LABOR REFORMS IN THE EUROPEAN SATELLITES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00935A000400240004-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 30
• Document Creation Date: November 9, 2016
• Document Release Date: August 25, 1998
• Sequence Number: 4
• Publication Date: February 21, 1957
• Content Type: IM

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INTELLIGENCE MEMORANDUM
LABOR REFORMS IN THE EUROPEAN SATELLITES
CIA/RR IM-447
21 February 1957
WARNING
THIS MATERIAL CONTAINS INFORMATION AFFECTING THE.
NATIONAL DEFENSE OF THE UNITED STATES WITHIN THE
MEANING OF THE ESPIONAGE LAWS, TITLE 18, USC, SECS.
793 AND 794, THE TRANSMISSION OR REVELATION OF
WHICH IN ANY MANNER TO AN UNAUTHORIZED PERSON IS
PROHIBITED BY LAW.
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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CONTENTS
1. Introduction . . . . . . . . . . . . . . . . . . . . . . 3
2. Reduction in the Workweek . . . . . . . . . . . . . . . 4
3. Adjustment of Wages and Work Norms . . . . . . . . . . . 5
4. Planned Wage Reforms . . . . . . . . . . . . . . . . . 9
5. Social Security and Pensions . . . . . . . . . . . . . . 11
6. Easing of Labor Discipline Laws . . . . . . . . . . . . 13
7. Worker Participation in Decision Making . . . . . . . . 15
Appendixes
Appendix A. Chronological Record of Labor Reforms
in the European Satellites During 1956 . . . . 19
Appendix B. Gaps in Intelligence . . . . . . . . . . . 25
Appendix C. Source References . . . . '? 27
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CIA/RR IM-447
(ORR Project 41.1647)
LABOR REFORMS IN THE EUROPEAN SATELLITES*
1956
Summary
During 1956 the governments of the European Satellites** took
action on an unprecedented scale with respect to the economic welfare
and working conditions of the industrial labor force. These actions
were motivated in part by the necessity for devising ways to increase
labor productivity and in part by the need to placate a restless popu-
lace. Although the particular measures taken differed widely in scope
and content among the six countries, the net result in each country
was an improvement in the lot of the industrial worker. The net effect
,on productivity cannot yet be determined.
Labor laws and practices in the Satellites are patterned after
those of the USSR. Liberalizing measures in the labor field taken by
the USSR during 1956 undoubtedly stimulated Satellite actions along
the same lines. In addition to the Soviet example, however, the
particular pattern of reform adopted in each Satellite was influenced
by its own reaction to the Soviet repudiation of Stalin, by develop-
ments in other Satellites, and by its own complex of events, includ-
ing the extent of worker unrest. Reacting to internal repercussions
of the Hungarian uprising late in the year, for example, East Germany
increased pensions and public-assistance benefits, Czechoslovakia
reduced prices, and Rumania raised wages and pensions. Bulgaria
announced increases in wages, pensions, and family allowances to take
effect in 1957, and East Germany moved forward its scheduled reduction
in the workweek.
Four of the 6 Satellites cut the regularly scheduled workweek
from 48 hours to 46 hours or fewer. In'Bulgaria and Czechoslovakia
a general 46-hour workweek was established, whereas in Hungary and
Rumania the reductions applied only to designated industries.
The estimates and conclusions contained in this memorandum repre-
sent-the best judgment of ORR as of 1 January 1957.
** The term European Satellites as used in this memorandum includes
six countries - Bulgaria, Czechoslovakia, East Germany, Hungary,
Poland, and Rumania.
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Although East Germany and Poland did not reduce the length of the
workweek during 1956, they have indicated an intention to-do so
during their current F:Lve Year Plan periods.
Each of the six Satellites took action of one kind or another
to raise wages of various categories of workers and to adjust work
norms.. Four countries -- East Germany, Hungary, Poland, and Rumania --
made general, across-the-board increases in basic minimum rates, thus
giving substantial wage increases to the lowest paid workers. In
Bulgaria, wage increases were few, and they benefited an insignificant
number of workers. In the other Satellites, however, wage adjustments
were made for a variety of industries and occupations, and they affected
substantial proportions of the industrial, labor forces. Poland, for
-example, increased the wages of about 4 million industrial workers,
nearly two-thirds of all nonagricultural employees. Increased work
norms in some industries, however -- particularly in East Germany --
-negated the beneficial effect of these wage adjustments on workers'
total earnings. All of these countries have announced plans for fur-
ther wage and work-norm reforms during the next few years.
All of the Satellites improved their social-security systems,
which provide temporary disability benefits, family allowances, and
pensions. All of the countries except Hungary effected substantial
increases in old age, disability, and survivors' pensions by estab-
lishing higher minimum. pensions for each category. Hungary improved
temporary disability benefits somewhat. A comprehensive revision of
the entire social insurance program was scheduled to become effective
in Czechoslovakia on 1 January 1957, and Poland planned to raise family
allowances on that date.
Most of the Satellites took steps to liberalize the existing,
highly restrictive laws governing absenteeism, job changing, and
other forms of labor discipline. Only East Germany and Czechoslovakia
took no action in this field. Rumania repealed laws which had permitted
compulsory transfer of workers on government order and which had pro-
hibited voluntary leaving by the worker. Poland and Hungary abolished
criminal penalties for absenteeism and other infractions of labor dis-
cipline. Several of the countries are engaged in comprehensive re-
visions of their criminal and labor codes.
Along with these concrete reforms, there were moves in several
of the Satellites to give workers and the trade unions a greater
voice in economic decision making. These moves are part of a general
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drive to decentralize economic management -- particularly in Czecho-
slovakia, Poland, and Hungary. In Poland and Hungary, steps have
been taken to establish in industrial enterprises workers' councils
which are patterned after those in Yugoslavia. Although these
councils are to be delegated broad managerial powers, they are to
operate within the framework of over-all central planning. It is
doubtful whether these councils can be effective managerial bodies,
but their existence may affect worker morale favorably.
In 1956, all of the European Satellites except Bulgaria embarked
on new Five Year Plans which again called for substantial increases
in labor productivity and promised improved living conditions for the
workers.* Increases in industrial productivity which are planned to
be achieved by 1960 range from 35 percent in Poland to 50 percent in
East Germany. Real wages are scheduled to rise by 30 percent in
Poland, Czechoslovakia, East Germany, and Rumania and by 25 percent
in Hungary. In addition to planned increases in capital equipment
and advancements in technology, the Satellites hope to achieve their
productivity goals by providing workers with various incentives to
increase production and reduce waste. Each of the countries took
measures along these lines during 1956, although their actions differed
widely in scope and content.
Strong impetus for liberalizing labor laws. in the Satellites was
provided by events in the USSR, where labor laws and practices have
served as models for the Satellites since the inception of Communist
regimes in these countries. At the XXth Party Congress held in
February 1956, Soviet leaders indicated their intention to improve
the lot of the worker and to provide incentives for increased produc-
tivity. Following up these intentions, the USSR embarked during 1956
on a large-scale reform of the wage system; reduced working hours,
improved pensions, and repealed some of the more onerous laws governing
labor discipline.
* For a chronological record of labor developments in the Satellites,
see Appendix A.
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The actions taken by the Satellites in the labor field during
1956 were influenced not only by Soviet examples, but also by diverse
reactions to the Soviet repudiation of Stalin and by the particular
circumstances prevailing in each country. Unlike the USSR, the
Satellites had to recognize the existence of widespread popular
unrest. Worker protests and strikes were reported in all six countries
during 1956, with discontent over economic and political conditions
culminating in the Poznan riots in Poland during the last week in
June and in the rebellion and general strikes in Hungary during Octo-
ber and November. In Poland and Bulgaria, unemployment became a
serious problem during 1956, forcing the governments to adopt special
measures to create jobs.
2. Reduction in the Workweek.
Following the example set by the USSR, all six Satellites either
took steps to shorten the workweek during 1956 or indicated their
intentions to do so during their current Five Year Plan periods.
Bulgaria, on 29 April, l/* and Czechoslovakia, on 1 October, 2/ cut
the regularly scheduled workweek from 48 to 46 hours by reducing the
number of Saturday hours from 8 to 6, an action which was taken
by the USSR on 10 March. These general reductions in hours were
supposed to be accomplished without reduction in workers' earnings. To
maintain their earnings, however, pieceworkers, who constitute the
overwhelming majority of workers, would have to produce the same amount
in 46 hours that they formerly produced in 48, since piece'rates were
not changed. Czechoslovakia also fixed a 36-hour workweek for workers
aged 16 to 18 years, effective 1 October, in line with a similar move by
the USSR, effective 1 July. Hungary and Rumania, although not insti-
tuting a general reduction in hours, cut substantially the hours of
employees who are engaged in hazardous and unpleasant work.
According to a decree of the Hungarian Council of Ministers,
working hours in designated branches of the chemical, electrical, metal-
lurgical, and machine industries were to be reduced gradually to 42, 40, or
36 hours per. week, beginning on 1 June. 3 A decree of 31 May promulgated
by the government in Rumania established a workday of 7 hours or less
for a wide variety of jobs generally considered to be dangerous or
unhealthy. 4/ Neither Poland nor East Germany made general cuts in
working hours in 1956.
Lf-Tor serially numbered source references, see Appendix C.
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Except for Bulgaria and Rumania, the Satellite governments indi-
cated their intention to bring about major reductions in the workweek
by 1960, which is the end of the current Five Year Plan periods. The
1956-60 Plan directives for Czechoslovakia call for the gradual intro-
duction of the 7-hour workday throughout industry during the last half
of the. plan period. J In a report to the 20th Plenum of the Communist
Party Central Committee in East Germany, Walter Ulbricht set forth
the Politburo recommendation that steps be taken to cut the industrial
workweek from 48 to 45 hours in 1957 and to 40 or 42 hours by 1960. J
In a speech of 2 November, following the events in Poland and Hungary,
Ulbricht intimated that the shift to a 45-hour workweek would be
started in 1956 in certain industries. J Subsequently, the East Ger-
man government announced that the shift to a 45-hour workweek would
be carried out piecemeal beginning an 1 January 1957. J In
Hungary, according to the directives of the Five Year Plan, transition
to the 7-hour workday and 42-hour workweek is to proceed gradually
during the period from 1956 through 1960 but will not be completed until
some time during the following Five Year Plan period. 9/ By 1960,
however, the present 48-hour workweek in Hungary is to be reduced to
a 46-hour workweek. In Poland the 46-hour workweek has apparently
been in effect for some years. Plan goals call for a gradual reduction
in hours by 1960 "in certain branches of the economy," indicating
that "this should apply first of all to the working hours of young
people." 10/ Implementation of these plans for shortening working hours
is made contingent upon commensurate. increases in labor productivity.
The current Five Year Plans call for increases in industrial labor
productivity of from 35 to 50 percent, based on currently scheduled
workweeks. If the workweeks are reduced as planned, even greater
;productivity gains must be achieved in order to fulfill output goals.
The only alternative to increased productivity, if production goals
are to be met, would be an expansion of the industrial labor force
greater than planned.
3. Adjustment of Wages and Work Norms.
Each of the six Satellites took some action in 1956 to raise wages
of various groups of workers and to adjust work norms, but the nature
and the extent of such actions differed markedly among the countries.
In Bulgaria, wage increases were few and affected an insignificant
percentage of workers, whereas in the other countries, particularly
Poland and Hungary, wage adjustments were made for a variety of occu-
pations and benefited a substantial proportion of the industrial labor
force. All countries also made price reductions on a wide variety
of consumer goods.
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Four countries -- East Germany, Hungary, Poland, and Rumania --
made general across-the-board increases in basic minimum rates, thus
giving substantial wage increases to low-paid workers.
With the exception of increases in salaries for a few professional
categories, Bulgaria made no wage adjustments but raised work norms, at
least in heavy industry and probably also in light industry. 11/
Indeed, the Bulgarian government specifically denied rumors that wage
increases would take place during 1956. 12/
Until 30 October 1956, Rumania had announced wage increases for
only one group of employees, teachers in elementary and secondary
schools, 13/ the increases to take effect on l April. On 30 October
the government announced that, as of 1 November, "average minimum
earnings" were to be stabilized at from 350 to 400 lei per month,
varying with industry. 14/ Since the decision is to result in
immediate increases for low-paid workers, the ambiguous phraseology
of the decree probably means that these amounts will represent basic
legal minimum wages. Along with announcement of the decision, the
government also stated that "improvements were made in the wage
system" during 1956 for workers in the chemical, oil-drilling, and
geological exploitation industries; wood, electric power, and railroad
industries; commerce and "part of the engineering, technical and admini-
strative personnel; and other categories." 15/ The belated announce-
ments with respect to compensation adjustments for these groups of
employees raise the question as to whether the indicated "improvements
in the wage system" actually resulted in any significant wage increases.
Acting on a Party Central Committee decision of 30 March, the
government of Czechoslovakia carried through during 1956 a gradual
program of improvement in the wage structure. 16/ Effective 1 April,
special bonuses for timely completion of certain kinds of construction
projects were introduced, 17~ and, effective 1 June, new wages and
norms were put into effect in the building industry. 18/ New job
classifications and salary structures were announced in July for
employees of scientific research institutes. 19/ Wages for under-
ground auxiliary workers in the mining industry were increased on
1 May 20/; a new wage scale went into effect in the printing industry
on 1 July 21/; and the salaries of teachers, doctors, and other pro-
fessions were adjusted, effective 1 September. 22/ Finally, on
6 October the government approved a series of regulations providing
for "improvement and simplification" of the salary structure for civil
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servants. 23/ In April the government announced that important revi-
sions would be made in the wage system for communications workers,
but there has been as yet no indication that these revisions have
actually taken effect. 24/
During 1956, East Germany, although conducting a concerted
drive to raise work norms, did increase the wages of workers in a
few occupations and did adjust the entire wage structure in such a
way as to raise substantially the wages of the lowest paid workers.
A decree effective 1 January provided for the payment of percentage
bonuses to certain categories of engineering-technical employees who
remain on the same job for 2 years or more. 25/ During June, wage
increases ranging as high as 30 percent were granted to employees
of railroads, motor transport enterprises, local public transport
enterprises, and postal service. Nurses and certain other auxil-
iary medical personnel also received increases. These increases,
benefiting "several hundred thousand employees," 26/ allegedly were
given to compensate such employees for their inability to earn
production bonuses like most industrial workers.. They may also
have been granted in an attempt to relieve critical manpower shortages
in transport and medical services. 27/ On 14 September the East
German government announced the abolition of area wage categories
"C" and "D"* in all wage schedules throughout the country. The
effect of this action was to narrow geographical wage differentials
and give immediate increases to nearly a million low-paid employees,
mainly in such industries as timber, food, commerce, postal and
telecommunications, and transport. Teachers, public health workers,
and civil-service employees in rural areas and small towns also
were affected. These increases benefited about one-sixth of the
total nonagricultural labor force and will add some 250 million
East German marks (DME) to the total annual wage bill. 28/
In support of its imperative requirements for productivity
increases, East Germany carried on during 1956 a concerted drive to
increase work norms by establishing so-called "technically based"
norms on an industry-by-industry and plant-by-plant basis. On
1 January 1956, new norms were put into effect in the hard-coal
industry, 29/ followed shortly by similar action in various enter-
prises of the uranium, brown coal, and. potash industries. 30/ By
the middle of the year, higher norms and job reclassifications had
* In East Germany, wages vary according to area. The categories
run from A through D, with A being the most highly paid.
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been extended to selected enterprises in construction, machine
building, steel, rubber, and textile industries. 31/ Although the
decreases in earnings resulting from the new norms produced widespread
worker dissatisfaction and high labor turnover,* strikes and open
protests were few. Nevertheless, awareness of the workers' attitude
forced the regime to cancel some of its plans to extend the work-norm
revision program 33 and also to publish statements admitting that
some norms had been set "wrongly" and had resulted in "unjustified"
wage decreases. 34/
Beginning in May and proceeding at an accelerated pace until
October, - - the Hungarian government decreed wage increases for
workers in the coal mining industry, 35 the construction and building
materials industry, 36/ theatres, 37 oil extraction activities, 38
railroads and the postal service, 39 research workers and teachers
in schools and research institutes, 0/ state farms, 41/ and the food
industry. 42/ In addition to these piecemeal wage adjustments,
Hungary also established a basic minimum wage of 650 forints per month
for most categories of workers, effective 1 June. 43/ It is reported
that roughly 100,000 workers (about 4 percent of the nonagricultural
labor force) benefited. from this action. 44/ The government also
claims that wage "settlements" were made during the year for workers
in the electric power and chemical industries and that foremens'
wages were "improved," 45/ but dates and details of these actions are
not indicated. The government stated in May that wage increases
planned for 1956 would raise the total annual wage bill by 800 million
forints. 46/ On 10 November the Kadar government approved a .general
wage increase averaging 10 percent, to be put into effect not later
than 1 Januaxy 1957. 4j/ Subsequently, additional wage increases and
abolition of the system of work norms were ordered for miners. 48/
From February to November 1956 the government of Poland instituted a
number of wage adjustments throughout the economy, allegedly benefiting
over 4 million workers (about two-thirds of the total nonagricultural
labor force) and increasing the annual wage bill by about 8.6 billion
zlotys. 49/ Wage increases were granted to workers engaged in a wide
variety of activities, as follows: municipal sanitation employees 50/;
* Labor turnover apparently reached phenomenal proportions during the
spring of 1956. According to the East German Minister of Labor and
Social Welfare, labor turnover in mining and building construction was
66 percent annually. 32/
** For specific dates of increases, see Appendix A.
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mechanical maintenance workers and craftsmen in various economic
ministries 51/; civil-service employees and field workers on state
farms 52/; retail trade employees 53/; workers in coal mining and
food industries 54/; and administrative workers in state institutes and
local governments, as well as workers in construction, communications,
forestry, pharmacies, courts, and the public health service 55/;
workers in entertainment and the arts 56 ; employees of elementary and
secondary schools, universities, and scientific research institutes 57/;
and workers in motor transport. 58/ In addition to these wage adjust-
ments, the government established a basic minimum wage of 500 zlotys
per month effective 1 May. 59/ In Poland, unlike East Germany, there
was apparently no concerted drive to raise work norms during
1956, although a radiobroadcast of 1+ October stressed the urgent need
to replace obsolete norms with new ones that would reflect changes in
technology. 60/
4. Planned Wage Reforms.
Except for East Germany, all of the Satellites have indicated.,
either in the Five Year Plan directives* or in statements of govern-
ment leaders, their intention to proceed with reformations of their
general employee compensation systems to correct a variety of ad-
mittedly serious defects. At the same time, according to the Five Year
Plan directives,, real wages are to increase by 25 percent in Hungary
and by 30 percent (as in the USSR) in Czechoslovakia, East Germany,
Poland, and Rumania. In general, these increases are to be achieved
in part through price reductions and in part through increases in
money wages. In view of the planned wage reforms, however, it is prob-
able that increases in money wages will contribute a larger share
to the planned increase in real wages for 1956-60 than has been true
heretofore.
According to an official Bulgarian statement in June 1956, the only
wage revisions contemplated for 1957 were increases for low-paid workers
in the textile, food, and tobacco industries. Real wage increases were
to be achieved through price reductions. 61 On 4 December, however,
the government issued a decree providing for a large-scale wage reform
to take effect in 1957 and 1958. 62/ The decree provides for the
following: (a) establishment of a basic minimum wage of 400 leva per
month; (b) wage increases ranging from 5 to 27 percent, effective
* Bulgaria is currently operating under a Five Year Plan which
terminates in 1957; the current_Five Year Plans of the other Satellites
terminate in 1960.
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1 April 1957, to wage and salary workers earning less than 550 leva per
month; (c) new wage scales and norms, to yield additional increases
of 10 to 18 percent in designated low-wage industries, effective 15
May 1957; and (d) submission of proposals concerning the adoption of
new wages and norms in other industries starting in 1958.
In Rumania, although the Five Year Plan specifies that the
planned increase in real wages is to come mainly from price reduction,
the government announced on 30 October that a fundamental revision of
the entire wage structure was being planned for 1957. 63/ On the
basis of plans to be completed by 31 December 1956, the "improved"
wage system is to be introduced in a few plants on an experimental
basis during the first quarter of 1957 and gradually extended there-
after to all other plants. The stated objective of the new system
is to improve productivity by providing workers and managerial per-
sonnel with more direct material incentives for increasing output
and lowering costs. In addition, beginning on 1 January 1957, sal-
aries of administrative and technical personnel in various branches
of the economy are to be gradually increased.
According to the Five Year Plan directives, production per
worker in East Germany is to increase by 50 percent by 1960, and 90
percent of the planned increase in industrial output is to be achieved
through increased productivity. EA/ Unlike other Satellites, East
Germany has not indicated plans to increase money wages or to
revise its wage system. Apparently, however, the current drive for
the gradual extension of "technically based" (that is, higher) work
norms is to continue.
According to the plan directives approved in April, Hungary
intends to achieve the planned increase in real wages through a combi-
nation of money wage increases and price decreases. 65/ In addition,
the wage system is to be gradually improved by the correction of im-
proper wage differentials between industries and occupations. On
20 October the then head of the Hungarian National Planning Office
stated that an increase of at least 7 percent in wages and salaries
was planned for 1957. 66/
The press in Czechoslovakia devoted much space during 1956 to
discussions of the defects of the existing wage and salary system,
claiming that these shortcomings are responsible in part for maldistri-
bution of the labor force, excessive labor turnover, and low produc-
tivity. 67/ The Five Year Plan directives call for a complete overhaul
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of the wage structure with the following objectives: (a) to raise base
(tariff) rates substantially and to increase their relative importance
in workers' total earnings, (b) to revise the complex system of bonuses
and premiums to increase their incentive features, (c) to create
more equitable wage differentials between industries and occupations
to promote labor allocation objectives, and (d) to increase work
norms by replacing obsolete norms with norms that reflect improved
technology and work methods. 68/ These over-all objectives are
essentially the same as those of the scheduled wage reform to take
place in the USSR during the Sixth Five Year Plan (1956-60).
In Poland the Five Year Plan directives issued in August called for
the planned rise in real earnings to be accomplished through wage
increases and price reductions on "certain consumer goods." 69/ The
pay differentials between industries and occupations were to be
reexamined, and raises were to be granted to lower paid groups. At
the same time the government announced a program of emergency
measures to be taken during 1956-57 for the purpose of alleviating
the most serious grievances of the workers -- grievances that became
clear as a result of the Poznan riots in June. This program called
for further implementation of planned wage increases; work norm
revisions to be effected only if earnings will not be reduced; an
increase in the enterprise directors' funds, which are used in part
to reward meritorious workers; and the gradual introduction of a
new bonus system for technical and managerial employees to increase
the incentive for efficient operation of enterprises. 70/ In Octo-
ber, in a speech to the Eighth Plenum of the Communist Party, Gomulka
stated, however, that no "serious" wage increases were planned
for 1957. 71/ A. subsequent decision of the Plenum noted that,
because of the dangers of inflation, wage increases-in 1957 would
have to be limited to workers in the mining industry (probably in the
hope of alleviating the critical manpower shortage there) and to "very
small groups in other branches of the economy." 72/ The government
announced, however, that income tax reductions of 30 percent, affecting
2 million workers, would take effect on 1 January 1957. 73/
5. Social Security and Pensions.
The Satellites have comprehensive systems of social welfare
benefits, patterned more or less after the USSR. The benefits include
medical and hospital care; sickness and accident compensation; family
allowances; and old age, disability, and survivors' pensions.
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During 1956, each of the six Satellites improved these programs in
various ways, paralleling action by the USSR, which increased paid
maternity leave and pensions in 1956.
Effective 1 August, Bulgaria established minimum monthly
pensions ranging from 140 to 300 leva for various categories of
pensioners. 71./ It is reported that this measure benefited 4+0 percent
of all pensioners. 75 The government has also stated its intention to
exempt all pensions from taxation and to prepare a new draft law on
pensions by the end of the year. On 23 November the government an-
nounced that as of 1 January 1957 family allowances are to be raised
and pensions are to be established for members of producers'
cooperatives. 76 In Rumania, old age, disability, and survivors'
pensions were introduced in September for persons not qualifying for
benefits under the established social insurance system. 77 Effec-
tive 1 December, the minimum pensions for all categories of pensioners
were increased to amounts ranging from 180 to 300 leva per month,
varying with geographic area and pension category. 78/ Paid maternity
leave was increased, and family allowances were raised substantially,
effective 1 November. 79
In East Germany the established insurance system was extended
in March to easants, artisans, and the self-employed not previously
covered. 80/p The East German Five Year Plan calls for a major pension
reform toe completed by 1960, and a special commission of the
Communist Party Central Committee was set up to study the pension
problem. On 3 November (closely following the events in Poland and
Hungary), Party Secretary Ulbricht announced that this commission
would submit "shortly" a proposal to increase old age pensions. 81/
On 16 November the East German parliament approved the proposal to
raise all pension and public assistance payments as of 1 December and
to undertake a major revision of the old age pension system during
1957. $2/
In a decree which apparently took effect on 1 January 1956, the
Hungarian government made a few small improvements in its health
insurance program 83/ but otherwise took no action in the area of
social insurance. Before the October rebellion, however, a Party leader
stated that the National Assembly was scheduled to discuss a proposal
to increase the pensions for about 100,000 persons. 84 Radical
improvement in pensions and family allowances was in a list of demands
made by the Presidium of the Central Council of Trade Unions on 26
October, shortly after the outbreak of the rebellion. 85/
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Effective 1 December, Czechoslovakia increased substantially the
benefits of all categories of pensioners by establishing higher
minimum pensions; this measure will affect 400,000 persons. 86/ In
addition, the government has approved a major revision of the entire
social insurance program to take effect on 1 January 1957. The
revision will result in considerable increases in all types of
social security benefits -- pensions, sickness and accident benefits,
and family allowances. 87 These benefits will add about 1 billion
crowns to the total cost of social security, estimated to be more than
12 billion crowns in 1955. 88 In Poland a major improvement in the
pension system took effect as of 1 July. The new provisions
established higher minimum pensions, benefiting nearly one-third of
all pensioners. 89/ In addition, changes were made in the methods of
computing pensions, resulting in substantial increases for additional
pensioners. Finally, increased family allowances for families with
low incomes and four or more children, to take effect on 1 January 1957,
were included in the Communist Party's program of emergency measures
to be adopted in 1956-57 to alleviate the most serious grievances
of the populace. 90/
6. Easing of Labor Discipline Laws.
In the European Satellites the laws governing labor discipline are
closely patterned after those of the USSR. 91/ These restrictive
laws are designed to cope with problems of high labor turnover,
absenteeism, and manpower allocation, which have plagued the regimes
for several years. Although the laws differ somewhat among the six
countries, in general they contain the following provisions: (a) em-
ployees must possess workbooks, which provide a continuous record
of their job history and performance and without which they cannot
legally be employed; (b) employees may not change jobs without their
employer's permission; (c) severe penalties, criminal punishment in
some cases, are provided for unjustified absenteeism; (d) graduates of
universities, technical schools, and labor reserve schools are sub-
ject to compulsory work assignments for specified periods and to
compulsory transfer at the behest of the government.
On 8 May 1956 the USSR announced the repeal of various laws that
had provided criminal penalties for absenteeism and unauthorized job
changing and had permitted compulsory transfer of certain categories
of skilled workers by government order. Following this example, most
of the Satellites took various steps during 1956 to liberalize the
regulations governing labor discipline.
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On 1 November the National Assembly of Bulgaria, as part of a
general revision of the penal code, abrogated existing statutes
which had permitted imprisonment of persons refusing to accept jobs
designated by the state. Rumania amended its labor code on 24 July
to provide for abolition of compulsory job transfers; voluntary job
changing by workers upon giving 12 days'notice; and limitation of
responsibility for material damage to that for which the worker is
directly responsible, rather than as before to that for which the
brigade was responsible. 92/ In general the labor laws in East
Germany are less harsh than those of other Satellites, and the
regime did not amend these laws during 1956. Czechoslovakia
made no changes in its laws governing labor discipline during 1956.
The Central Council of Trade Unions has been given the task of
drafting a labor code, however, and it is possible that recommendations
for liberalization may result. 93/
In Hungary a decree of the Council of Ministers, announced on
30 June, modified the rules governing workbooks to provide that
employees in the construction industry m a y be hired without presenta-
tion of a workbook for periods u p to 3 months. 9 A Council decree
of 24 May removed certain "minor offenses," presumably infractions of
labor discipline, from the category of criminal acts, and in the future
such infractions are to be punished by monetary fines. 95/ Finally,
new penal and labor codes are being drafted, and the Central Council
of Trade Unions has recc mended liberalization of the laws restricting
voluntary changing of employment. 96/
Poland liberalized its labor laws considerably during 1956. On
25 January the government published a decree severely limiting the
conditions under which enterprise managers can dismiss employees
without notice. 97/ A regulation was issued on 25 May abolishing the
practice of issuing confidential reports on workers when they changed
employment. In the future these reports must be shown to the worker,
who may appeal to the factory workers' council if he is dissatisfied. 98/
On 10 September the Polish parliament repealed a 1950 law "on the safe-
guarding of labor discipline," which imposed severe monetary and criminal
penalties for unjustified absenteeism. 99/ Finally, it was announced on
9 November that the Ministry of Higher Education is planning to abolish
the present system of "labor direction," under which university and
technical school graduates are given obligatory job assignments for
specified periods. 100/
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7. Worker Participation in Decision Making.
During the past several years the USSR has taken a number of
steps to decentralize economic management, with a concomitant increase
in the decision-making role played by workers and low-level managers.
A trend toward :Less centralization was also evident in some of the
Satellite states during 1956. Four countries -- Czechoslovakia,
Hungary, Poland, and East Germany -- adopted measures to simplify
and decentralize economic planning and management of individual
enterprises.
At the same time, there has been agitation to give workers and
their trade union representatives a greater voice in economic decision
making. In response to voluminous press criticism that trade unions
failed to represent workers' interests, the executive body of the
East German trade union organization took action designed to strengthen
the powers of factory committees and to'enhance the unions' ability
to represent workers in legal proceedings. 101/ Local units were
also enjoined to exercise their "right" to a share in management.
Somewhat similar actions were also taken by the Trade Union Council
in Czechoslovakia, and, in addition, the Council proposed to the
government that it be given greater rights of participation in the
drafting and implementation of economic plans. 102/ Hungarian and
Polish trade unions have gone even further. In September the Pre-
sidium of the Hungarian Trade Union Council adopted draft resolutions
calling for trade union participation in economic planning and wage
decisions at all managerial levels, with trade union bodies being given
increased rights coordinate with the broader rights accorded
managers under the decentralization program. 103 In Poland the
Central Trade Union Council drafted three measures for submission
to the Sejm, providing for increased powers for local union organs,
empowering union inspectors to impose fines on managers who violate
labor laws, and widening the prerogatives of arbitration comis-
sions. 104/ In addition, the Council called for a larger voice in
.policy decisions concerning "Just division of the national income,
on policy of wage structure and social contributions, housing, pro-
gress in the field of labor laws ... ." 105/ A resolution subse-
quently adopted by the Council called for sweeping changes in trade
union organization and functions with the aim of establishing "a trade
union attitude completely independent of the state and economic
administration, a broad foundation of the best traditions of the Polish
class trade union movement before the war and in the first postwar
years." 106/ Among other things the Council proposes to transfer to
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state organs such administrative functions as management of sanatoria
and vacation resorts and administration of social insurance -- functions
that are typically performed by trade unions in Communist countries.
Poland and Hungary have gone far beyond the USSR in taking steps
which at least purport to give workers a more direct part in enter-
prise management. In July the Eighth Plenum of the Polish Communist
Party passed a resolution calling for greater economic decentrali-
zation and increased worker participation in the management of indi-
vidual factories. 107/ In accordance with this resolution and after
much press discussion the Council of Ministers passed a draft reso-
lution calling for the establishment of workers' councils in fact
tories. 108 As tentatively planned, these councils are to be elected
by the employees and are to be fully responsible for management of
the enterprise within the framework of over-all plans and regulations
established centrally? Day-to-day management is to be exercised
through an elected presidium, of which the enterprise director is an
ex officio member. The council will have the right to appoint and
dismiss the director and other administrative employees. The powers
of the council are to include all those powers delegated to the
enterprise in a companion draft resolution, including formulation and
approval of the annual, enterprise plan on the basis of centrally
planned production goals for the firm, selection of the methods and
techniques of production, fixing of product prices which are not
established centrally, selection of methods of wage payment distribution of the wage fund within planned limits, and distribution
of factory profits on the basis of regulations not yet worked out.
On 13 November the Kadar government in Hungary issued a decree
providing for setting up workers' councils, with duties and rights
similar to those described for Poland. 109 In view of the unsettled
state of affairs in Hungary, it is not yet possible to say how this
decree will be implemented.
In East Germany, too, Party leaders have recently made gestures in
the direction of greater worker participation in decision making.
In a speech of 3 November, Ulbricht stated:. "The SED 5ocialistische
Einheitspartei Deutschlands7 proposes that the workers be called upon
to a greater extent to participate in the management of enterprises.
To this end it will be necessary to create organizational forms
enabling workers to cooperate with regard both to important production
problems and other problems." 110/ Subsequently, the SED directed
that workers' "committees" be set up in all state enterprises, with
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the right to "make observations" on such matters as the enterprise
plan, the introduction of new technology, the use of enterprise
capital funds, and plant organization. 111 Disputes between the
plant manager and the workers' committee are to be decided by the
industrial ministry supervising the plant. The authority to be
accorded these committees clearly is much narrower than that currently
contemplated for the workers' councils in Hungary and Poland.
These moves toward so-called worker self-government are part of
the trend toward "democratization" accompanying de-Stalinization in
the Satellites, particularly in Poland. The regimes presumably
believe that worker participation in management and in distribution
of enterprise profits will provide greater incentive for increased
productivity. The workers' councils scheduled to be established in
Poland and Hungary are patterned after those of Yugoslavia. Judging
from the experience of that country, it is probable that establish-
ment of the councils in the Satellites may be little more than the
creation of a semblance of worker participation in management with-
out any real transfer of decision-making authority. In the first
place, rank-and-file workers do not have the technical qualifications
to manage,an industrial enterprise, so that such responsibilities of
necessity will have to be performed by the administrative and techni-
cal staff. Moreover, since the councils are to operate within the
framework of central economic planning, they cannot control the
basic factors that will determine the welfare of the enterprise and its
employees -- production and investment goals, materials allocations,
size of the labor force, and the total wage fund.
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CHRONOLOGICAL RECORD OF
1. Bulgaria.
1 January
1 January
29 April
1 August
1 November
23 November
4 December
2. Czechoslovakia.
1 April
LABOR REFORMS IN THE EUROPEAN SATELLITES
DURING 1956
Increase in work norms in enterprises of the
Ministry of Heavy Industry.
Increase in salaries of professional employees.
Reduction in workweek from 48 to 46 hours.
Increase in old age and disability pensions.
Liberalization of laws governing work assign-
ments.
Announcement of increases in family allowances
and pensions, effective 1 January 1957.
Promulgation of a decree providing for wage
increases, to take effect in 1957.
Introduction of a new bonus system in the con-
struction industry.
Increase in wages for underground auxiliary
workers in the coal industry.
Increase in wages and norms in the building
industry.
Revision of the salary structure for scien-
tists and research workers.
Establishment of new wage scales in the printing
industry.
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1 September
6 October
3. East Germany.
1 January
4 January
18 September
20 November
1 December
2 December
4. Hungary.
3 January
22 May
Revision of the salary structure for teachers,
doctors, and other professions.
Reduction in the workweek from 48 to 46 hours.
Revision of the salary structure for civil
service employees.
Approval of a liberalization of social insur-
ance benefits, to take effect on 1 January
1957.
Increase in work norms in the coal industry.
Increase in pay for uninterrupted service
by technical and professional employees.
Increases in wages for workers in railroad
transport, local transport, the postal ser-
vice, and medical services.
Increase in wages of low-paid workers.
Establishment of workers' committees in state
enterprises.
Increases in pensions and public assistance
payments.
Announcement of reduction in workweek, to take
effect in 1957.
Improvements in temporary disability benefits.
Promulgation of a decree providing gradual re-
duction in hours for employees engaged in
hazardous work.
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22 May
31 May
1 June
7 June
16 June
30 June
1 July
1 July
1 August
1 September
11 October
10 November
13 November
14 November
5. Poland.
25 January
Abolition of criminal penalties for various
infractions of labor discipline.
Revision of the wage system in the coal industry.
Establishment of a minimum wage of 650 forints
per month.
Increases in wages and norms in the construction
and construction materials industries.
Increase in salaries of theatrical performers.
Modification of rules governing use of work-
books.
Increase in wages of oilfield workers.
Introduction of a new bonus system in light
industry.
Increases in wages of railroad and postal
workers.
Increases in salaries of research workers, teach-
ers, and workers in the food industry.
Increase in wages of state farm workers.
Announcement of wage increase for industrial
workers.
A resolution authorizing establishment of
workers' councils.
Increase in wages and reduction in workweek for
miners.
Decree forbidding dismissal of workers without
notice.
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1 February Increase in wages of municipal sanitation
workers.
22 March Increase in wages of maintenance mechanics.
1 April Increases in wages of government and state
farm employees.
1 May Increase in wages of coal miners.
1 May
2 5 May
June
Establishment of a minimum wage of 500 zlotys
per month.
Abolition of confidential reporting on
workers.
Increases in wages for workers in municipal
enterprises, the health service, communica-
tions, forestry, pharmacies, and courts.
1 July Improvement in pension provisions.
1 August Increase in salaries of workers in the field
of the arts.
1 September Increases in salaries for elementary and second-
ary school teachers.
12 September Abolition of criminal penalties for infraction
of labor discipline.
1 October Increases in salaries of university professors
and research workers.
1 October Increase in wages of transport workers.
October Government resolution authorizing establishment
of workers' councils.
6. Rumania.
1 April Increase in salaries of school teachers.
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May Increase in salaries of government employees.
31 May
24 July
29 September
1 November
1 December
Reduction in hours for employees engaged in
hazardous work.
Relaxation of restrictions on employment
transfers and increase in pregnancy leave.
Establishment of pensions for workers not
eligible under social insurance system.
Establishment of minimum wages and increase
in family allowances.
Increase in pensions.
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GAPS IN INTELLIGENCE
Most of the Satellites revised their wage systems in one way or
another during 1956. Little information is available, however, on
the extent to which these changes actually increased workers' in-
comes. Also, there is little information on the basis of which to
assess the effect of the widespread reduction in the workweek on
workers' total earnings. Finally, it would be desirable to have
information, which should become available shortly, concerning
the extent to which the general relaxation of stringent labor con-
trols has succeeded in alleviating some of the chronic labor problems
of the Satellites, such as absenteeism, high labor turnover, and
low productivity.
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SOURCE REFERENCES
Evaluations, following the classification entry and designated
"Eval.," have the following significance:
S
ource of Information
Doc. - Documentary
1
- Confirmed by other
sources
A
- Completely reliable
2
- Probably true
B
- Usually reliable
3
- Possibly true
C
- Fairly reliable
4
- Doubtful
D
- Not usually reliable
5
- Probably false
E
F
- Not reliable
- Cannot be judged
6 - Cannot be judged
"Documentary" refers to original documents of foreign governments
and organizations; copies or translations of such documents by a staff
officer; or information extracted from such documents by a staff officer,
all of which may carry the field evaluation "Documentary."
Evaluations not otherwise designated are those appearing on the
cited document; those designated "RR" are by the author of this memo-
randum. No "RR" evaluation is given when the author agrees with the
evaluation on the cited document.
25X1A8a
2.
3-
4.
5.
Ibid.,
7 Sep 56,
p.
HH 1.
OFF USE.
Eval. Doc.
Ib id . ,
28 May 56,
p.
II 1.
OFF USE.
Eval. Doc.
Ibid.,
7 Jun 56,
p.
JJ 2.
'OFF USE.
Eval. Doc.
Ibid., l8 Jun 56,
p.
HH 66. OFF USE.
Eval. Doc.
6. Neues Deutschland, 2 Aug 56. U. Eval. Doc.
25X(1 A-94- York Times, 3 Nov 56, p. 13. U. Eval. RR
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 Approved For Release 1999/09/21 : CIA-RDP79T00935A000400240004-1
9. State/Gt Brit, Budapest. Hungarian Press Summary,
7IZVI1 AQ*n 11,..- rc _.
25X1 A2g 11. CIA. FDD Summary no 878. 29 6, p- 37- OFF USE. Eval. RR 2.
12. Rabotniche.-,ko (jel n _ 11 -Tien q4 TT L0_.'.9 nn
25X1A8a
25X1A8a
25X1A8a
Ibid., 31 Oct 56, p. JJ 1. OFF USE. Eval. Doc.
15. Ibid.
16. Rude pravo, 6 Apr 56 . U. Eval. Doc.
20. National Committee for Free Europe. News from Behind the
ncv.1 AM? n----1-'-- .-i _1 __
22.
23.
21+.
25.
Ibid., 9 Apr 56, P. HH 4-5----
-5 . OFF USE. Eval. RR 2.
Ibid., 8 Oct 56, p. HH 2. OFF USE. Eval. RR 2.
Thu., 9 Apr 56, p. HH 4. OFF USE . . Eval. RR 2.
Gesetzblatt der Deutschen Demokratischen Republik, no 18
, 1956,
Berl n F
b _
7 rzf_
U
e
-75X1AWe, Berlin. Dsp 11+1 21 Jul 56. OFF
29. State, Berlin. Dsp 522, 7 Feb 56. OFF USE. Eval. RR 1.
~`- 30. State, Berlin. Dsp 858, 11 May 56. C. Eval. RR 1.
31. State, Berlin. Dsp 71, 25 Jul 56. OFF USE. Eval. RR 1.
25X1 A2 32? Ibid.
State, Berlin. Dsp 71, 25 Jul 56. OFF USE. Eval. RR 1.
35. State/Gt Brit,:Budapest. Hungarian Press Summary,
31 May 56. U. Eval. RR 1.
36. Ibid., 7 Jun 56. U. Eval. RR 1.
37. Ibid., 16 Jun 56. U. Eval. RR 2.
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38. Ibid., 12 Jun 56. U. Eval. RR 1.
X1 1 USAFE, 7050 AISW. IR-9030-56
1. State/Gt Brit, Budapest. Hungarian Press Summary
11 Oct 56
,
.
25X1A8a U. Eval. RR 2.
43.
44.
45.
46.
47.
49.
.
.
.
48. A. Current Intelligence Digest 23 Nov 56, p. 5.
25(1A ,1. RR 2.
55. National Committee for Free Europe. News from Behind the
50.
51.
52.
53.
54.
25`18rtain, Aug 56, p. 46-47. U. Eval. RR 1.
56.
57.
58.
59.
6o.
61.
62.
Ibid.,
24 May 56,
p.
II
3.
OFF-USE.
Eval. RR 1.
Ibid.,
29 May 56,
p.
II
3.
OFF USE.
Eval. RR 2.
Ibid.,
24 Sep 56,
p.
II
1.
OFF USE.
Eval. RR 3.
Ibid.,
29 May 56,
p.
II
3.
OFF USE.
Eval. RR 3.
Ibid.,
13 Nov 56,
p.
II
18.
OFF USE
Eval
RR 2
Ibid.,
2 Feb 56, p.
GG 5.
OFF USE.
Eval. RR 2.
Ibid.,
23 Mar 56, p.
GG 1.
OFF USE.
Eval. RR 2.
Ibid.,
26.Apr 56, p.
GG 14.
OFF USE.
Eval.?RR 2.
Ibid.,
16.Apr 56, p.
GG 7.
OFF USE.
Eval. RR 2.
Ibid.,
23.Apr 56, p.
GG 16.
OFF USE.
Eval. RR 2.
Ibid.,
3 May 56, P.
GG I.
OFF USE.
Eval. RR 2.
Ibid.,
18 May 56, p.
GG 2.
OFF USE.
Eval. RR 2.
25McA$a26 Jun 56, p. GG 7. OFF USE. Eval.
Ibid.., 21 Aug 56, p. GG 19. OFF USE. Eval. RR 2.
Ibid., 4 Oct 56, p. GG 2. OFF USE. Eval. RR 2.
Ibid., 16 Apr 56, p. GG 7. OFF USE. Eval. RR 2.
Ibid., 11 Oct 56, p. GG 6. OFF USE. Eval. RR 2.
4A$ahesko Belo, 11 Jun 56. U. Eval. RR
63. Ibid., 31 Oct 56, p. JJ 2. OFF USE
Eval
RR 2
.
.
.
64. State, Berlin. Dsp 251, 17 Sep 56. OFF USE. Eval. RR 2.
65. State/Gt Brit, Budapest. Hungarian Press Summary, 27 Apr 56,
P. 30. U. Eval. RR 2.
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25X1A8a
67. CIA. FDD Summary no 1063, 20 Sep 56, p. 86. OFF USE.
Eval. RR 2.
25X1 Aflid . , no 9,79, 27 J u n 56, p . 59. OFF USE. Eval. RR 2.
69. Ibid., 6 Aug 56, p. GG 24. OFF USE. Eval_. RR 2.
70. Ibid., p. GG 23-26. OFF USE. Eval. boc.
2'641 A0,te, Warsaw. T 111482, 25 Oct 56. OFF USE. Eval. RR 2.
73.
Ibid., 9 Oct 56, p. GG 19.
OFF USE.
74.
Ibid., 22 Jun 56, p. KK 1.
OFF USE.
Eval. RR 2.
Eval. Doc.
25X1f8i1, Sofia, 21 Jun 56. U. Eval. RR 3-
77.
78.
79.
80.
81.
82.
83.
84.
85.
86.
Ibid., 1 Oct 56, p. JJ 1. OFF USE. Eval. RR 2.
Ibid., 31 Oct 56, p. JJ 1. OFF USE. Eval. RR 2.
Ibid., 6 Nov 56, p. JJ 6. OFF USE. Eval. RR 2.
Ibid., 30 Jul 56, p. JJ 3. OFF USE. Eval. RR 2.
Ibid.., 21 Mar 56, p. FF 9. OFF USE. Eval. RR 2.
Ibid., 6 Nov 56, p. FF 15. OFF USE. Eval. RR 2.
Ibid., 19 Nov 56, p. FF 1. OFF USE. Eval. RR 2.
Iid., 4 Jan 56, p. II 1. OFF USE. Eval. RR 2.
Ibid., 8 Oct 56, p. II 10. OFF USE. Eval. RR 2.
Ibid., 26 Oct 56, p. II 18. OFF USE. Eval. RR 2.
Ibid., 28 Jun 56, p. HH 13. OFF USE. Eval. RR 2.
Ibid., 3 Oct 56, p. HH 1. OFF USE. Eval. RR 2.
8 State/Gt Brit, Prague. Press Review, no 242, 18 Oct 56.
25x1 Aftg Eval. RR 2.
89. State/Gt Brit, Warsaw. Polish Press Summary, vol 111, no 7,
25X 1 A8& Aug 56 . U. Eval. RR 2.
1. CIA. CIA/RR PR-116, Control of the Labor Force and Trade
2
unionism in the European Satellites, 20 Jul 55. S.
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93. Ibid., 22 Oct 56, p. HH 1. OFF USE. Eval. RR 2.
94. Ibid., 6 Jul 56, p. II 2. OFF USE. Eval. RR 2.
95. Ibid., 24 May 56, p. II 5. OFF USE. Eval. RR 2.
96. State/Gt Brit, Budapest. Hungarian Press Sum.y, no 232,
25&t&8a56,, U. Eval. RR 2.
Ate, Warsaw. Dsp 1 5 E, 17 Jul 56. C. Eval. RR 1.
100.
Ibid., 9 Nov 56, p. GG 25.
OFF USE.
Eval. RR 2.
101.
Ibid., 20 Sep 56, p. FF 2.
OFF USE.
Eval. RR 2.
102.
Ibid..,-6 Sep 56, p. HH I.
OFF USE.
Eval. RR 2.
Ibid., 17 Aug 56, p. HH 9.
OFF USE.
Eval. RR 2.
103 25
91 Budapest. JOINT WEEKA, no 37, 14 Sep 56. C. Eval. RR 2,
106. Ibid., 23 Nov 56, p. GG 6.
PlYI/AcR-ate, Warsaw. T 1630
Ibid.,
8 Nov 56, p. GG 17.
OFF USE.
Eval. Doc.
109. Ibid.,
14 Nov 56, p. II 11..
OFF USE.
Eval. Doc.
Ibid.,
26 Nov 56, p. II 1.
OFF USE.
Eval. RR 2.
110. Ibid.,
6 Nov 56, p. FF 12.
OFF USE.
Eval. Doe.
111. Ibid.,
23 Nov 56, p. FF 6.
OFF USE.
Eval. RR 2.
ter
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