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BOX-FOLDER-REPORT: 67-2-18
TITLE:             Purchasing Power of Workers in the Soviet Union
BY:                
COUNTRY:           Soviet Union
ORIGINAL SUBJECT:  

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X/5 RUSS (1) -- PURCHASING POWER OF WORKERS IN THE SOVIET UNION	F-108

Table 1. Approximate worktime required to buy a weekly supply of selected foods for a 4-person family at state-fixed prices
in Moscow, selected dates [1]

Food Items	Price (in rubles)				Quantity consumed per week by a family of 4 [5]	Approximate worktime [2] required for a week's consumption
	1928[3]	1953[4]	1962[4]	1970[4]		In hours				1953 as percent of 1928	1962 as percent of 1928	1970 as percent of 1928
						1928	1953	1962	1970
Rye bread, 1 kilogram (2.2 pounds)	0.080	1.35	0.13	0.14	9.84 Kilograms	2.71	4.52	2.84	1.97	167	105	73
Potatoes, 1 Kilogram	.085	.75	.10	.10	12.16 kilograms	3.56	3.10	2.70	1.74	87	76	49
Beef, 1 kilogram	.870	12.60	1.60	1.60	3.68 kilograms	11.04	15.77	13.08	8.41	143	118	76
Butter, 1 kilogram	2.433	26.75	3.60	3.60	.44 kilograms	3.69	4.00	3.52	2.26	108	95	61
Sugar, 14 kilogram	.620	9.09	.89	1.04	180 kilograms	3.85	5.57	3.56	2.67	145	92	69
Milk, 1 liter (1.06 quarts)	.063	2.20	.29	6.32	4.96 liters	1.08	3.71	3.20	2.27	344	296	210
Eggs, per 10	.200	6.88	.80	.90	6.4 eggs	.44	1.50	1.14	.82	341	259	186
All 7 foods						26.37	38.17	30.04	20.14	145	114	76

[1] April 1, 1928; April 1, 1953; June 15.19S2; July 1,1970.

[2] Work time is computed by multiplying quantity consumed by price and dividing
the product by average hourly earnings. In 1928, official national average earnings
were 703 rubles a year (figure given in Trud v SSSR [Labor in U.S.S.R.], Moscow, 1936,
p. 17), or 0.29 rubles an hour. In 1953, the estimated average earnings were about 600
rubles a month, or 2.94 rubles an hour, according to an. analysis of scattered data
appearing in the Soviet press. In June 1962. estimated average earnings of
manufacturing workers, in terms of the revaluated ruble, were about 80 rubles a month, or 0.45
rubies an hour; and in July 1970, the estimated average earnings were 120 rubles a
month, or about 0.70 rubles an hour.

[3] Official Soviet prices from the People's Commissarial of Labor, as transmitted to
the International Labor Office (see International Labor Review, October-November
1928, pp. 657-660). These prices were lower than those in private trade, which played
a larger role in workers' purchases, and their use may somewhat inflate the workers'
real purchasing power at that time. See Naum Jasny, The Soviet Economy During
the Plan Era (Stanford, Stanford University Press, 1951), p. 105.

[4] Based on published reports of U.S. and European visitors to the U.S.S.R. and on
information appearing in the Soviet press.

[5]Weekly consumption figures per person in 1928 from International Labor Review,
ibid., p. 659; the average worker's family in 1928 consisted of 4 persons. See Solomon
Schwarz, Labor in the Soviet Union (New York. Praeger, 1952), p. 145. The same
percent relationship between 1928 and 1966 would be obtained if the quantities for 1
person were used instead of the quantities for a family of 4 In 1959, a sample of 94
families had an average of 3.86 members per family F. Ya. Aleshina, "Social changes
in working-class families over a period of nine years," in G. V. Osipov, ed., Industry
and Labor [n the U.S.S.R. (London, Tavistock Publications, 1966), p. 61.

[6] Milk was usually available only in half-liter cartons, at 0.16 rubles a carton.

contributed to the higher increases in recent
years. The increase in the monthly minimum
wage accounted for most of the increase of over
7.5 percent in 1968, a postwar record. The increase
in average earnings during 1970 was 4.0 percent.[4]

A wide range in earnings exists in the Soviet
Union, as is illustrated in the listing of earnings
for selected types of salaried and wage earners in
1970 (table 2). The range has narrowed noticeably
since I960,[5] primarily because of two increases in
the minimum monthly wage which raised it from
27 rubles (270 old rubles)[6] to 60 rubles (or US$30
to $67). The policy of the Government has been
to keep the highest salaries fixed and to increase
salaries and wages on the lower levels. Wage
earners in Soviet industry are classified by skill
into 6, 7, 8, or 10 progressive wage categories,
depending on the industry.[7] The range of earnings
for a specific occupation usually depends on the
industry; as a rule, workers doing similar work
are paid more in heavy industry than in light
industry.[8]

Consumer goods prices

No comprehensive list of prices of basic
consumer goods has been published in the Soviet
Union since the appearance in Pravda on
December 16, 1947, of the price-fixing decree of the
Council of Ministers. However, in recent years,
prices of durable consumer goods have appeared
in official tables of prizes won in State lotteries.

A list of goods and prices has been selected (except
for the Fiat automobile) from the lottery prize
lists published in Trud on July 15 and October 16,
1970. (See (able 3.) The articles were described
only occasionally by brand name; consequently,
a comparison cannot be made with similar U.S.
goods. However, calculations have been made
showing the approximate worktime required of
the average Soviet wage and salary earner to buy
these goods, on the basis of average gross monthly
earnings in July 1970 of 120 rubles (US$132) or
about 0.70 rubies (US$0.78) an hour.

Moscow appears to have the lowest prices for
consumer goods. In most other cities and towns,
prices reportedly have been 10 to 50 percent higher
than in Moscow, in some cases more than twice as
high.[9] In hardship areas (such as Siberia and the
Far North), workers are at least partially
compensated by payment of higher wages and salaries
than in Moscow.

U.S. and U.S.S.R. real earnings

The average Moscow worker has to work much
longer than the average New York City worker to
buy comparable basic and other consumer goods,
as shown in table 4. For potatoes, he has to work
twice as long; for white bread, 3 times; for beef,
31/2 times; for milk, 41/2 times; for eggs, 71/2 times;
for butter, 81/2 times; and for sugar, 16 times. For
clothing he has to work 6 to 10 times as long. For
the other commodities listed, he has to work from

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X/5 RUSS (2) -- PURCHASING POWER OF WORKERS IN THE SOVIET UNION	F-109

twice as long (cigarettes) to 8 times as long
(toilet soap).

The difference in worktime required to buy
consumer goods in Moscow and Now York City
appears to have decreased for all commodities
listed in table 2 (except milk) since August 15,
1959, the date for which a Moscow-New York
City comparison was made in this magazine.[10] For
foods, Moscow worktime required, as a percent of
New York City worktime required, decreased
most for sugar (from 2,100 to 1,600 percent) and
potatoes (from 350 to 200 percent); the decrease
was small for beef (from 400 to 350 percent), butter
(from 900 to 850 percent), and eggs (from 800 to
750 percent). For milk, the difference increased
from 400 to 450 percent.

The improvement in the Moscow workers'
clothing situation was large in all cases. For
example, Moscow worktime required, as a percent
of New York City worktime required, decreased
most for a man's white cotton shirt (from 1,600
to 650 percent), a man's woolen suit (from 1,100
to 600 percent), and women's leather shoes (from
1,100 to 600 percent). As for other commodities,
there was a decrease in all cases; toilet soap (from
1,050 to 800 percent), cigarettes (from 400 to 200
percent), and vodka (from 450 to 400 percent).

A 1970 report of the Joint Economic
Committee of Congress shows that, in 1968, Soviet
per capita consumption of consumer goods and
services was about 33 percent of the U.S. level.[11]
This also would indicate some improvement in
recent years, for a 1963 article in this magazine
showed that the real income of the average
Soviet citizen was about one-quarter to
one-third that of the average American.[12]

Although Soviet consumers spend much more
for goods than do Americans, they are provided
with a number of free services, such as medical
service, education, and pensions. They also have
the benefit of low housing rentals, amounting
usually to about 5 percent of their monthly
earnings; however, their living quarters are
usually cramped. In the United States in 1969,
the average rental for all renting urban families
was about 15 percent of monthly earnings, but
the average family lived in four or five rooms,
with its own kitchen and bathroom.[13] The Soviet
Government claimed that in 1970 the value of
the free consumer services and other benefits
mounted to 42 rubles (US$47) a month, or
84.4 percent of average monthly earnings.[14]

Table 2. Monthly earnings of selected groups of salaried
and wage earners, 1970

Occupation	Monthly earnings (in rubles[1])

Scientist (academician)	800-1,500
Minister (head of Government ministry or department)	700
Opera star	[2] 500-2,000
Professor (science)	600-1,000
Professor (medicine)	400-600
Docent (assistant professor)	300-500
Manager of enterprise or establishment	[3] 100-1,000
Engineer	90-200
Physician, staff	[4] 90-170
Teacher, high school	[4] 80-137
Teacher, primary school	[4] 80-137
Technician	80-200
Worker, skilled	100-250
Worker, semiskilled	70-90
Worker, unskilled	60-70

[1] The official tourist rate of exchange, as fixed by the Soviet Government, Is 1 ruble =
US$1.11. Tourists have reported this to be a fair rate of exchange on an overall basis.

[2] The top salary at the Bolshol Theater has been reported as 500 rubles a month.
Outside appearances Increase the artist's income.

[3] Depending mostly on the sire of the enterprise. For example, In small-scale local
Industry the salaries of directors of machine-construction and metal working enterprises
range from 100 to 300 rubles a month. See I. L. Kukulevich, Organizatslya Zarabotnol
platy na predpriyatiyakh mestnol promyshiennosti. (The Organization of Wages in
Enterprises of the Local Industry). (Moscow. 1970), p. 100.

[4] Pravda [Communist Party daily], July 14, 1964, p. 4.

The relatively high cost of foods (and nonfoods,
shown in table 4) may partially explain the high
proportion (50 percent) of women among wage
and salary earners.[15] In the United States, the
corresponding proportion in 1969 was 41.3.[16]

Availability of goods and services

Despite an increase over the years, the Soviet
worker's purchasing power has been affected by
the limited availability of consumer goods and
services. According to statements in the Soviet
press, particularly from the recent annual
economic reports of the Central Statistical
Administration of the U.S.S.R. Council of Ministers,
the Soviet economy continues to have considerable
shortages of various consumer goods-especially
durable ones, such as refrigerators, automobiles,
furniture, and house building materials. As for
everyday minor consumer goods, Pravda (in an
editorial of September 15, 1970) reported the
steady receipt of complaints from its readers about
the absence in stores of glassware and chinaware,
knives and forks, blankets, bath towels, oilcloth,
kitchenware, and other goods in wide demand; it
called for a fundamental improvement in the
production of consumer goods and for a survey of
consumer demand.

Possession of sufficient money to meet the
purchase price is no assurance of getting a scarce
commodity, such as an automobile or a
refrigerator. Usually, a person who has been successful in
getting his name on the restricted waiting list

(pto)

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X/5 RUSS (3) -- PURCHASING POWER OF WORKERS IN THE SOVIET UNION	F-110

Table 3. Prices of selected durable consumer goods and
worktime required for purchase, 1970

Commodity	Price (in rubles)	Approximate worktime required for purchase
Automobile, "Moskvich-412"	4,936	41 months
Automobile, Flat[1]	5,500	46 months
Refrigerator	250	2 months
Washing machine[2]	85	3 weeks
Vacuum cleaner	45	1 week, 3 days
Motor scooter. "Vyatka"	350	3 months
Motorcycle, "M-105"	350	3 months
Bicycle, man's	50	1 week, 4 days
Bicycle, boy's "Shkolnik"	29.80	1 weeks
Tape recorder, "Obita-2"	210	7 weeks
Radio set, "Mikron," lowest-priced	25.95	5 workdays
Electric razor, "Kharkov"	22.50	4 workdays

[1] About 30,000 Soviet-made Italian Flats were produced in 1970; the goal is about
200,000 in 1971. The total number of Soviet-»made passenger cars manufactured in 1970
was 344,000.

[2] This would appear to be a simple machine without any automatic features. A
"semi-automatic" washing machine (with a spin-dry feature), selling for 140 rubles (about
USJ155) is described as time-consuming and very inefficient in the New York Times,
November 29,1970.

for the purchase of a car has to wait 2 to 4 years
before he gets it.

Meat and vegetables continue to be in short
supply Millions of Soviet citizens still cultivate
private fruit and vegetable gardens to meet their
food needs.[17] In 1968, the per capita annual
consumption of red meat (without fats) was reported
as 77 pounds in the Soviet Union and 183 pounds
in the United States.[18] The Soviets plan a per
capita increase in meat consumption of 12
kilograms (12.4 lbs.) between 1971 and 1975.[19]

Consumer services in Soviet stores, repair shops,
laundries, restaurants, and for repairs in homes
continue to be inadequate. In late 1970, the
Central Committee of the trade union workers in
consumer goods and services industries noted that
in order to tailor an outer garment it usually
took 3 to 4 months, instead of the prescribed
20-25 days. The repair of footwear frequently
took twice as long as prescribed.[20] Shortages in
materials, equipment, and servicing personnel
reportedly account for this,[21] According to Trud,
only about 4 to 10 percent of the needed servicing
personnel are being trained. There appears to be
a lack of enthusiasm among Soviet youth for
vocations in consumer services.[22]

Soviet housing has been notorious for its
scarcity, poor quality of construction, and
problems of maintenance, primarily caused by
shortages of skilled workers and building materials.
Although housing conditions have improved
considerably for millions of families in recent years,[23]
the general housing situation remains tight. An
example of the kind of progress made is given by
the Moscow daily Vechernaya Pravda, January 15,
1966, which reported that an old building at 17
Bakuninskaya Street, whore "five to six families
had lived in one apartment" and shared one
kitchen, had just been reconstructed to provide
individual apartments with separate kitchens.

The average per capita floor space for city
dwellers at the end of 1966 was 10 square meters
(about 108 square feet),[24] the 1971 economic plan
aims to raise this average to 11.2 square meters
(about 121 square feet).[25] At the present time,
only families with less than 5 square meters
(about 54 square feet) of floor space per capita
and newlyweds are permitted to put their names
on lists for new housing, but there is a long wait--
at least 3 years-before new housing is obtained.
The existence of large amounts of personal
savings in banks indicates the limited
availability for many Soviet citizens of durable goods,
as well as their refusal to buy undesirable goods,
which are reported to be piling up in
store-houses. During the period 1905-69, the volume
of savings in banks more than doubled. The
savings in 80 million bank accounts on
December 31, 1970, amounted to more than 46 billion
rubles (US$51 billion), which included a
21-percent increase of 8 billion rubles (US$8.9
billion) during 1970. The average savings account
in 1970 was 575 rubles (US$639), or about 5
months' earnings for the average worker.[26]

The Soviet Government apparently does not
intend to increase income taxes, which are
proportionately higher for low earners than high
earners. The first 60 rabies (US$67) of monthly
earnings are exempt from tax. The basic income
tax rate on earnings from 61 rubles (US$68)
through 100 rubles (US$111) ranges from 20 to 29
percent. Earnings over 100 rubles are taxed at the
rate of only 13 percent. In addition to the basic
tax there is a tax on the total earnings of bachelors
and childless couples, which ranges from 0.41
percent of total earnings of 61 rubles (US$68) a
month to 6.0 percent of earnings over 80 rubles
(US$89) a month.[27]

Policies for improving living conditions

The Soviet Government has been striving to
improve the material well-being of its citizens by

[page 5]

missing page

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X/5 JRUSS [5] -- PURCHASING POWER OF WORKERS IN THE SOVIET UNION	F-112

(especially laundries and repair shops) to the
Population." In 196S, a decree directed
establishments in heavy industry to expand their
production of consumer goods as well as materials and
equipment for consumer goods industries. In
January 1970, the Government announced that
it had provided for a considerable expansion of
consumer services, mostly repairs and deliveries
from stores, during the next 5-year plan period
(1971-75). And, on July 21, 1970, Pravda
announced the decree "Concerning Measures to
Increase the Production and Improve the Storage of
Potatoes, Vegetables, and Fruits, and to Assure
these Products for the Population."

The 1966-70 5-year plan provided for a doubling
of fruit production, in order to reduce the
prevailing large imports of fruits and fruit products.
During the same period, over 1,500 new factories
and plants were reported built for the food
processing industry. In 1970, the volume of production
in the food industry was expected to increase by
nearly 5 percent.[32] Despite this, in October 1970,
the Soviet minister of the food industry pointed out
the serious need for a, greater volume and a greater
variety of processed foods.23 The 1971 State budget
provides for a 12.4-pereent increase over 1970 in
investments in agricultural development.[34]

Perhaps the most dramatic measure indicative
of the Government's intent to speed up
improvement of the consumer goods situation was the
major change in its production policy in 1968,
when, according to plan, the annual rate of growth
in output of consumer goods (8.3 percent)
exceeded, for the first time since the beginning of
the 5-year plans in 1928, that of capital goods
(8.0 percent). This new policy continued in force
during 1969, when the production increases were
7,2 percent for consumer goods and 6.9 percent for
capital goods; the increase in production in 1970
was 8.5 percent for consumer goods and 8.2
percent for capital goods.

Soviet shoppers still suffer "enormous losses
of time in queues."[35] In 1969, Pravda reported
that 6Vofy shopper spent about 300 to 400 hours
a year in the stores.[36] To reduce the time spent in
queues (which are caused primarily by a shortage
of store personnel), the introduction of self-service
stores with prepackaged goods is being promoted.
During 1968 and 1969, over 4,000 new self-service
stores were opened in cities.[37] However, in
mid-1970 only 7 percent of the country's nonfood
stores and only 1 in 10 of the food stores were
self-service stores.[38] The increase in the number
of self-service stores has been hindered by the
limited availability of suit-able quarters and by
the lack of packaged goods. There has been a
tendency in recent years to establish new
department stores away from centers of cities.

Some stores attached to factories have reduced
waiting time for workers by accepting orders in
advance and having the ordered goods ready for
pickup at quitting time.[39] To save time for workers,
many repair shops, laundries, tailor shops, barber
shops, and other consumer service shops have
been established at the places of work.[40]

The Soviet leaders are aware that faster
improvement in the consumer goods and services
situation will come only with the broader
introduction of modern equipment and production
methods; all modern means of communication
are being used constantly to convey this idea to
the mass of workers.

----------FOOT NOTES----------

[1] For a detailed discussion of price-wage relationships
in the period 1927-50, see Naum Jasny, "The Soviet
Price System," American Economic Review, December
1950, pp. 845-863.

[2] For earlier articles on the purchasing power of Soviet
workers in the postwar period, see Monthly Labor Review,
July 1953, pp. 705-708, April 1900, pp. 359-364, and
July 19GG, pp. 772-773.

[3] Ekonomicheskaya Gazzit. No. 11, March 1957, p. 4,
and No. 47, November 1970, p. 1.

[4] Trud [Labor, a trade union daily], February 4, 1971,
p. 1.

[5] Edmund Nash, "Purchasing Power of Workers in the
U.S.S.R.," Monthly Labor Review, April 1960, p. 362

[6] The Soviet ruble was revalued on January 1, 1961, at
the rate of 10 old rubles to I new ruble.

[7]See Labor in the U.S.S.R. (BLS Report 358, 1969),
pp. 11-12.

[8] Ibid., for a discussion on average monthly earning
by economic sector.

[9] P?? Khoziuislvv [Planned Economy, a monthly],
October 19C5, pp. 10, 14, and 17.

[10] Monthly Labor Review, April 1960, p. 362.

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X/5 RUSS (6) PURCHASING POWER OF WORKERS IN THE SOVIET UNION	F-113

[11] See "Consumer Welfare," Economic Performance and
the Military Burden in the Soviet Union (U.S. Senate,
Joint Economic Committee, Subcommittee on Foreign
Economic Policy, 91st Cong., 2d sess., 1970, Committee
Print).

[12] "Janet G. Chapman, "The Consumer in the Soviet
Union and the United States," Monthly Labor Review,
January 1963, p.11.

[13] Based on the 1960-61 Survey of Consumer Expenditures
(BLS Report 237-38, 1964), p. 14, and the BLS release
Three Budgets for an Urban Family of Four Persons--
Final Spring 1969 Estimates, December 1970, table 1.

[14] Trud, op. cit.

[15] For more about Soviet women workers, see Edmund
Nash, "The status of women in the U.S.S.R.," Monthly
Labor Review, June 1970, pp. 39-44

[16] Consumer Income, December 14, 1970, Current
Population Reports, No. 75 (U.S. Bureau of the Census), p. 133.

[17] Communist [a monthly of the Communist Party]
November 1965, p. 68, and September 1968, pp. 28-29.

[18] World Agricultural Production and Trade, Statistical
Report (U.S. Department of Agriculture, 1970, p.2.

[19] Moscow News, December 19-26, 1970, p. 2.

[20] Trud, December 16, 1970, p. 1.

[21] Voprosy Ekonomiki [Problems of Economics, a monthly],
September 1970, p. 54.

[22] Trud, November 21, 1970, p. 2.

[23] In 1970, 11.2 million persons reportedly had their
housing conditions improved to an unspecified degree.
Trud, February 4, 1971, p. 1.

[24] Strana Sovetov za 60 Let [50 Years of the Country of
the Soviets] (Moscow, 1967), p. 38.

[25] Pravda, December 9, 1970, p. 3.

[26] Trud, February 4, 1971, p. 1.

[27] Moscow News, February 26, 1966, p. 2; and V. A.
Tur, ed., Spravochnik po nalogam i sboram 8 naseleniya
[Handbook on Taxes and Duties on the Population]
(Moscow, 1968), pp. 16-17 and 72.

[28] Pravda, July 20, 1970, p. 1.

[29] Ibid., November 7, 1970, p. 2.

[30] Ibid., p. 3; also December 23, 1970, p. 1.

[31] For discussion, see Jerome A. Levine, "U.S.S.R.
Acts to Improve Meat and Dairy Procurement and
Processing," Foreign Agriculture, October 30, 1967, p. 7.

[32] Trud, October 18, 1970, p. 2.

[33] Ekonomicheskaya Gazeta, No. 42, October 1970, p. 4.

[34] Pravda, December 9, 1970, p. 4.

[35] Trud, October 9, 1970, p. 2.

[36] Pravda, May 14, 1969, p. 1. For more on this subject,
see Bernard Gwertzman, "Soviet Shoppers Spend Years
in Line," The New. York Times, May 13, 1969, p. 17.

[37] Trud, April 8, 1970, p. 2.

[38] Pravda, August 4, 1970, p. 1.

[39] Ibid., October 1, 1970, p. 3.

[40] Sotsialistickeskii Trud, March 1970, p. 113.

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