Russians put roubles under the mattress

Press, 12 May 1979, Page 16

Russians put roubles under the mattress

By

DEV MURARKA

The level of private savings is rising alarmingly in the Soviet Union. Recently the newspaper “Trud” disclosed that savings bank deposits have increased to 116 billion roubles — roughly $175 billion at official rates of exchange. That figure does not take account of savings accumulated by people in their homes. (It is a common phenomenon that people are able to produce hundreds, even thousands, of roubles at short notice without going to the banks.) The situation worries the authorities because they regard the vast hoard of private savings as unproductive capital. What is more, the rate of saving is rising steadily despite increased living costs. For instance, “Trud” states that, while spending on consumer durables by workers’ families rose from 5.8 to 6.8 per cent of income between 1970 and 1977, their savings increased from 4.6 to 6.8 per cent of income during the same period. Practically the same up-

surge is observed in the country, where farmers’ expenditure on consumer durables increased from 4.9 to 5.9 per cent while their savings increased from 10.6 to 12.3 per cent. Savings are higher in the country because rural areas are even worse off in terms of supply of goods and services than the towns.

There is another parallel trend in expenditure. People are spending a smaller proportion of income on food, and clothing sales have stabilised at about 15 to 16 per cent of income. “Trud” explains that a good deal of the savings are for the eventual purchase of cars and dachas (holiday homes) — two items which every self-re-specting family now wants in the Soviet Union. Then comes demand for sophisticated hi-fi equipment. Television is no longer an unsatisfied demand, though the change to colour television is going

slowly because of relatively high prices. The authorities are racking their brains for ways of putting private savings to more productive use. One idea has been to encourage people to buy co-operative flats or houses, but this is attractive only for those who do not already have satisfactory homes.

And in many cases those who need better housing most urgently are newly married couples with no money of their own. The tendency is growing for parents to help with the initial big instalment on co-operative homes, but even parents are reluctant to invest all their savings in this way. Of course, the obvious solution would be to raise the quality of consumer durables, to increase their variety and improve their supply and distribution. But despite frequent and ritual affirmations and protestations to this effect, Soviet industry is

incapable of delivering the goods.

'’ers exhort it, consumers complain about it, i,u....paper columnists write about it, but basically Soviet industry remains unmoved, unchanged — some would say, unchangeable. The “Trud” article claims that the level of per capita incomes in economic terms in the Soviet Union is near to the level of Western Europe. What the writer means is that Russian wage-earners must add to their lowest pay packets the notional “income” of a free health service, low rents and other benefits like free education.

The claim may have some substance, though it would take a good deal of expertise to verify it.' What is certain is that more and more Soviet citizens are becoming familiar with the standard and style of European life and they want it for themselves.

Until better quality goods arrive in the shops, they would sooner keep their money in the bank. (O.F.N.S. Copyright).