INDUSTRIAL PRODUCTIVITY UNDER THE NEW HUNGARIAN ECONOMIC POLICY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700230116-6
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: July 12, 2011
• Sequence Number: 116
• Publication Date: April 27, 1955
• Content Type: REPORT

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STAT
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INDUSTRIAL PRODUCTIVITY UNDER THE HEFT HUNGARIAN ECONOMIC POLICY
PRODUCTION COSTS AND PRODUCTIVITY
dalmi Szemle, Jul 54 IN HUNGARIAN INDUSTRY -- Budapest, Tarsa-
From 1951 to 1953, Hungary's industrial production increased by 73 percent
and the productivity of industrial labor increased by 54 percent. The cost of
production, however, failed to follow a favorable trend. Production costs from
1951 to 1953 decreased only 8 percent. The Five-Year Plan called for a 25-per-
cent reduction in production costs, which required an annual decrease of 4-5
percent, but the average decrease amounted to only 2-3 percent in recent years,
and in 1953 it was less than one percent. This trend failed to improve during
the first part of this year; on the contrary, it deteriorated considerably.
Production costs in the first quarter of 1954 were 4.3 percent higher than
the average for 1953, and this ratio did not change in the second quarter.
Among the enterprises under the jurisdiction of the Ministry of Light Industry,
twice as many operated at a loss in the first quarter of 1954 as in the corres-
ponding period of the first year of the Five-Year Plan. Factors contributing
to the increased cost of production in the first quarter of 1954 include incle-
ment weather, delays in shipments, and frequent interruptions in the electrical
Power supply.
Although the average reduction of costs was generally poor in 1953 the
transportation, clothing, and mining industries managed to reduce their costs
according to their plans. Notable success was also accomplished by certain
enterprises which reduced the production cost of harvesting and threshing ma-
chines by more than 17 percent in 1953 and by 11.5 percent in the first quarter
of 1954.
On the average, productivity during the first 4 years of the Five-Year
Plan increased by 13.5 percent annually and was nearly 80 percent higher in
1953 than in 1935. The rate of increase, however, has decreased in recent years;
in 1953, productivity
quarter manufacturing
second the
Productivity
of 1954 was industry 8.4 percent increased
higher only
than 8inethent.
first quarter, but it is still unsatisfactory, since in the first half of 1954
it was 2-3 percent lower than in the corresponding period of 1953.
The reasons for the unfavorable trend in productivity during the past year
are poor exploitation of working hours and a decrease in wage and work disci-
pline. In the second half of 1953, industry utilized only 88 percent of the
available workdays, appreciably less than in the first half of 1953, and this
condition did not improve in the first half of 1954. More than 1.5 million work-
days [man-days?] could have been gained this past year if work time had been
utilized to the same extent as during the first half of 1953.
The migration of labor has also contributed to the decrease in productivity.
In the fourth quarter of 1953 and in the first quarter of 1954, permanent porkers
in the clothing industry were only 43 percent of the total. Manpower turnover
in the first quarter of this year was 14.4 percent in the industries under the
jurisdiction of the ministries and 39.5 percent in the building industries.
Despite the national trend of low productivity, output per worker during
the first half of this year increased as compared to the corresponding period
of 1953. The rate of increase in various industries was as follows (in percent):
9.4 at the Borsodnadasd Sheet Steel Factory (Boreodnadesdi Lemezgyar); 10.1 at
the Kobanya Spinning Mill (Kobanyai Fonoipar); 15.2 at the Cable and Wire Rope
Factory (Kabel as Sodronykotelgyar), Budapest; and 6.4 at the Kobanya Brewery
(Kobanyai Sorgyar).
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During the period of decrease in industrial productivity, wagec ircreased
continually. While productivity in the first quarter of 1954 was lower than
in the corresponding period of 1953, average earnings and wage levels were con-
siderably higher. This unfavorable condition resulted from excessive wage in-
creases and poor utilization of working time.
The utilization of new production techniques at the Hajdusag Pharmaceutical
Factory (Hajdusagi Gyogyszerarugyar) reduced the production cost of penicillin
by 50 percent. New equipment costing 19,000 forints has saved 400,000 forints
in a year at the Wilhelm Pieck Railroad Car and Machine Factory (Wilhelm Pieck
Vagon es Gepgyar), Gyor. The Ikarus Body and Vehicle Factory (Ikarus Karosszeria
es Jarmugyar), Budapest, also realized considerable savings as a result of a
nominal investment; the factory installed corrosion control equipment costing
26,000 forints and saved 1.8 million forints in the fi:st year. The Wilhelm
Pieck Railroad Car and Machine Factory fulfilled its cost reduction plan by re-
ducing the production time of second-class passenger railroad coaches from 240
to 140 days.
In numerous industries, including the Dunakeszi Car Factory (Dunakeszi
Vagongyar) and the Ganz Railroad Car and Machine Factory (Ganz Vagon es Gepyar),
production in the second quarter of this year was relatively less than in Decem-
ber 1953 when lack of electrical power caused frequent work stoppages. This de-
velopment indicates lack of proper machinery maintenance. In the machine indus-
try, maintenance crews spend 30-40 percent of their time in performing other
tasks.
Material waste has increased recently in the form of defective products.
At the enterprises under the jurisdiction of the Ministry of Metallurgy and Ma-
chine Industry, products worth 400 million forints were rejected in 1953 and
products worth 100 million forints were rejected in the first quarter of 1954.
Poor storage facilities are also contributing to the increase in material waste.
The movement for increasing the speed of circulation of working capital
has been in practice in Hungary for only a short time. In 1953, this movement
had the effect of speeding the circulation of working capital in industries by
5 days. This freed working capital totaling over 800 million forints, includ-
ing 60,000 tons of rolled steel, 1,000 tons of nonferrous metal, and other
valuable material. -- Gyorgy Tauszk
NEW ECONOMIC POLICY TO INCREASE PRODUCTIVITY -- Budapest, Szabad Nep, 28 Dec 54
Productivity has not increased enough, because advantage has not been taken
of the opportunities afforded by a socialist economy. A large par;; of the na-
tional income was put into industrialization but the renovation of existing in-
dustrial facilities was neglected. Besides failing to introduce neu products,
those manufacturing areas which have proved profitable were not expanded. Waste
such as the use of more valuable materials than necessary, has been abetted b;,
forcing the shops to meet their quotas at any cos;.. Such mistakes resulted in
serious losses to the economy in the first nnali' of 1954. If these mistakes had
been avoided, there could have been swecpinf price reductions.
The manufacture of new products in certain shops may moan additional e;;-
penses now, but even so, the opportunities of"ered by the new economic policy
make possible more economical production. The cutback in industrialization
means that more thought can be given to economy, quality production, technolog-
ical improvements, better equipment, planned maintenance, and shop safety.
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Funds to be spent on shop renovation, which according to a recent decision
of the Central Committee of the party will be increased by 30 percent, will en-
sure better and more economical production. Also, in addition to bud eta
vestment appropriations, enterprises are authorized to obtain one-year credits
from the Hungarian National Bank. g 29 in-
The greatest need for economy is in the use of
the ratio of material costs to total production coststincreased steadily,
reaching a high of 70 Percent i the fi~st In Past years,
forming to established maaterialnconsumptionhnorms. 1954. stance, i are not
con-
Metallurgical Works (Lein Kohaszati used For
the
in the manufacture of 10 crankshafts, exce dick) used ls in July, the
.9 9ton tons e of rolled steel
by 19 percent. ng the prescribed norm of 15.9 tons
aumbeApp d iab a savings can be realized by improving quality and reduci
53, defethe
1.1 billion forints, a sum equal to the pay of 100,000 workers.
The productivity of the individual worker must also be increased
the ratio of labor costs to total production costs is too high.
wades amount to about one fifth of , because
In general
the pramornton is much higher. production costs, but in certain industries
chats represent over three For example, in the coal mining indust
tile t iessee, over one hguarters of production costs, s labor
Vladimir Abelovszky and in the brick and
STAT
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