for the harvest or
special civic projects and (3) time lost due to disruptions in work activity
associated with erratic supply of materials and equipment. As a result, new
facilities are often short of labor while older production facilities are
overmanned--usually with large numbers of low skill and manual laborers. 25X1
Long before the onset of the current squeeze in labor supply, Soviet
leaders recognized the need to curb labor demand and raise productivity in
order to ease the effects of rapidly declining increments to the labor
force. For two decades the Soviet press has exhorted industry to get more
work done with fewer people and to eliminate practices which waste labor.
Recent leadership statements indicate the extent to which the effort to change
the way Soviet industry utilizes labor has foundered: 25X1
M.S. Gorbachev in a CPSU Central Committee report, June 1986--
"The extensive buildup of fixed production assets led to an artificial
shortage of labor resources...Of course, we know the demographic situation in
the country. But we may ask "If there is a shortage of labor resources then
why continue building new enterprises, and on the basis of obsolete equipment
at that...At the present time, industry alone has about 700,000 job
vacancies. And this practically with a one-shift use of equipment. At a
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shift coefficient of 1.7, the number of job vacancies in industry will exceed
Boris Yeltsin in a 20 July 1986 address to the Moscow Gorkom--
"To suit departmental and sector interests, over the last three 5-year plans,
instead of setting about the automation and mechanization of production, the
flywheel of increasing the number of jobs was spun, and now it is very
difficult to stop it. Over 15 years, more than 700,000 workers from other
cities were brought into Moscow. At the same time the rate of abandoning
obsolete production facilities and mechanizing manual labor fell."
and on enterprise resistance to staff reductions--
"After the city party conference we came up against the fact that a number of
ministries and departments, oriented toward the customarily low rate of growth
in labor productivity, defend with a zeal worthy of a better purpose their own
proposals for increased numbers, proposals which, in total, exceed the city's
potential fivefold. And scientific institutions, in place of the planned
reduction, have requested an increase of 50,000 in the number of workers."
Chelyabinsk Obkom Chief writing in Kommunist, No. 8, 1986--
"In the 10th Five-Year Plan (1976-80) the oblast's average annual growth rate
in labor productivity amounted to 5.7 percent. In the 11th (1981-85) this
indicator decreased to 2.4 percent... Conditions are exacerbated by the
demographic situation in the region: taking into account the 12th Five-Year
Plan (1986-90) and the prevailing extensive methods of accomplishing economic
tasks, the shortage in the work force will amount to about 150,000 people. It
is clear that it is necessary to abandon the old methods once and for all.
However, the question is one of habits of many years's standing which in a
number of cases have become stereotypes of thinking among a certain group of
party and economic leaders. Therefore, we do not expect a quick and easy
victory here."
N.I. Ryzhkov, Chairman of the USSR Council of Ministers, June 1986:
"Over (the 12th FYP) the increase in labor resources will diminish and amount
to only 3.2 million persons. Without the planned increase in labor
productivity (20-23 percent), the national economy would need more than 22
million additional workers. We simply do not have such labor resources at our
disposal." (Figure 1.)
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Figure 1
Ryzhkov's Estimates of Labor Demand in 1990 a
Million workers
22 million
1965 1970 1975 1980 1985 1990
??B
B
workers
aEstimate A: Labor needed to reach national income goal without planned increase in labor productivity.
Estimate B: Labor needed with planned 20-23 percent increase in labor productivity.
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Soviet demographic trends led to a sharp deceleration in growth of both
the working-age population and the labor force during the early eighties
(figure 2). The working-age population, which grew by 22 million persons
between 1971 and 1980, is expected to grow by only 5.6 million persons between
1981 and 1990. On the other hand, the US Bureau of the Census estimates that
the labor force will increase somewhat faster, growing by 8.1 million persons
during 1981-90. This is the result of a greater concentration of people in
the middle age groups which have the highest participation rates (see table 3,
p.16 below), as well as a rise in the number of pensioners who stay in the
labor force after reaching retirement age. Approximately a third of
pensioners remain economically active and this age-group will grow
substantially in the eighties (figure 3).
In the mid 1990s the number of new entrants to the labor force will pick
up, easing strains on labor supply.
* The working-age population is composed of men aged 16-59 and women aged 16-
54. The labor force is the economically active population, including working
pensioners and those engaged in private subsidiary farming.
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Figure 2
USSR: Increments to the Soviet Working-Age
Population and the Civilian Labor Force
Legend
? Working-Age
Population
1971-75 1976-80 1981-85 1986-90 1991-95 1996-
Force
2000
Source: Ward Kingkade, "Estimates and Projections of the Labor Force and Civilian Employment
in the USSR: 1950 to 2000," Center for International Research, Bureau of the Census,
September 1986.
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Figure 3
USSR: Increments to the Pension-Age Population
Million persons
1996-
2000
Source: Godfrey Baldwin, "USSR: Population Estimates and Projections, 1970-2020,"
Center for International Research, Bureau of the Census, November 1984.
1971-75 1976-80 1981-85 1986-90 1991-95
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The number of males reaching draft age (eighteen) has declined sharply in
recent years (see figure 4), intensifying competition for manpower between the
civilian economy and the military. To maintain the size of the armed forces
at around 6 million the Soviets have:
o Virtually eliminated educational deferments
o Further restricted medical exclusions
o Conscripted men up to age 26 who had not been inducted earlier
o Conscripted women with medical or certain other specialized training.
As a result, the military has effectively increased its share of a shrinking
pool of draft-age youth--reducing the man-years available for job training and
employment in the civilian labor force.
* In theory a Soviet youth can be called up at any time from age 18-26. In
practice, a youth who is temporarily deferred for several years is unlikely to
be conscripted. Deferments are granted only for reasons of health, higher
education and family hardship.
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Figure 4
USSR: Draft-Age Males and Conscript Demand: 1970-90
1-}--__
1970 1972 1974
Males 18 years old
Draft-eligible males*
*Total males 18 years old less those deferred.
1984 1986 1988 1990
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The greatest future demand for workers in the Soviet Union is in the
highly industrialized western USSR and in resource-rich Siberia. However the
able-bodied population in the RSFSR and other European republics has actually
been declining since 1984 and will continue to decline until 1996 (table 1).
In the last 20 years Soviet population growth has been concentrated in
the high-fertility Southern tier republics (figure 5). During the eighties
most of the increment to the able-bodied ages in the Soviet Union will come
from Central Asia--where workers generally have less education, fewer skills
and less plant and equipment to work with than those in the rest of the
country (figure 6).
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Increases in Soviet Working-Age Population by Demographic Region*
Million Persons
as of 1 July
European
Transitional
Central Asian
Year
Working-
Age
Population
Average
Annual
Rate of
Growth
(percent)
Working-
Age
Population
Average
Annual
Rate of
Growth
(percent)
Working-
Age
Population
Average
Annual
Rate of
Growth
(percent)
108,582
14,497
8631
117,310
1.6
16,702
2.9
10,700
4.4
124,264
1.2
18,683
2.3
12,846
3.7
124,174
0
19,913
1.3
14,747
2.8
1990
123,228
-0.1
21,190
1.2
16,904
2.8
1995
122,172
-0.2
22,405
1.1
19,455
2.8
2000
124,389
0.4
24,143
1.5
22,679
3.1
*The European region, characterized by low birth rates, includes the RSFSR, Latvia,
Lithuania, Estonia, Belorussia and the Ukraine; the transitional region, characterized by
marked declines in birthrates, includes Kazakhstan, Azerbaidzhan, Georgia, Armenia and
Moldavia; the Central Asian republics, characterized by high birth rates, are Uzbekistan,
Turkmenistan, Tadzhikistan and Kirghizia.
Source: Godfrey Baldwin, "Estimated and Projected Population of USSR: 1970 to 2025."
Center for International Research, U.S. Bureau of the Census. November 1984.
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Figure 5
Soviet Demographic Regions
The United States Government has not recognized
the incorporation of Estonia, Latvia, and Lithuania
into the Soviet Union. Other boundary representation
,a not necessarily authoritative.
Norway
SW@tiCn
Belorussian'
S.S.R. 1
Ukrainian
S.S.R. I
Finland
European (low birth rate)
birth rate)
Central Asian (high birth rate)
Republic boundary
1000 Miles
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Figure
Increments to the Working-Age Population
by Demographic Region
Million persons
rd N
Legend
? European
Transitional
-2
1976-80 1981-85 1986-90 1991-95 1995-
2000
Source: Godfrey Baldwin; "USSR: Population tstlmdtes and projections 1970-2025," Center for
International Research, Bureau of the Census, November 1984.
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A south to north migration may eventually occur, but in the near term
Central Asians are unlikely to move to the urban industrial centers of
European Russia on a scale large enough to offset the numerical shrinking of
the labor pool there. On the contrary, comparison of the 1970 and 1979 census
results shows that Central Asians are becoming even more concentrated in their
own republics or elsewhere in Central Asia (table 2). Reasons for this
reluctance to move include: the higher cost of living in European Russia, the
language barrier, ethnic prejudice, Central Asians' cultural attachment to
their homeland and the absence of established Central Asian neighborhoods in
European Russia that could act as poles of attraction.
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Distribution of the Soviet Union's Major Central Asian Nationalities
Nationality Population Percent Residing in
(Millions) Own Republic or Elsewhere
in Central Asia
1970 1979 1970 1979
Uzbeks 9.195 12.456 96.8 97.2
Tadzhiks 2.136 2.898 98.4 98.5
Kirghiz 1.452 1.906 98.5 98.5
Turkmens 1.525 2.028 98.3 98.5
Kazakhs 5.299 6.556 90.8 91.8
Sources: Census results. 1970 Itogi Vsesoyuznoy perepisi naseleniva SSSR 1970 goda
vol.IV. Natsionalniy sostav naseleniya SSSR, pp.9-15 1979 Naseleniye; SSSR po dannym
Vsesoyuznoy perepisi naseleniva 1979 goda. Politizdat. 1980, pp.23-30.
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It will be difficult for Moscow to achieve significant increases in labor
force participation rates because most of the adult population in the Soviet
Union--particularly in labor deficit regions--is already working (table 3).
In 1950 there was a relatively large labor reserve in terms of relatively low
participation rates (figure 7). By the 1970's the Soviets had successfully
pushed these rates to over 80 percent of the working-age population--largely
by achieving one of the highest female labor force participation rates in the
world (table 3). As participation rates rose above 80 percent, however, it
became much more difficult to mobilize the remaining labor reserve--consisting
largely of students, housewives, pensioners, the disabled, and those between
jobs. As a result, the labor force participation rate has leveled off since
1970.
Soviet leaders have taken steps to further increase participation in the
labor force at the margins by changing pension laws to encourage retirees to
stay in the work force; expanding part-time schooling and correspondence
courses to encourage student employment; and by expanding the use of labor
placement bureaus to attract pensioners and women with children to part-time
jobs and piecework that can be done at home. Under a new law on individual
labor activity, pensioners and housewives are also being encouraged to
increase their economic contribution by engaging in small-scale private
activity in the sphere of handicrafts and consumer services.
High labor force participation rates have not come without substantial
costs to the Soviet Union. High female participation in the work force in the
European part of the country has depressed birth rates and will lower future
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Table 3
Force Participation Rates by Sex and Age Group
(Percent)
1959
1970
1979
Males
88
87
Females
82
84
Age Group
16 -2 9
78
74
30-49
80
93
50-54/59
70
80
Pension-age*
23
13
Source: L. Chizhova, "Kak luchshe ispolzovat trud razlichnykh sotsialno-
demograficheskikh grupp naseleniya," Sotsialisticheskiy trud, No.8, August
1984.
* Chizhova's estimates exclude private farming and part-time employment. If
these activities are taken into account, the participation rate of the
pension-age group becomes roughly a third in 1980.
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Figure 7
USSR: Shrinking Potential of Reserve Labor
Employment as
percent of
able-bodied population
(ages 16-59/54)
Labor reserves difficult
to mobilize
tj
Readily
mobilized
labor reserve
50-{- --r------1----- T'- T_._______7
1950 1955 1960 1965 1970 1975 1980 1985
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labor force growth in this region. In addition, increased use of part-time
and correspondence schooling nationwide tends to lower future labor force
qual ity.
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The proportion of Central Asia's working-age population employed in the
public sector has been falling slightly in recent years (table 4). It is
currently about 67 percent--compared to an average 84 percent for the Soviet
Union as a whole. Efforts to reverse this trend are hampered by a labor
surplus in rural Central Asia where the rapid growth of the working-age
population has begun to outstrip the ability of the state to create
appropriate jobs. Rural Central Asians have been slow to migrate to urban
areas of their own republic, much less to labor deficit regions farther
north. Central Asian leaders complain that jobs in their cities often go
unfilled. Moreover, a slow rate of urbanization also suggests a slow
demographic transition to lower fertility rates and higher female
participation in the workforce.
The rural labor surplus in Central Asia presents a number of problems for
the Soviet leadership. A rising number of Central Asians now work outside the
state economy, both legally and illegally--a development Soviet leaders
complain about with increasing frequency. The labor surplus also slows
efforts to boost low labor productivity in agriculture, to raise the
educational level of the population, and to narrow the gap between rural and
urban living standards.
Moscow has a number of options for coping with the rural labor surplus in
Central Asia:
o Develop labor-intensive, low-tech industries in small cities and towns
near rural areas. Soviet leaders have endorsed this idea, but higher
investment priorities in other regions of the country will likely put
limits on what can be done.
o Find ways to speed urbanization within Central Asia--for example,
design housing and work schedules that are better adapted to Central
Asians' way of life.
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Central Asia: Proportion of the Able-Bodied Population Employed in the
State Sector and on Collective Farms
(Percent)
1970
1975
1980
1981
1982
1983
1984
1985
72.3
69.3
67.1
67.5
67.9
68.7
67.4
66.7
Source: Estimate were made by dividing employment in the state sector and
collective farms by the total able-bodied population for the following
republics: Uzbekistan, Tadzhikistan, Turkmenistan and Kirghizia. Employment
data are from various issues of Narodnoye khoz a stvo SSSR (hereafter referred
to as Narkhoz). Population data are from G. Baldwin, Population Estimates and
Projections: 1970-2025, Center for International Research, Bureau of the
Census, November MT.-
* The downward trend in this proportion partly reflects a relative shift in
age distribution toward the younger age groups which have lower participation
rates than the rest of the working age population.
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o Crackdown on the second economy. This would run serious political
risks by making life in rural areas of Central Asia much more
difficult, but might increase outmigration through economic necessity.
o Encourage migration to labor deficit regions. Step up resettlement
programs, including the organized recruitment (Orgnabor) of Central
Asians and the placement of Central Asian youths in schools in regions
where they are then required to work for two years after graduation.
In the past, resettlement efforts have largely failed as the recruits
soon return to their homeland. Any effort to use coercion to
accelerate outmi ration would probably run into substantial
opposition.
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Kh. Umarov, Voprosy ekonomiki No 9, September 1986
o on continued high birthrates
"Birthrates in rural areas of Central Asia are now 36-42 per thousand.
In the rural areas of the country as a whole they are only 22.8 per
thousand. According to projections, in the next five years a significant
decrease in the rate of natural increase of the population of this region is
not expected."
o on the development of squatter settlements
"The growth in rural population density in the valleys of cotton growing
regions is reaching a critical level, promoting the migration of a certain
segment of the population to less densely populated regions. The migration is
marked by the formation of rural-urban agglomerations in rayons. The newly
settled villages--especially the mountain villages--are outside of the sphere
of influence of the planning and economic organs of the region. In
Tadzhikistan alone, according to incomplete data, nearly 300 of such villages
can be counted. They lack enterprises and facilities to provide a social
infrastructure. Many of them lack electricity and are not even connected by
roads with other, more developed types of settlements."
"One of the features of the labor surplus countryside is the low
territorial mobility of the population. Sociological research shows that in
Dushanbe only 8.2 percent of the working youth are those who have migrated
Komnunist Uzbekistana No 7, July 1986
o on the growth of private activity
"In the rural areas of the republic one in four, and in Andizhan,
Fergana, and Kashdadarya oblasts nearly one in three of the able-bodied
population is occupied with home work or tending private plots. In some
mountain and foothill areas of Uzbekistan where the population is engaged
primarily in animal husbandry, the situation is even worse: half or more of
the working-age population is not employed in the public sector."
I. ALYABYEVA, ZVEZDA VOSTOKA NO 8, AUGUST 1986...
o on overmanning and depressed labor productivity
"In contrast... to the Russian countryside, here children prefer to stay
on the land of their parents, taking an already well-trodden path. Today in
the Andizhan countryside high population density affects the earnings of the
peasants, lowers their labor and social activity, and develops an 'anti-
mechanization mood.' In certain rayons the average load for one cotton
25X1
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harvesting machine is 20-30 tons, while on a few farms they are not used at
all...In general in the oblast, inall of its sectors, labor productivity
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EMPLOYMENT TRENDS BY MAJOR SECTOR
Low labor productivity and a high percentage of manual work dictate the
maintenance of a large agricultural labor force. The decline of employment
in Soviet agriculture has been markedly slow for a developed country.
Employment in socialized agriculture decreased at an average annual rate of
less than one-half of one percent during.1971-85 (figure 8). In 1985, state
and collective farms accounted for a 19.2 percent share of total employment in
the socialized economy. If private agricultural activities are taken into
account this proportion grows to 25.2 percent.
Gorbachev hopes to turn this situation around by accelerating the
mechanization of agriculture; he argues that this could result in the release
of over 10 million workers by the year 2000. This would represent a
tremendous acceleration in the decline of agricultural labor. In the previous
fifteen-year period--1971-1985--the number of workers in socialized
agriculture decreased by only 1.4 million. The total decrease of employment
in agriculture--including private activities--was 2.4 million. If Go?rbachev's
goal is to be achieved, major improvements will be needed in the quantity,
quality and assortment of Soviet agricultural machinery, storage and
maintenance facilities, and incentives for farms to use the equipment
efficiently.
In the nonagricultural sphere, average annual employment in the service
sector has been growing at a comparatively faster rate than other sectors of
the economy. Between 1970 and 1985 it increased at an average annual rate of
1.2 percent as compared to an average annual increase of 0.8 percent in
industry (table 5).
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25X1 j
Figure 8
USSR: Employment in Socialized Agriculture
Compared to Total Civilian Employment
150 ........,..
man years
Civilian
Employment
Socialized
Agriculture
0 -1 -r------ I -----~
-x
1975
Source: S. Rapawy, "Estimates and Protections of the Labor Force and Civilian Employment in
the USSR: 1950 to 2000," Center for In ernational Research. Bureau of the Census, September 1986.
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USSR: Employmenta
(thousands)
1970
1975
1970
1981 1
1982
1983
1984
1985
Civilian Employmentb
107,186
117,560
125,998
127,161.
128,263
.129,052
129,829
130,300
Industry
31,593
34,054
36,891
37,236
37,610
37,830
37,957
38,103
Indust. Materialsc
8,069
8,320
8,667
8,696
8,792
8,844
8,826
8,806
Fuels (incls Petroch)
1,907
1,852
2,009
2,057
2,091
2,105
2,101
2,135
Electric Power
633
686
785
799
823
837
853
872
Machinery
12,017
13,816
15,437
15,574
15,735
15,833
15,948
16,047
Consumer Goodsd
7,920
8,124
8,458
8,517
8,511
8,459
8,452
8,376
Construction
9,052
10,574
11,240
11,298
11,299
11,315
11,349
11,492
Agriculturee
26,419
25,921
25,150
25,014
25,119
25,165
25,206
25,040
Transport & Commo.
9,315
10,743
11,958
12,172
12,337
12,438
12,487
12,549
Trade & Servicesf
29,376
34,565
38,865
39,530
39,940
40,309
40,784
41,336
Military Manpower
5,081
5,638
5,941
5,970
6,021
6,034
6,044
6,018
average annu
al growth
rate p
ercent
1971-75
1976-80
1981-85
1983
1984
1985
Able-bodied populationg
1.7
1.5
0.4
0.3
0.2
0.2
Civilian Employment
1.9
1.4
0.7
0.6
0.6
0.4
Industry
1.5
1.6
0.6
0.6
0.3
0.4
Industrial Materials
0.6
0.8
0.3
0.6
-0.2
-0.2-
Fuels
-0.6
1.6
1.2
0.7
-0.2'
1.6
Electric Power
1.6
2.7
2.1
1.7
1.9
2.2
Machinery
2.8
2.2
0.8
0.6
0.7
0.6
Consumer goods
0.5
0.8
-0.2
-0.2
-0.5
-0.9
Construction
3.2
1.2
0.4
0.1
0.3
1.3
Agriculture
-0.4
-0.6
0.2
0.2
0.2
-0.7
Transport and Commo.
2.9
2.2
1.0
0.8
0.4
0.5
Trade and Services
3.3
2.4
1.2
0.9
1.2
1.3
Military Manpower
2.1
1.0
0.3
0.2
0.2
-0.4
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(Table 5 continued)
a Employment data are from various issues of Narkhoz. Breakdowns for
employment by branch of industry were done by the Center for International
Research, Bureau of the Census.
b Civilian employment is the average annual number of persons working in all
branches of the national economy--wage and salary workers and collective
farmers.
C Includes chemicals, ferrous metals, nonferrous metals, construction
materials, and wood, pulp, and paper.
d Includes light and food industry.
e Excludes private agriculture, but includes nonagricultural employment
subordinate to agricultural enterprises.
f Includes trade, public dining, material-technical supply and sales,
procurement; housing, communal economy, and personal services; health
services; education; culture; art; science, and scientific services; credit
and insurance organizations; and government administration.
g Males aged 16-59 and females aged 16-54. Figures are estimated by Center
for International Research, Bureau of the Census.
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Within industry, the energy sector has shown the highest employment
growth. Employment in the electric power industry grew at an average of over
2 percent per year during 1971-85. Employment growth in the fuels sector,
which declined in the early seventies, picked up to an average of 1.6 percent
per year in 1976-80, and 1.2 percent in 1981-1985. The effect of the slowdown
in labor force growth was thus magnified for the remaining sectors of
industry, especially the consumer oriented branches. In the eighties the
average annual growth rate for employment in the machinery sector has been
less than half the high rate achieved in the seventies--falling from 2.2
percent per year in 1976-80 to 0.8 percent per year in 1981-85. Employment in
the consumer goods sector, which includes the light and food industries, has
declined at a rate of 0.2 percent per year since 1980.
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To return to higher rates of economic growth, Moscow must rely on gains
in labor productivity to make up for the current slow expansion of labor
supply. Gorbachev has approached the problem on several levels:
o Efforts to improve labor utilization--primarily administrative measures
that attempt to make it more difficult for enterprises to hoard labor.
o Mechanization. Moscow hopes that the mechanization of labor intensive
processes can free 20 million workers from manual labor by the year
2000. This goal is to be realized largely through production of more
modern equipment.
o 'Human factor' policies. Moscow is counting on its discipline and
temperance campaigns to reduce shirking; while wage reform is to
increase incentives for good performance.
o Management and planning reforms to improve incentives.
Efforts to Improve Labor Utilization
Moscow has long tried to control poor labor utilization through
administrative measures, better incentives to save labor, and improved
management and planning. Gorbachev has intensified this effort through a
number of initiatives including:
o Work position certification. Under this program, begun in 1985, all
enterprises are tasked with a systematic inventory and evaluation of
their labor and equipment--with the aim of eliminating low productivity
jobs and obsolete machinery. The inventory is also to provide planners
with the information necessary to draw up regional balances in supply
and demand for labor--and to more critically evaluate ministries'
requests for labor.
o Shchekino-type schemes. Under these programs--variations on the
experiment begun in 1965 in the Shchekino Chemical Combine--enterprises
are assured a fixed wage fund and encouraged to release their least
productive workers and use the resulting savings in wages to reward
their most productive personnel. The Shchekino system is factored into
the overall reform experiment in the Soviet Union. It is the basis for
the new pay system recently introduced in scientific research
institutes as well as the staff-cutting scheme recently mandated for
all Soviet railways.
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Gorbachev's programs will be difficult to implement successfully. In the
case of work certification, enterprises are essentially being asked to
regulate themselves--certification committees are to be formed within the
enterprise. There have been complaints of footdragging on the part of both
enterprises and some ministries. There is also some doubt as to the ability
of administrators and planners to manage the mass of paperwork generated by
the program. Previous attempts to implement Shchekino-type labor saving
measures on a wide scale have had disappointing results. When such
experiments spread they often run into opposition and interference from
ministries and state committees who tend to protect the status quo.
Nevertheless, the program may lead to some marginal improvements in labor
utilization.
Mechanization
Every Soviet regime since Khrushchev has tried to reduce the size of the
work force engaged in manual labor. While slow progress has been made,
Moscow's current plan to reduce the number of manual laborers by 20 million by
the year 2000 seems overly ambitious (table 6). Five million manual workers
are to be released during the 12th Five-Year Plan--as compared to a reported
reduction of less than half that figure in 1981-85. This acceleration in the
reduction of manual labor would require both increased production of
materials-handling equipment and greater incentives for ministries and
enterprises to use investment funds to save labor. While Gorbachev has
sharply increased investment in machine building, thus far Moscow's attention
seems to be focused more on increased production of high technology robots and
advanced machine tools rather than relatively simple materials-handling
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Table 6
Manual Labor in Soviet Industry, Agriculture and Construction
(.Percent)
Of which those who perform:
All
Workers
Work
With
Machines
Manual
Labor
Maintenance and
Repair Work
Industry
1975
100
45.7
41.6
12.7
1982
100
48.8
37.4
13.8
1985
100
51.0
34.9
14.1
Agriculture
Kolkhoz
crop-cultivation
1982
100
23.6
75.2
1.2
1985
100
25.5
73.3
1.2
animal husbandry
1982
100
23.5
73.9
2.6
1985
100
28.3
68.9
3.2
Sovkhoz
crop-cultivation
1975
100
24.9
75.1
--
1982
100
27.0
72.1
1.8
1985
100
28.5
69.8
1.7
animal husbandry
1975
100
17.7
78.8
3.5
1982
100
19.4
76.9
3.7
1985
100
23.6
72.4
4.0
Construction
1975
100
36.8
59.9
3.3
1982
100
38.8
57.4
3.8
1985
100
40.0
56.4
3.6
Source: Narkhoz 1985.
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Gorbachev remarks during Far East Tour, July 1986:
"Some of the programs and measures are just a collection of superficial and
insufficiently thought out plans for the introduction of new equipment and
technology, and only one-third of them have a direct effect on the reduction
of manual labor, whose proportion in machine building is up to 40 percent."
Report of the RSFSR Government Presidium, September 17, 1986:
"It was noted that despite certain positive results achieved in the sphere of
speeding up scientific and technical progress, these results do not constitute
a qualitative breakthrough and the restructuring process is still moving
slowly. Labor productivity growth rates have slowed down in industry and the
plan to reduce the proportion of manual labor is not being fulfilled. Thus,
in the RSFSR Ministry of the Fish Industry the proportion of manual labor is
54.5 percent and in the RSFSR Ministry of the River Fleet it is 51.5
percent." F__1
N.N. Slyunkov, Belorussian First Secretary, at the 30 July 1986 republic
plenum:
"The forecast.. .of scientific and technical progress in the Belorussian SSR
chemical industry complex envisages a pace of renewal--if one may use the
expression--for the equipment pool that will increase the service life of
equipment 2-2.5 times in 20 years. And the underlying pace of mechanization
will produce only a 2 to 5 percent reduction in manual labor." (U)
Boris Yeltsin in a 20 July 1986 address to Moscow Gorkom plenum criticizing
award-winning enterprises of the Ministry of Instrument Making and Automation
Equipment:
"And in practice? Here, for years on end, they produce obsolete types of
output which lag substantially behind the best foreign models. New machinery
is assimilated only on a small scale and manual labor prevails in
production. That is the example of acceleration which our frontrunners
set."
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equipment (such as fork lifts and gantry cranes) which could free up many more
workers at a seemingly lower cost.
Gorbachev has yet to find an effective way to instill a labor saving
mentality in ministry officials and enterprise managers. Soviet leaders
complain that requirements for large numbers of manual laborers are still
being 'built in' to ministries' plans for new construction and reconstruction
of plants, and that enterprise managers are still reluctant to release
redundant workers.
"Human Factor" Policies
Gorbachev's so-called "human factor" policies include temperance and
discipline campaigns to spur greater work effort. Tightened worker discipline
probably raised labor productivity both in 1986 and earlier during Andropov's
discipline campaign in 1983-84. Such boosts become increasingly difficult to
sustain however as the most obvious shortcomings are overcome. Moreover,
attempts to further tighten discipline eventually become counterproductive if
workers view them as too repressive.
The most visible discipline policy is the temperance campaign. When
Gorbachev came into power, alcohol abuse had become a major drag on growth of
labor productivity in the Soviet Union. Alcohol figured prominently in
absenteeism, shoddy workmanship, and accidents on the job; and it had damaged
the health of a large segment of the labor force, contributing to the rise in
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mortality rates among working-age men. In May 1985 Gorbachev initiated a
temperance campaign which included measures to cut alcohol production, reduce
liquor store hours, and stiffen penalities for alcohol-related crimes. 25X1
The temperance campaign has had some success--cutting alcohol consumption
by an estimated 20 percent and reducing drunkenness and absenteeism. The
campaign probably contributed to the improvement in labor productivity in
1986. But the temperance drive has also been accompanied by certain costs:
popular resentment, loss of state revenue from the sale of alcoholic
.beverages, and the expansion of illegal activities related to the production,
distribution and sale of alcohol--consumption of illegal home brew may have
jumped by more than 40 percent. It will be difficult for the regime to
maintain strict temperance measures for an indefinite period of time. There
are already signs that the temperance campaign is letting up in some areas.
In late October liquor stores hours in Moscow were extended to cut down on
embarrassingly long lines; and in November alcohol was reintroduced in Moscow
restaurants. 25X1
Wage Reform
The implementation of a new wage system in Soviet industry began on
January 1, 1987. The new system is designed to improve incentives to perform
well and acquire advanced skills by reversing the long-standing trend towards
wage-leveling. Currently many trained professionals make little more than
blue collar workers. Under the new system sharply higher wage increases would
go to those with skills vital to the modernization program--top engineers,
designers and skilled labor in machine-building. Wage increases are to be
funded by the enterprises themselves--through increases in productivity and
through savings in the wage fund created by releasing excess labor.
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SOVIET'S CITE BENEFITS, AND COSTS, OF TEMPERANCE CAMPAIGN
According to M.A. Korolev, Chief of the USSR Central Statistical
Administration, Izvestiya 12 October 1986:
o In year 1 of the temperance campaign the number of fatal accidents
connected with drunkenness at the work place fell by 20 percent. 25X1
o In the first 6 months of 1986 losses of work time through absenteeism
were reduced by one-third in industry and by 40 percent in
construction.
o The number of road and transport accidents caused by drunk drivers fell
by 15 percent. F__1 25X1
o On December 3 1986, Boris Zabotin, deputy minister of internal affairs,
said that illicit sales of alcohol had risen 42 percent, while
instances of private wine-making had tripled.
o In a 10 November speech at the CPSU Central Committee, Yegor Ligachev
noted that drinking has gone indoors--with people increasingly drinking
at home rather than in public. ~
o The Soviet press tells of people resorting to home brew, cologne, and
even industrial preparations to satisfy their need for alcohol. In
parts of the country perfume outlets now open the same time as liquor
stores--2 p.m.
o By the beginning of 1987, cutting alcohol sales had cost the state more
than 10 billion rubles in lost tax revenue.
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The effect of changes in the wage and incentive structure may not be
evident for some time. Implementation of.the new system is likely to be
slowed by the stipulation that enterprises must fund the wage increases out of
their own resources.
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SUBJECT: Strains in the Soviet Labor Force
Distribution: Strains in the Soviet Labor Force
Distribution:
Internal
1-D/SOVA (4E58 HQ)
2-DD/SOYA (4E58 HQ)
3-NI0/USSR (7E47 HQ)
4-NI0/Economics (7E47 HQ)
5-NI0/Warning (7E47 HQ)
6-DDI Registry (7E47 HQ)
7-NIC/AG (7E47 HQ)
8-Ch, Product Evaluation Staff (6F44 HQ)
9-Ch, Intelligence Liaison Staff (7G50 HQ)
10-CPAS/CSG (7F30 HQ)
11-OIR/LDSD (1E4810 HQ)
12-FBIS/AG (1014 Key Bldg)
13-OLDA/UE (1G43 HQ)
14-19-CPAS/IMS/CB (7G07 HQ)
20-C/IMC/CPAS (7G25 HQ)
21-SA/Dissemination Analysis/CPAS (7G50 HQ)
22-DDO/SE (5B02 HQ)
25-SOVA/ES/CIB (4E66
26-C/SOVA/NIG (4E65 HQ)
27-C/SOVA/DEIG (5E56 HQ)
28-C/SOYA/RIG (5E25 HQ)
29-C/SOVA/SIG (4E31 HQ)
30-C/SOVA/DEIG/DED (5E56 HQ)
31-C/SOVA/DEIG/DID (4E31 HQ)
32-C/SOVA/NIG/DPD (4E65 HQ)
33-C/SOVA/NIG/EPD (5E66 HQ)
34-SOVA/NIG/EPD/IA (5E66 HQ)
35-SOVA/NIG/EPD/RM (5E66 HQ)
36-SOVA/NIG/EPD/FT (5E66 HQ)
37-43-SOVA/NIG/EPD/EP (5E66 HQ)
External
45-Col. Tyrus W. Cobb, Director, East-West Section,
European and Soviet Affairs, National Security
Council (373 EOB)
46-Paula J. Dobriansky, European and Soviet Affairs,
National Security Council (368 EOB)
w r T
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48~ IDean, Defense Intelligence
College, DIAC (C3-124 Bolling AFB)
49-Dr. Donald Goldstein, Principal Director,
International Economics, Trade, and Security
Policy, Department of Defense (4C76 Pentagon)
51-Robert H. Baraz, Director, Office of Analysis for
the Soviet Union and Eastern Europe, Bureau of
Intelligence and Research, Department of State (4758
State)
52-John Danylyk, Chief, Communist Economic Relations
Division, Bureau of Intelligence and Research,
Department of State (8662 State)
53-Robert W. Clark, Deputy Director (Economic Affairs),
Office of Soviet Union Affairs, Bureau of European
and Canadian Affairs, Department of State (4223 State)
54-Ralph Lindstrom, Director, Office of Economic
Analysis, Bureau of Intelligence and Research,
Department of State (8722 State)
55-Robert F. Ober, Economic Counselor, US Embassy, Moscow,
USSR, Department of State
56-Kenneth Yalowitz, Economic Counselor, US Mission
to NATO, Brussels, Belgium, Department of State
57-Jack Brougher, Jr., Chief, USSR Division, Office of
Eastern Europe and Soviet Affairs, Department of
Commerce (6854 Main Commerce)
58-Susanne Lotarski, Director, Office of Eastern Europe and
Soviet Affairs, Department of Commerce (3410 Main
Commerce)
59-Byron L. Jackson, Director, Office of Intelligence
Liaison, Department of Commerce (6854 Main Commerce)
60-Douglas R. Mulholland, Special Assistant to the
Secretary (National Security), Department of the
Treasury (4324 Main Treasury)
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