Stings in the tail of Kremlin hand-out

Press, 12 January 1977, Page 6

Stings in the tail of Kremlin hand-out

By CHRIS CATLIN ' > The Kremlin’s New Year: for millions of Russians] was a surprise pay-and-prices deal which has left many, people wondering just how; it will affect their family bud-; gets. | The way the official medial presented it, the programme of pay rises and price changes seemed like a generous bonus for wage-earners and consumers alike, but together with the much emphasised improvements, the Government has put through price rises for several luxurygoods and for air and taxi fares. For a country which boasts of having no inflation, in con-] trast with the troubled West-i ern economies, the increases' were a sensitive issue—and were treated as such. To soften the blow, it was: announced first that wages! would rise by 18 per cent for] 31 million workers in public! services and other “non-| productive” jobs, and, days] later, price cuts of up to 251 per cent were made on arange of clothes and consumer durables. i In both announcements the sting came in the tail. Workers affected by the rise earn an average of just over 24 roubles ($2B) a week, well below the wage of nearly 35 roubles ($42) paid to the average factory or office worker. The increase, which they were guaranteed, anyway, under the five-year-plan, will; bring them in an extra four' roubles ($4.50) or more each; week, and raise minimum! wages for the group to a weekly 16 roubles ($19.50). The snag is that most; workers will have to wait un-l til at least the end of this] year before receiving the rise, and it will be the only one] paid between 1976 and 1960.; These details were buried deep down in the announce-;

: ment as was the bad news j from the State Prices Commitee — that air, boat and taxi fares were all going up | from next April. Sought-after items, including carpets, silk, cut glass, and tailor-made clothes will ’also be more expensive, and jso will some better-quality I books. The price cuts for certain brands of refrigerators, taperecorders. television sets and electric razors were given in detail, but not so the price increases. Shoppers had to wait until the following morning before learning from shop assistants that carpets were going up by 40 to 50 per cent, silk !by about 40 per cent, and cut glass by 100 per cent. According to one Moscow tailoring shop, labour charges for a typical man’s suit were (going up from 32 to 4.3 roubles ($.39 to $5l), depending on the quality of the | material. This would be I about a third of the total 'price. I Asked about the reductions. shop assistants mostly ‘explained that they were for older styles which might otherwise be left on the shelves. There had been no rush to take advantage of the cuts, they said. Three days after the announcement. the chairman of the State Prices Committee. Mr Nikolai Glushkov, finally disclosed that taxi fares were being doubled and air fares raised by an average of 20 per cent. The increases will push up I taxi fares from 10 to 20 ; kopeks (12c to 24c) per kilometre. The 80-minute flight ifrom Moscow to Leningrad I will go up from 13 roubles to about 16 ($l5 to $18). ■i The 100 million passengers ilwho fly Aeroflot every year have always paid much less sithan equivalent Western fares, even if wages are corIjrespondingly lower, -| The Soviet media has al-

ways pointed to the low public transport charges as a typical advantage of the Socialist system. Apparently trying to soften the psychological impact of the increases, official press and radio were unusually active at the end of 1976 in comparing the Soviet Union’s stable prices and full employment with the West’s inflation and growing armies of unemployed. “There is no inflation in the Soviet Union, nor can there be — that is quite out of the question,” was a typical claim. Western experts disagree, but concede, nevertheless, that retail-price inflation is probably no more than 2 to 5 per cent. Mr Glushkov attributes the rises to “a trend towards higher quality, which, in combination with fixed prices, has meant that some goods are being produced at a loss.” The cost of improving and speeding up travel by air, sea, and road without a corresponding increase in fares had also meant deficits for many enterprises, he explained. Soviet enterprises are supposed to aim for a 5 per cent profit as part of a plan to ensure industrial efficiency, but in practice the State often has to step in to subsidise large differences between the price and actual cost. According to Mr Glushkov, the Soviet Union spent a staggering 19,000 million roubles f523,000M) in 1975 — more than it admits spending on defence — in an attempt to keep meat and milk prices down. The danger is that widespread subsidising encourages inefficiency, and apparently this is why Moscow has decided to charge more for fares and less-essential commodities — even if it does mean swallowing some ideological pride.