Western slant to Tito's economy

Press, 28 July 1976, Page 9

Western slant to Tito's economy

B”

JULIET PEARCE,

of

the observer Foreign News Service. Belgrade.

Disregarding the disapproval of orthodox Communists. Yugoslav's planners are pouring more capitalist lubricant into their economic machinery. The signs are unmistakable: Western companies are signing huge contracts. American businessmen — complete with attache cases and electric calculators — hold working sessions in Yugoslav resorts: Western methods are increasingly used in industry. Officially socialism is the password, and Yugoslavia still rates as a developing country. The Communist Party has the last word in economic matters aitnough over-all planning sets the framework rather than details. The system, although neither fish nor fowl has produced better results than in any other Communist country. But the blunt fact is that the comparative prosperity in Yugoslavia is not due so much to the “workers’ selfmanagement” as to the intensity Oft rade with the West, the hard currency remittances of nearly one million Yugoslav workers in Western Europe, and the flow of tourists to the

incomparable Dalmation coast. The system is plagued by doubt, inefficiency, and lack of incentive. It is vulnerable because it has made the expatriate workers and their estimated 4 million dependants subject to Western economic fluctuations. To true Communists — if there is such a thing — it has made the system extremely suspect by subjecting it to the inevitable laws of supply and demand, anathema to any red-blooded Marxist. “Ours is a socialist market economy,” a highly placed Yugoslav technocrat explained, not without a sheepish smile. The curious term is a contradiction in itself, but that is the best Yugoslavia can do under the circumstances. So Yugoslavia ploughs on, shackled by workers’ councils that waste roughly one out of five working days in futile meetings, profiteering, and shady deals that crowd the highways with expensive Western cars in a country where managers earn the equivalent of S6OO monthly. How do they do it? “There are ways,” Yugoslavs reply, seldom volunternng details. High-rise satellite cities are appearing on the outskirts of Belgrade, Zagreb, Ljubljana. Even Skopje in unde> privileged Macedonia is getting a share of “the

the contributions of the richer republics of the Yugoslav federation. The maverick Yugoslav system is based on the theory that the means of production are socially owned and "managed by producers on all levels.” In practice it means that every enterprise is supervised by up to three different workers’ committees and its product is estimated “on the basis of market forces.” If an enterprise loses money, the salaries of the personnel are lowered. If it shows profit, it indulges in bonuses, rest homes, and housing co-operatives. Still, on the whole, the incentive for the average worker is limited. The permanent source of complaints and bewilderment is that Yugoslav labourers in Western Europe perform much better than those at home. President Josip Broz Tito himself pointed it out in a number of public speeches. The private sector is limited to farms and small enterprises theoretically not allowed to employ more than five persons. The law may be revised to create more initiative. Hampered as it is by the existence of the doctrine, the system has succeeded better than in other Communist countries because it has allowed the intensive development of the consumer side.

Yugoslavs travelling to Soviet Bloc countries feel proud of their achievements. When they go to the West, they frequently feel bitter and inadequate. The million “guest workers,” mainly in West Germany and Scandinavia, send home an estimated SI billion a year. This supports about 4 million other Yugoslavs at home who, in the blunt terms of one official, “are fed by Western capitalism’.’ In addition to these expatriate and basically migratory workers, id per cent of the labour force, or some half a million people, are unemployed. A person is considered jobless in Yugoslavia when he registers as seeking employment. During the recent recession in the West, an estimated 40,000 Yugoslav “guest workers” were sent home. Now things are looking up again and the Yugoslavs are streaming back to German and Swedish factories. . The' inflation which reached 25 per cent in recent years -was reduced to an estimated 10 per cent, and the Government hopes to lower it even more. In 1974 Yugoslavia had a 51.2 billion foreign trade deficit. There was a point when the country’s ability to borrow money abroad was in doubt Subsequently import controls and other

vigorous measures reduced the deficit to $950 million. The Yugoslavs have learned to live with their system, and they see no dramatic changes in the offing. Their socialism does offer advantages to the workers. What is lacking is Western-type efficiency and economic flexibility. Yugoslav . manufactured goods are not competitive in Western markets but they do stand out in Soviet Bloc countries. At this stage roughly a third of Yugoslav trade is with Soviet Bloc countries and there is some speculation that the ratio may’ be increased. Still, many Yugoslavs are wary of greater economic involvement with the Soviet-dominated area. Thus the accent is on greater co-operation with the West. Earlier this year the Dow Chemical Company signed an agreement for the joint construction and operation of a ($7OO million petrochemical complex. It will be the biggest single American venture in Yugoslavia. Other firms are holding exploratory talks. Western diplomats discern steady although slow progress toward economic flexibility. The trend is likely to continue — if Yugoslavia is allowed to pursue its independent course OF.N.S. Copynghu