THE EMPLOYMENT SITUATION IN THE USSR

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A005200100002-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 20, 2016
• Document Release Date: March 22, 2006
• Sequence Number: 2
• Publication Date: April 15, 1966
• Content Type: REPORT

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THE EMPLOYMENZ` SITUATIOT IN' THE USSR
CENTRAL INTELLIGENCE, AGENCY
O F F I C E OF C U R R E N T I N T E L L I Ely C E
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e 2006/04/13 CIA-RDP79-00927A00110100002-4
1.5 April 1966
(SCI No. 0285:/66A
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THE EMPLOYMENT SITUATION IN THE USSR
There are occasional references to unemployed
workers in the Soviet press, but the USSR is not
suffering from widespread unemployment. Pockets of
unemployment exist, however, attributable in part
to the failure of present labor market institutions
to match worker and job efficiently and quickly. In
addition, changes in "success indicators" by which
their performance is judged have made managers less
eager to hire and retain surplus labor. Finally,
rapid changes in technology and in patterns of de-
mand have occurred and are still in process, affect-
ing particular areas of employment. The problem
areas most often mentioned in the Soviet press and
of special concern to the authorities are excessive
labor turnover, unemployment among youths, and unem-
ployment in small cities. On balance, the USSR has
achieved a relatively high level of employment among
the adult population.
Soviet concern about unemployment derives not
from any crisis in the labor market. but rather from
official dogma, which calls for full employment and
equates it with the use of every able-bodied person
in the "social economy." An awareness also appears
to be spreading that the labor market of an indus-
trialized economy needs flexibility to operate ef-
ficiently. The employment problems confronting So-
viet leaders have no immediately acceptable solu-
tions, and will therefore remain as more or less
chronic features of the Soviet economic scene.
Concepts
The official Soviet posi-
tion is that unemployment was
abolished "forever" in 1930.
Recently, however, there has
been an increasing realization
in the USSR that pockets of un-
employment tend to develop in
any highly industrialized so-
ciety. The causes include au-
tomation and other forces of
technological change, failure
of plans to mesh completely,; and
the institutional difficulties
of absorbing new entrants in the
labor market. The Soviet press
has only recently started to
comment on these questions and
has treated them in terms of the
employment problems among cer-
tain groups in the economy.
In contrast to Soviet prac-
tice, US statistics on national
employment embrace three cate-
gories: persons with jobs are
classified "employed"; persons
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without jobs and looking for
work are considered "unemployed";
and persons neither working nor
looking for work are classified
"not in the labor force." Thus
the US practice is to leave the
voluntarily unemployed out of
the unemployment tally.
In the USSR, however, where
unemployment is ideologically
impossible, the authorities
classify adults only as having
or not having jobs. The Soviet
concept of full employment em-
braces the use of all able-
bodied persons of working age
in the "social economy." The
Soviet concept also reflects the
policy of confining the economic
activity of workers to prescribed
sectors of the economy. So-
called "nonparticipants in the
social economy" include house-
wives and others not actively
seeking employment, and the five
million able-bodied persons
working only on private plots
of land, as well as the rela-
tively few persons without jobs
who are actively seeking employ-
ment.
Persons who work only on
private plots pose a special
problem for Soviet leaders. From
an economic standpoint, they are
in fact employed and are adding
substantially to the national
product by producing needed food.
From an ideological standpoint,
however, they are not participat-
ing in the "social economy," and
represent the last vestiges of
capitalism. As a practical mat-
ter, economic realities have
taken priority over ideological
purity, and these very produc-
tive "unemployed" have been per-
mitted to continue their private
economic activity.
Employment Policy
And the Labor Market
The USSR Constitution speci-
fies the basic tenets of the of-
ficial employment policy: "Citi-
zens of the USSR have the right
to work..., and work in the USSR
is a duty... for every able-bodied
citizen." Moreover, Soviet au-
thorities have shown themselves
willing to tolerate substantial
degrees of surplus or insuffi-
ciently utilized labor through-
out the economy. Questions of
hiring and firing thus do not
arise for the almost one third
of the Soviet labor force work-
ing on collective farms. These
farmers cannot be dismissed for
lack of full-time work, nor for
any other reason.
Another constituent of the
policy of full employment is the
state's monopoly of all matters
relating to labor, including
wages, hours, working conditions,
allocation of jobs, and trade
unions. In the Soviet economy,
central planning decisions take
the place of the processes of the
free market to a considerable
extent. Even so, however, suf-
ficient freedom remains for in-
dependent activity by individual
enterprises and the play of mar-
ket forces. Central planners
determine the number of jobs by
the number of persons available
for work, and centrally establish
wage schedules and bonus regula-
tions, but in practice, the in-
dividual enterprise has considerable
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leeway to manipulate work norms
and wage rates for individual
jobs. In the past, managers of-
ten found ways to get around
limitations on the size of their
work force.
The USSR has used a variety
of devices in pursuit of full
employment, such as establish-
ing differential wage rates, cen-
trally allocating labor, giving
women and youths the same em-
ployment opportunities as men,
and using coercive measures in
the form of antiparasite laws
and propaganda campaigns to in-
duce individuals to take jobs.
These measures have been ef-
fective. Since 1950, about 70
percent of the adult population
have been employed. Employment
among the adult population in
the US averaged about 55 percent
during the same period. The pri-
mary explanation of this differ-
ence between the US and the USSR
is the extremely high participa-
tion by women in the Soviet labor
force--about two thirds of adult
women in the USSR, compared with
about one third in the US.
Despite the over-all success
of the USSR in creating more jobs
than are economically justifiable
by Western standards, substantial
unemployment has persisted among
certain groups and sectors of the
urban economy, especially since
the mid-1950s. By that time the
growth of the urban population
reaching working age nearly
matched the increase in indus-
trial jobs. This development
meant that the policy of migra-
tion control--limiting the flow
to the cities of workers from
the countryside--was no longer
effective as a means of ensuring
full employment among urban in-
dustrial workers. Alterations
in labor laws since 1953 have
eliminated other controls avail-
able to the regime by removing
most of the formal restraints on
voluntary changing of jobs and
limiting the use of compulsion
in job placements.
Other features of the So-
viet system also tend to create
unemployment. Since 1959, a sys-
tem of bonuses has been in use
which links bonuses to reduction
of costs, and thus has encour-
aged managers to economize on
labor chiefly by firing redundant
workers. The press reports that
of the more than one million
workers dismissed from indus-
trial enterprises in 1964, 30-35
percent were fired illegally.
The principal Soviet trade union
journal recently complained that
"Annually the state suffers huge
losses, amounting to millions of
rubles,in reinstating to work
people who have been illegally
dismissed." Managers have also
risked being charged with illegal
practices by refusing to hire un-
wanted workers sent to them by
local party officials in order
to curtail labor costs.
In addition to these prob-
lems, the Soviet authorities are
also seriously concerned over
the rising rate of labor turn-
over, which is causing produc-
tion losses, increasing training
expenses, and generating a
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variety of noneconomic problems.
In 1960, when the level of turn-
over was at its lowest, 32 work-
ers per 100 changed jobs with
the loss of time between jobs
averaging about 25 days. At
that time 170 million man-days
of production were lost. In
1964, an estimated 200 million
man-days of lost output were due
to labor turnover.
The regime has been unwill-
ing to adopt suggested correc-
tive measures to eliminate un-
planned turnover. The improve-
ment of working and living con-
ditions would require diversion
of substantial resources and the
adoption of legislation to re-
strict mobility might produce
serious political and social
consequences.
During the past decade the
Soviet regime has increasingly
relied more on incentives and
less on compulsion throughout
the economy. Recent articles by
Soviet economists, moreover, in-
dicate a growing realization
that the costs of labor turnover
are offset to some degree by the
resulting gains, both economic
and social, due to flexibility
in the labor market.
Unemployment Among Youths
For the first time in the
postwar period, unemployment
among youths became serious dur-
ing the summer of 1957. In that
year, 1.3 million persons grad-
uated from full-time secondary
schools. This was an outgrowth
of Soviet educational policies
since 1950. These emphasized
universal secondary education
and resulted in an increased
number of graduates which aver-
aged 500,000 between 1950 and
1955, and skyrocketed to 1.2
million in 1956. At the same
time, the number of admissions
to full-time study at higher
educational institutions, which
had averaged about 250,000 each
year between 1950 and 1955, de-
clined to 220,000 in 1957. The
reduction in the size of the
armed forces after 1955, more-
over, as well as the return of
amnestied prisoners from forced
labor camps, swelled the ranks
of civilian jobseekers even
more. The predicament of youths
seeking work was further aggra-
vated by the fact that upon
graduation the majority of them
were unsuited for immediate em-
ployment. Their curriculum
had been oriented toward fur-
ther professional education and
they had no skills or vocational
training. In addition, labor
legislation since 1955 gave
youths shorter hours, equal pay,
and longer leaves, and tended
to curb the interest of managers
in accepting workers under 18.
Since 1960, press articles
have expressed increasing con-
cern about teenage unemployment,
probably because of the rising
pressure for jobs as the post-
war baby boom reaches working
age. The number of youths 15
to 18 years old doubled between
1960 and 1965. Beginning in
1966, moreover, the number of
teenagers available for employ-
ment will rise sharply as a re-
sult of a 1964 decree cutting
the length of secondary educa-
tion by one year. In 1966 two
classes instead of one will
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graduate from secondary schools,
and this summer jobs will have
to be found for 1.6 million grad-
uates instead of the normal
600,000.
Unemployment among youths
is often voluntary because af-
ter graduation they have no in-
tention of doing manual work,
and they are not prepared to do
skilled work. The government
has used both the carrot and
the stick method. Youths are
granted special work privileges
such as shorter workdays and
generous leave allowances for
those studying part time. In
addition, admission require-
ments to higher educational in-
stitutions have been changed to
give preference to applicants
with at least two years of mil-
itary or work experience. On
the other hand, the USSR passed
the "antiparasite" laws in
1958-61 to prod reluctant youths
into the labor force. Under
these laws--which subjected non-
working adults to compulsory la-
bor and exile--youths who dropped
out of school and failed to go
to work were coerced into "so-
cially useful labor" in industry
and other state enterprises.
In another move to restrict
involuntary unemployment among
youths, Juvenile Placement Com-
missions were established in
1957 to work out a nationwide
job quota system. These commis-
sions were also set up to compel
state enterprises to provide vo-
cational training for young work-
ers, but a measure of their in-
effectiveness is the persistence
and growth of the very problem
they were supposed to correct.
Jobs reserved for teenag-
ers in industry, construction,
and state agriculture offer em-
ployment to only one fourth to
one half the number of persons
available for work in the 15 to
18 age group. The lack of pen-
alties for violations of orders
given by the placement commis-
sions has been a major weakness.
Managers in numerous cases have
refused to hire youths sent to
them under the quota system,
and have even fired youths when
alternative labor was available.
In addition, the expansion of
industrial training has not yet
materialized. Since 1958, the
number of youths in industrial
apprenticeship programs has de-
clined in absolute numbers and
as a share of total industrial
employment.
Unemployment in Small Cities
The rate of participation
of the able-bodied population
in the "social economy" in the
800 smaller Soviet cities with
a population of less than
50,000 is approximately 35-45
percent of that in larger cit-
lOs and is declining. Soviet
economists suggest that the
lack of jobs in these cities
is a primary cause for the
lower labor participation rates.
The unfavorable employment
situation in small cities is
analogous to the Appalachia
problem in the US. In both
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areas the decline of local in-
dustry and the process of tech-
nological change and automation
has not been matched by a cor-
responding outward movement of
labor to other areas. In the
USSR, furthermore, small cities
tend to be "one industry" towns
--often heavy industry--making
it difficult for women and youths
to find jobs.
A problem particularly acute
in small cities is underemploy-
ment of women. In an effort to
encourage women to take jobs, the
regime in 1958 began a program
to expand child care facilities
for the preschool-age children
of working mothers. Twice the
number of child care centers
would be required, however, if
all women of working age were to
be employed in the "social econ-
omy."
Other proposals for easing
unemployment in small cities have
centered on developing labor-in-
tensive consumer goods industries
in these towns and a rapid ex-
pansion of the service sector.
Soviet authorities, however, un-
doubtedly realize that in many
cases the cost of employing
idle adults and youths in the
"social economy" will far out-
eigh the potential economic
returns. These costs include
both child care centers and
other facilities as well as ag-
ricultural output on private
plots that would have to be
sacrificed if these unemployed
persons were put to work on the
state economy.
Prospects
Problems of unemployment may
soon be made even more urgent
as a result of the new economic
incentives for enterprise mana-
gers under the Kosygin program.
Although not all incentives have
been clearly spelled out, they
may provide even greater en-
couragement to managers to econ-
omize on labor than the bonus
system. The major Soviet theo-
retical journal Kommunist has re-
cently admitted that a appli-
cation of new methods of planning
and economic incentives for in-
dustrial enterprises will undoubt-
edly result in the release of
some workers .'"
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