JPRS ID: 10497 USSR REPORT ECONOMIC AFFAIRS

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• Document Creation Date: November 1, 2016
• Sequence Number: 10
• Content Type: REPORTS

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JPRS L/ 10497
6 May 1982 .
USSR Re ort
p
ECONOMIC AFFAIRS
CFOUO 3/82)
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JPRS Z/10497
6 May 1982
USSR REPORT ~
- ECnNOMIC AFFAIRS
(~'OUO 3/82)
CONTENTS
INDUSTRIAL DEVELOPMENT [~ND PERFORMANCE
Effectiveness of Use of Production Potential
(V. Kuznetsov; VOPROSY EKONOMIKI, Oct 81) 1
Normative Net Output in Increased Production Efficiency
(L. Rozenova; VOPROSY EKONOMIKI, Jan 82) 13
- a ~ [III - USSR - 3 FOUO]
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I;VDUSTRIAL DEVELOP:^g:NT AIJD PEP.FORMANCE
i:r~~CTIVENES5 OI~ US~ OF PRODUCTION POTENTIAL
:~oscow VOPROSY ~i:ONOKII:I in Russian No 10, Oct 81 pp 120-130
[Article b}- V. riuznetsovl,
[Te~;t] ;~or the party's economic policy in the period of developed socialism,
derermination of lon~-term tasks, consideration of the conditions of economic
construction, scientific validation of ways of speedin~ up economic progres~
~ire characteristic features. The highest aim of the party's economic strategy
f.or tiie '80s, as pointed out at tiie 26th CPSU Con~ress, is a steady rise of
tiie material and cultural level of the liFe of tlie peerl~:, creation of the best
conditions for ti?e individual`s all-round development on the basis of a contiii-
uiii~; rise of efficiency of public production, grocath of laUor productivity and
- :;r~-~wth of the social and labor activity of the Soviet people. Its practical
acliievement will require tremendous resources. The national income used for
consumption and accumulation should be increased 1.4-fold Uy 1990.
'1'iie country's economic development over the long term, which means mobilization
of resources, will be associated with a whole series of complicating factors.
?de ref,er to significant curtailment of growth of labor resources, rise of out-
in connection with the development of the East and the North, growth of
expenditures on protection of the environment. There will be required radical
- rebuildinF of oId enterprises, construction of roads and accelerated develop-
ment of transport and communications.
Uurin~ tize llth Five-Year Plan, it is planned to increase national income by
18-20 percent, output of manufactured products--by 26-28 percent and of agri-
cultural ones--Uy 12-14 percent. Total volume of capital investment for tlie
five-year plan has been set at 711-730 billion ruUles.
Our country has entered the new decade while possessing a mighty scientific-
- tecl?nical and ~roduction potential. Tremendous resources are involved in the
national economy. National ~aealth (without land, mineral resources and forests)
durin, 1~7~-1930 grew from 1.4 to more than 2.7 trillion rubles. The relative
share of fi;ced capital amounted to 62 percent, including producer goods--42
- Pexcent, material working capital--17 percent, property of the population--19
percent. lluring the lOth Five-Year Plan fixed production capital grew by 344
uillion rubles. During 1976-1980, it was renewed 38 percent, including 36
percent in industry and 47 percent in agriculture. The capital-labor ratio
1
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of a person engaged in the sphere of material production, which in 1970 amount-
ed to 5,500 rubles, had almost d~ubled by 1980, amounting to 10,700 ruUles. In
industry it gre~a from 7,100 to 13,400 rub~es (87 percent), in agriculture--from
3,4U0 to 8,St30 rub les (142 percent) and ~.n construction--from 2,000 to 4,400
rubles (lld p~rcent).
Comp ared tc, thE. '60s, electric-power production doubled, steel production in-
creased Uy 46U million tons and production of the chemical and petrochemical
inclustry better ttian doubled. ?n 10 years, machine-building production grew
2.7 -fold, ontput of instruments-~~3.3-fold, computer-technology equipment--ten-
fold. Uuring 1971-1980, there were produced in the country more than 5 billion
~ tons of petroleum (including gas condensate~ that is as much as in the preced-
in~ ceiitury; 1.4 billion tons of steel were smelted.
Profound changes occurred in the distribution of productive forces. The natural
resources of tiie eastern and northern regions of the country are being actively
involved in national-economic turnover. As a result of the impact of the
scientific-technical revolution on the economy, the Lace of many production op-
erations and entire sectoL; is rapidly changing. I~iodernization is proceeding
at an accelerated pace in industry. During 1971-1980, new and modernized
enterprises provided four-fifths of the growth of industrial production. At
~liose enterprises wiiich have been built, expanded or modernized, production out-
rut per. worker is almost doubZe to what it was previously.
As a result of the systematic realization of the agrarian policy of the CPSU, a
mode r.n mate rial-technical base has been created for agriculture. Fixed agri-
cultural production capitai amounts to 212 billion rubles. The capital-labor
ratio ner ~oorker in agr~iculture reached 8,400 rubles in 1980; the capital-labor
ratie per 100 hectares of a~ricultural land is 39,000 rubles of worth of fixed
canital. Tlianks to strengthening of the technical base of agricultuxal produc-
tion, even with a curtailed number of workers, the volume of production per
iiectare grew 1.3-fcld in tihe last 10 years.
'ihe liSSR has rich natural resources. Agricultural land amounts to 609 mil-
lion hectares. l~orested area amounts to 792 million hectares (first place in
tlie world); the total stocks of tree plantings amount to 84 billion cubic
meters (one-fourth o~ the world stocks). Our country occupies first piace in
the world ~vith respect ta proved reserves of iron and manganese ores, apatites
and natural Ras.
'The country's production potential is determined by the quantitative and qu~11i-
tritive features of existin~ production fixed capital, material working capital
1nu labor resources. At the same time, accoun t is taken of availability to
tlie state of natural resources that are necessary for the normal functionin~;
of E~ub.lic ~roduction. 'io ensure fuller and more effective utilization of ~he
nroduction potential means to realize in the complex the most important fdctors
for l~oostinp the productivity of social labor and reducing production labor
intensiveness, to utilize with the hi~hest yield f:Lxed production capital (re-
duction of capital requirements per ruble of output) and to increase the pro-
duction output of existing ra~z and other materials while reducing material
intensiveness of production.
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'i~ie Soviet people are ri~;htly proud of the production potential created in our
country. But pride," L.I. Brezhnev said at the 26th CPSU Congress, "must always
be accompanied by a sense of high responsibility. Responsibility for the
fact that the tremendous potential created by the Soviet People is to be used
efficiently, witii full return."
Leading collectives of associations and enterprises have accumulated much ex-
perience in the struggle for economy of resources and reduction of material
intensiveness of production. During 1976-1980 economies of raw and other ma-
terials, Yuel, power and otlier ob jects of labor amounted to 11.4 billion ru-
bles. At the same time, unfortunately, more raw materials and electric power
are bein~ expended per unit of national income than would be possible if tht
best world indicators ~aere consiciered. hlany kinds of machinery and equipment
?iave hign material intensiveness, and expenditures of materials on the fabri-
cation of a number of products are great. Tne existence of large reserves for
tiie economizing and increasino of production of finished products from re-
sources existing in the national economy is shown by cases of inadequate use
of resource-savin~ production processes, incomplete removal of minerals from
tiie bowels of the eartti, poor utilization of production wastes and secondary
resources, significant losses of inetal, fuel, timber, cement, mineral fertili-
zers and agricultural products in the course of production or stora~e and slow
reduction of production cost and transport expenditures.
1'he adopted decree of the CPSU Central Committee and the USSR Council of Minis-
ters (3~ June 1981) "On Intensifyin~ Work on Economy and Rational Utilization
o� ~.R41-:iatcrial, Fuel-Power and Other riaterial Resources" notes that the ful-
1:illment of a broad program of economic and social development of the country
clesi~nated for tiie llth Five-Year Plan and the ' 80s woulcl require the involve-
ment in production of tremendous raw-material, fuel-powe r and other material
resources. But the acquisition of raw materials and fuel is increasingly more
expensive, while reserves of minerals are irreplaceable. 1ne most economically
ancl efficiently possible use of all the types ~~f material resources under
these conditions acquires special national-economic importance.
The 26th CPSU Con~ress set a task of ensuring economy of material resources,
introducing progressive norms of expenditure per manufactured product unit,
using on a ~~ide scale integrated processing of racv materials, resource saving
equipment and loca-waste, wastefree and power-saving technology and involving
in every possible way local raw and other materials into the cycle of opera-
tion and utilizing secondary resources; maximally curtailing the use of food
= raw materials and other agricultural products for industrial purposes. Tlirifty
expenditure of raw and other materials, reduction of waste and elimination of
losses siUnify economy of the labor of nullions of people and of capital in-
vestment, Uetter production results with lower outlays for it and conservation
of. tiie natural environment. In ttie final analysis, all this contributes to tne
imPr.oveci crell-bein~ cf the people. The reduetion of solely by half of losses
_ an~ wastes in r~etalworking is tl~e equivalent of an increase in ti~e production
of iinished rolled ferrous metals of 10 percent. Replacement of inetal cutting
witli stamping, pressin~; and f.itting on [nasadka] would make it possible to
sihnificantly reduce its expenditure. In machine buildin~, wastes in the course
of a year aMOUnt on the averape to almost 19 million tons, which is the
~
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~c~~iivalc'_nt of several Uillion rubles. Inefficient outlays of inetal because of
c~.cessive wei~ht of machinery and equipnient, unjustifiably high metal inten-
siveness of- products and insufficient use of progressive technology of inetal
w~rl:ing add up to apnroximately 15 million tons. Reliable protection of inetal
at;ainst corrosion ~fwhich costsStheastate135S40 billion ru les)lwouldrpermit ly ,
10-1~ ~illion tons,
trenendous economic savings.
C~zpital investment for the collection and processing of one ton of scrap metal
is tcaenty-fivefold less than the amount of natural ra~�~ material needed for the
sneltina of one ton of cast iron. The use of scrap and wastes of ferrous metals
at rerrous-r:;etallur~y plants is the equivalent of the release on an annual
It was noted at
;,zsis o~ G7U,OOU persons for the national econony as a whole.
L~:ie 26tn CPSU Con~ress that the main directions far the devalopment of ferrous
;,cr,~llurgy involve the radical improvement of the quality and increased produc-
5-fold in-
tian of effective types of inetal products. There will be a 1..'`i-2�
rrease iu the production of cold-rolled metal plate, rolled products from low-
;,.l..l_oy steel, sheet metal and tinplate with protectTeciseasha~es oflrolledemetal.
:;tri� metal and dyn~imic steel, shaped and tii~hly P i ep metallic powder
`Clie ProducCion of economical and special types of steel p p,
for the manufacture of items ~+~itii high resistance to wear, lonPouringaof steelt
~~~lcc to corrosion is being developed at an accelerated pace.
on continous-casting machines for thc production of billets caill reach 35-37
r~iLlion tons. 'ioEether ~aith overcoming shortage of inetal, another way--the
z~ationllization of nroduction use--will be introduced. For example, in Che-
- lyal~inskaya Oblast, economy of inetals at enterprises and construction projects
is l~eiu;; achieved on the basis of promisin~; comprehensive programs. At metal-
lur~*,ic.al enterPrises, reenuipment is being done for this end of production and
l~ro~~ressive production processes are bein~ introduced. As a result, output is
}~eiii~; 7.ncreased and quality is improved of inetal products and economical types
c,f rolled ~roducts. At user-eiiterprises, groduction metal intensiveness is
i~ein~ systematically reduced on the basis of improved design of manufactured
itc?,s, improvement of tiieir quality and wide-scale use of inetalworking pro-
;:,,-e~~ive teclinology.
Jurin}; tiie current five-year plan,oftrolledaferrous metalse bylan~averagemofano
~~~r;;.in;; to reduce the expend~.ture
less tlian 15-2U percent, stec l pipe--10-12 percent, rolled nonferrous metals--
'1-11 percent and savings of rolled ferrous metals in construction--7-9 percent.
M i~~.~~~ortant direction in more effective use of th~ production potential lies in
e.(~Licient emp loy~e n t o f ener g y carriers. The USSR p roduces annually 2 billion
A sign~f-
~ons of conventional fuel, which is one-fifth af world consumption.
icant portion ot ii~;ed production capital is concentrated in sectors of the
iuel and poorer compler.. For their development, there are allocated roughly
one-tliird of all state capital investment and significant material and
teciinical resources. lluring 1965-1979, petroleum production (including gas
coil:iensate) increased from 242,888,000 tons to 585,571,000 tons, gas--from
1~i7~(~~G million cubic n~telectricOpo;aer producCionrSfroma507fbillion~kilowatt-
to 718,664,000 tons, a
I~uurs to 1,23ti billion kilowatt-hours.
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Uurinb ttic llth l~ive-Year Plan, the further development and strengthening of
the country's fuel and power base is planned. The production cf electric power
by 19Fi5 is Pxpected to reach 1,550-1,600 billion kilowatt-hours, including
22U-225 billion kilocaatt hours at atomic electric power stations and 230-235
billion kilowatt-hours at hydroelectric poc~er stations and the production of
petroleum (~aith ~as conSensate)--620-645 million tons, gas--600-640 billion
cubic neters and coal--770-38U raillion tons. The achievements of the Soviet
economy are large determined by the increased efficiency of the extractive
industry. The main direction for this lies in accelerated scientific-technical
progress, ensuriug of tilorough and comprehensive processing of minerals, the
_ u~e of resource-saving equipment and technology and broader use of secondary
- resources and local raw materials. Greater economy of petroleum, for example,
is promised by its intproved extraction, conversion of motor transport to diesel
~ind ~;as fuel and of thermal electric power stations--from coal to gas. The use
of energy-slvin~; tecl~nologies has made it possible to reduce tlie expenditure of
fuel in the production of electric power by 20 percent, cast iron and steel--
12 percent and cement--7 percent. At the same time, losses of fuel, he at and
pocaer are still ~reat. rlany possibilities exist for economy of electric pocaer
iii the nonproduction sphere. ror consumer needs, 15 percent is expended of the
total output of electric power, cahich is released to the population at the lowest
price in tne world per %ilowatt-hour. A one-percent reduction of electric-power
consumption on everyday needs would make it possible to save annually 0.5 bil-
lion lcilowatt-hours, which is the equivalent of 100 train loads of coal.
Tiie use of secondary energy resources is 2-2.5-fold less expensive than the
construction of enterprises which can ensure the production of such a quan-
tity of energy. Secondary resources suitable for use for the national economy
as a whole are estin~ated at 240 million gi~acalories. In actuality, only 105
million tons, or 44 percent, are utilized.
ln this connection, the experience of enterprises of hemerovskaya Oblast is of
interest. The idea here is the development and consistent realization of con-
crete programs of reduction of expenditure of fuel, electric and thermal power,
reduction of t11e time for reaching projected norms of reducing outlays of re-
sources and wide-scale introduction of personal economy accounts. During tiie
c~irrent five-year plan, provision has been made on the scale of the entire na-
tional economy to ensure economy of fuel ancl power resources in the amount of
16G-170 million tons of conventional fuel, including 70-80 million tons from
ti~e reduction of expenditure norms.
ln t:ie course of realization of the decree of the CPSU Central Committee and
the tiSSt~ Council of i~linisters "On Intensifyin~ Work on the Economy and Rational
Use of F:aw-3saterial, Fuel-P~wer and Other I~iaterial tZesources an entire system
is oein~ implemented of organizational, scientific-technical, economi.~ and
political educational measures, ensuring the launching of a mass movement of
workers for a~i-out economy in industry, a~riculture, transport, construction,
ttie nonproduction sphere and in management. At enterprises and const ruction
Projects, on lcolkhozes and sovkhozes and at institutions and organizations,
concrete guidelines are being determined for reducing dsring the curren t five-
year plan outlays o� raw and other materials, fuel and power, curtailing waste,
making maximum use of secondary resources and eliminatin~; different kinds of
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losses and the responsibility of specific performers and heads of services
and subciivisions is increased for the practical realization of the developed
measures.
l~or the purpose of increasing proved reserves of mineral and raw-material re-
sources, particularly fuel and power resources, work on geological study of
the territory o� the country will proceed at an accelerated pace. Ttie search
for and prospecting of deposits of petroleum and gas in Western and Eastern
Siberia, tne ~:uropean part of the iJSSR, Central Asia and "Kazakh SSR is being
intensified. The same is true of deposits and easily concentrated ores of
ferrous and nonferrous metals, bauxites, phosphorites, coal, fuel shale and
raw materials for atomic power engineering and for the production of construc-
tion materials and mineral fertilizers as well as the search for and prospect-
inR of sub terranean water.
'To~etlier c~~ith expansion of prospecting for reserves of mineral and raw-material
resources, measures ]tavc been p rovided for increasing the efficiency of the
e::~ractive industry. tde refer to the wider use of petroleum production of new
~netliocis of acting on petroleum beds, introduction of gas-lift operation of
wells, higli-output immersed electric pumps and improvement of the technology
ol" extractin~, hi~;hly viscous and bituminous petroleum. By 1985, up to:85-90
percent of petroleum will be produced at integrated automated fields. At the
same time, labor outlays on the servicing of a well ~oill be reduced 15-18 per-
- cent. Upen-metliod production of coal will develop at an advancin~ rate on the
basis of wide-scale use or p rogressive technology and mining transport equip-
ment witti greater unit capacity. Subterranean procurement of coal performed
iiydraulically witt~ its transportation via pipeline will be further developed.
Tlie raw-material base of ferrous and nonferrous metallurgy ~~ill be strengthened
by r,:or~ complete extraction of components of extracted ores, increased content
of iron, u:an~anese and chromium in concentrates, improved technology of extrac-
_ tion and processing of ores and concentrates, accelerated introduction of auto-
;;enous, i~ydrometallurgic, microbiological and other effective production pro-
cesses as ~aell as the ~ise of mac~iines of large unit capacity.
tlccelerated development of ttie cliemical and petrochemical industry will make it
~ossible to nave the production of synthetic resins and plastics reach 6-6.25
;nillion tons, and synteietic f ibers and thread--1.6 mi.llion tons, to increase
Llie production oi synthetic rubber, high-quality polymers with given technical
ci~aracteristics and to mor~ fully satisfy the needs of the national economy for
catalysts, preservatives, synthetic fibers, thread and dyes, auxiliary textile
su~s~ancc:,, detergents, varnisties, paints and packing materials, fat and oil
substitutes for iudustrial purposes, chemical additives for polymer materials
aiiu syntliesis of piiarmaceutical a~ents.
The ratioual, ecouomic use of material resources presupposes intensification of
~i~e struti~;le a~ainst losses. Developed n~easures for increasing economic stimu-
lation of those t~lio are able to save pu~lic property should meet the require-
ments of coverin; all channels of losses.
Special attention is bein~ paid during this five-year plan to the development
and production ot equip;~ent possessing high efficiency, lower outlays of inetal
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anci other materials and lower energy intensiveness. In tne motor-vehicle in-
dustry, it is planned to speed up the development of production of trucks with
diesel enhines and to increase fuel economy of internal-combustion engines
tiirough improvement of tlieir design. The collective of the Pioscow riotor-Vehicle
j?lant imeni I.A. Liknachev 'tias decided on the basis of expansion and deepening
of creative cooperation with scientific-research institutes of the country to
introduce durin~ the current five-year plan ~:G joint developments ar.d to in-
crease ttie operational life of motor vehicles by 16 percent and ttiat of engines
i~y 2f1 percent.
'1'he accomplishmeiit of the complex of ineasures relating to the introduction of
lo~a-caaste tecnnolo~y caill make it possible Uy the end of the five-year plan to
reducc expenditure of rolled ferrous-metal products by 120,000 tons compared
to prescribed norns calculated on the basis of annual production output. Tlie
fulfillir,ent of adopted comniitments for the five-year plan on introduction of
tiie acliievements of science and technolo~y will make it possible to produce an
cconor~ic effect in tiie national economy of more than 320 million rubles and to
s~ive about 50U,000 tons of gasoline and 45,000 tons of furnace and boiler fuel.
'ltie i1SSi SCate Coru~ittee for Science and Technology, the USSF. Academy of Sci-
ences, liSSR tainistries and departments and councils of ministers of union re-
publics have been instructed to stimulate research on urgeni problems of sci-
entific and technical prorress for tlie purpose of reducing material intensive-
ness and energy intensiveness of Production. ~xpansion of production of new
types of machiiiery and equipr.~ent witli continuous operation, large unit caPacity
aud productivity r,ial:ing it possible to use resources economically, which is
cliaracteristic of heavy, transport and power macliine building, the electrical
equinment industry and other macnine-Uuilding sectors.
l�?ide-scale use oi resource-saving production processes energes as one of the
most efPective methods of reducing, material intensiveness of production. In
i:~et:~llurgy, this means tiie re:placement of inetal cutting with economical methods
of sliapin~; parts, introduction of electric furnaces into casting production
and of the r~ietilod of nonoxidizin~ heatinc; of inetal into forging production
and eride-scale use of part rolling mills making it possiUle to use rolled metal
e~itii r,iinimal caaste; in machine building--accelerated development of production
of complexes of inetalwortiing equipment equipped with automatic manipulators;
in liglit and food industry--the use of hi~hly efficient systems of machines
ensuring comPreliensive use of agricultural raw materials, reduction of losses
in their processin~;, storage and presentation to the consumer, in the construc-
tion materials industry--the introduction of energy-savin~ technologies in pro-
duction of cement, glass, lime, e conomical methods of heat treatment of rein-
Lorced concrete, kilning of ceramic articles and effective mettiods of insulat-
in~ lleat units and usin~ secondary heat. During, the current five-,year plan,
fuller utilization of timber resources will contribute to raising tlie level of
inte~ration of t?ieir processing. tdith an increase in the volume of production
output in tiie sector amountin~; to 17-19 percent, the production of propressive
forms of wood and paper Products is developing at an advancinp rate. In
particular, n roduction of ctiipboard during the five-year plan will increase
approximately 1.5-fold, wood-fiber board and cartons--1.3-1.5 fold, paper pulp--
1.3-1.4--fold and paper--20-'?S percent.
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i Ar, it,portant direction of economic mana~ement is the collection and utilization
of secondary ra~~ materials. Processing of ~econdary resources makes it possible
te reduce five-tenfold the capital intensiveness and energy intensiveness of
products. In 1~~78, one-fifth of the pape.r and almost one-half of the cardboard
w~ere produced from waste paper (of which 1.9 million tons were used). As a re-
sult about 7 million cubic meters of timber wete saved, the production of whiCh
would :iave required fellj.nb of trees over an area in excess of 100,000 hectares.
Suctl a volun?e of timber wauld have been provided by 70 new large timber indus-
try enterprises whose creation would have required one-time capital investment
in tile amount of 1 billion rubles. Each year thousan~s of hectares of land are
set aside for the burying of solid everyday ~aastes from cities (40 million
tons). At the same time, their contents includes 30-45 percent of paper and
cardboard, 5-9 percent of glass, 4-6 percent of textile fabrics, 3-5 percent
of inetal and 1-3 pe rcent of wood. The utilization of these wastes provides an
im~~ortant ecolo~;ical and economic effect. For this reason, beginning in 1981,
plans of economic and social development for enterprises and associations in-
clude a section oci assi~nments of use of secandary raw materials.
Ltficient utilization of raw materials and energy carriers acquires even a more
pressing importance because many of ttiem are irreplaceable. rfajor possibilities
for more effective use of the available production potential are opened up by
intensive use oE preduction capacities, machines, equipment and means of trans-
port. 1)~iring 1970-1979, the growth rate of the capital-labor ratio in indu~try
~zmounted to 132 percent, while the growth rate of labor producCivity was 152
oercent; in agriculture these indicators were 231 percent and 117 percent,
respectively.
The lag of the gro~oti~ rate of labor productivity behind the growth rate of the
ca~>ital-labor ratie is borne out by insufficiently eEficient use of machinery
- and equipment, workers and power machines, rneasuring and regulative instruments
and devices and neans of transport. l1t many enterprises, machinery and equip-
ment operate only one shift and significant intrashift interruptions are per-
r,~ittecl. The 26tii CPSU Congress set a task of. improving the use of production
caPacities and fixe d capital, raising the shift coefficient of operation of
machiiiery and equipment and creating, while taking into consideration the spe-
cial features of individual sectors and production operations and using pro-
4,ressive systems of organizatioii of maintenance and modernization of equipment.
!;t t'tie end of 19~0, the value of fixed production capital of the national econ-
omy ar~ounCed to r,~ore than 1.1 trillion rubles. G)ith today~s scale of produc-
tion, a~;rowtl? of output capital in industry of 1 percent is the equivalent of
adclitional production output aniounting to roughly 6 billion rub les.
ror better utilization of fir.ed production capital, passports of production
associations and enterprises are compiled in accordance with the decree of the
Cl'SU Central Committee and the USSR Council af rLinisters on improving the econ-
omic mechanism. They sliow the presence and use of production capacities, the
technical organiz ational level and sper_ialization of production, the quality
of manufactured products and also oth~r. technical-economic indicators. Pass-
ports of production assaciations and era.L-e rprises provide the possibility of
si~;nificantly raising the level of control over the use ot production capac-
ities. This is borne out Uy the Sumy Piachine-13uilding Association imeni
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:..V. Frunze, wnere a control system of production capacities has been develop-
ed. Ar? audit ~aas made at the assoc~ation of the maciiine-tool parlc, and it was
established that it would be possible with two=shift work to fulfill a more
intensive program. During the lOth Five-Year Plan , 395 various machine to~Ls
were found to be unneessary at the association's hea~ plant. The freed area
~Ias used for the placement of 109 new ones, including those with programmed
operation. Tiie cnief evaluative criterion is the actual level of use oL norm-
ative production capacity.
I-fotivation of collectives of sections and shops is determined on the b asis of
tcao criteria: fulfillment of plan targets ~ives the right to a reward, while
its size is computed according to the level of actual utilization of production
canacity (compared to the norm). With distribution of economic-stimulation
funds, provision is made for redistribution of funds in favor those collec-
tiv~s of sections and shops wliich, in fulfilling tne plan, make better use of
production capacities. Effective usa of the production potential just at the
Sumy association resulted in a saving of 7_1.5 million rubles of capital
investr~ent.
e;ro~~th of labor ~roduction because of acceleration of the rate of intep,rated
meciianization anu automation of production, introduction of scientific labor
or;;anization, imProvement of training and upgrading of qualifications of cad-
res and strengtheninr_ of labor discipline constitute the decisive cotidition
Lor raisinQ of the efficiency of nublic production. Over ttie course of the
last 10 years, productivity of social labor, computed as a ratio of national
income to the number of einoloyed in sectors of material production, increased
b; a factor of 1.5. This was resPonsible for a greater than 30 percent ~ro~ath
of tiie national income and ensured an economy of labor of almost 3b million
persons. Ti~e rise of labor productivity in industry by only 1 percent in
1~)�i0 rrovided witii the same numUer of workers additional production output in
excess of u billion rul~les. Durinr tlie current five-year plan, it is intended
to Provide a 17-20-percent Frowtn of labor productivity. In all sectors, it
is imPortant to achieve ~;rowth of production output at existing enterprises
,:~ith a staUle or even snaller number of employees. It is planned to increase
laoor productiviCy of ~vorlcers in industry by 23-25 percent, in agriculture--by
22-24 percent, in construction--by 15-17 percent and in railroad transport--
by 10-12 percent. Ttie fulfillment of intensive t~rgets for oroyrth ~~i Iabor
productivity is dictated by tiie special features of the country`s economic
developrient in tlie ~80s, particularly the sharp reduction of influx of new
labor resources with an exceptionally hi~h level of employment of the popula-
' rion (J4 percent).
~ !:eduction of production labor intensiveness can be done on the basis of ~all-
possible acceleration of scientific-technical p rogress in all sectors of the
economy. During the current five-year plan, a transition will be systematic-
ally carried out of creation and introduction of individual machines and pro-
ciuction process for the development, production and mass use of nighly effi-
cie~it systems of machines and equipment for the mechanization of the ~ahole
comple~: of operations--both basic and auxiliary.
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L-,q~rovement of the organization, norm setting and stimulation of labor,
strear;tiienin~ of labor discipline and r_he continued rise in the level of
vocational-technical t,raining of cadres are of major importance. l~lthough
the sphere of use of qualifieci, meclianized labor is constantly expanding, at
Lhe present time, riore than 40 million people are en~aged in manual labor in
sectors of material production alone, excluding repair work. This results in
extensive use of labor resources, creates difficulties in filling work places
in counection ~~itii an uncleviating growth of the level of general-educational
and vocational-tecilnical training oL- workers, especially of young people. 2'he
ineclianization of mariual ~aork rapidly pays for itself and provides a si~nificant
social effect. i:;tpenditures on the release of one worker engaged in auxiliary
production are on the 1
7i,97
csa: iszo/iu~
iz
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INDUSTRIAL DEVELOPMENT AND PERFORMANCE
NORMATIVE NLT OUTPUT IN INCREASED PRODUCTION EFFICIENCY
Moscow VOPROSY EKONOMIKI in Russian No 1, Jan 82 pp 23-32
[Article by L. Rozenova: "Normative Net Output and Increasing Efficiency of
Production"]
[TextJ Increasing production efficiency and in all ways economizing on material,
labor and financial resources are important directions for steadily advancing the
national economy that were earmarked by the 26th CPSU Congress. Economizing on all
kinds of resources is a complex task whose solution involves the development of
science and technology, improvement of price setting, standardization and forms of
stimulation and other economic factors that influence economic conditions. In the
decree adopted by the CPSU Central Committee and the USSR Council of Ministers con-
cerning economizing on materi~?. resources it is noted that the system of administra-
tion, planning and incentives should be directed toward economy and effici~nt utili-
zation of all material resources.
In order to create conditions that contribute to economizing on resources it is
very important to apply the appropriate economic indicators in planning, particular-
ly the indicator of normative net output (NChP). As of 1 January 1982, 33 ~ninistries
are changing over to the application of the indicator of normative net output in
planning industrial production, including all machine building ministries. In the
four ministries--the USSR Ministry of Power and Electrification, Ministry of the
Petroleum Industry, Ministry of the Gas Industry and the Ministry of Nonferrous
Metallurgy--this indicator will be used only at enterprises of the processing in-
dustry for the time being. In a number of ministries, particularly the USSR Minis-
try of Ferrous Metallurgy, the Ministry of the Petroleum Refining and Petrochemical
Industry and the Ministry of the Chemical Industry, experimental testing of the in-
dicator of normative aet output is being continued. The normatives will be develop-
ed in these branches after the results of the experiment have bee~n generalized.
'I'he utilization of the indicator of normative net output and also other measures
that have been taken to improve planning make it possible to evaluate with better
justiEication and more objectively the results of the activity of the enterprises
and organizations for increasing production efficiency, increasing the productivity
of live labor and economizing on labor resources. This is shown by an economic ex-
periment in applying the normative net output in planning that was conducted on a
larKe scale in the branches, associations and enterprises. Measuring labor praduc-
tivity on the basis of gross output does not adequately reflect the enterprise's
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cc~ntribution to increasing its own labor productivity since it includes the results
of "outside" labor. The press has extensively elucidated the shortcomings of the
tradirional "gross" method of planning and accounting for labor productivity at en-
terprises and a~sociations. ~
On of the main directions for economizing on labor resources is increasing labor
productivity. What with the shortage of labor force, an objective evaluation of
labor productivity becomes especially important. The distribution and utilization
of labor resources, the development of ways of economizing on them and, consequent-
ly, increasing the efficiency of public production depend largely on this.
The normative net output is assigned an essential role in the objective evaluati.on
of labor productivity since expenditures of past labor do not influence its levc~l.
In the five-year plans for the economic and soci~al development of industrial minis-
tries. associations and enterprises (with a breakdown for the various years) thE~
new indicator is the basis for establishing indicators for increased net output
(normative) and labor productivity. The NChP is also used for calculating capital--
output ratio. Norn~atives for determining the wage fund and controlling its utili-
zation are established in terms of one ruble of NChP.
M
The main measures of labor productivity, as we know, are the output of products per
unit of. working time or expenditures of :~nrk~ng time on the production of each unit
of output. These indicators are calculated in physical units. The quantity of vari-
ous kinds of products that are produced is measured in value form (in constant prices
of the enterprises). Labor productivity in value terms including both past labor
that is embodied in raw material, processed materials, semimanufactured products and
batching items, and in newly created value essentially characterizes the productivi-
ty of public labor. On the basis of the normative net output it is possible to mea-
sure only the productivity of live labor. But the growth of the latter in all
branches of the national economy, in the final analysis, determines the growth of
the productivity of public labor.
The increased role of the normative net output in evaluating labor productivity has
brought about the structure of the new indicator and the methodology for determining
it. Wages comprised more than half of the structure of the normative net output,
and the remainder is profit. The table below gives data concerning the structure of
n~~rmative net output in the various branches of machine building:
Proportion oE T~ormative Net Out~ut
Output _ Wages Profit ~
1 2 3 -
Total for machine building ~ 60.0 40.0
including in branches:
_ heavy machine b~iilding (2,7 37.3
power machine building 50.1 49.9
electrical equipment industry 59.2 40.8
chemical and petroleum machine building 60.3 39.7
instrument making, automation equipment
and control systems 59.3 40.7
machine tool and tool building 65.2 34.8
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Proportion of Normative Net Output
Output Wages Profit
1 2 3
construction, roaci and municipal
machine building 63.2 34.8
automotive industry 55.0 45.0
tractor and agricultural machine
building 54.7 45.3
machine building for animal husbandry
and fodder production 54.2 45.8
machine building for light and food
industry and household appliances 65.5 34.5
On an average for machine building wages comprise 60 percent of the vplume of the
NChP and profit, 40 percent. The deviations from this average level in the various
branches is explained by the different structures of expenditures and the formation
of profit, taking into account the branch capital-output ratio.
The normative net output is a part of the wholesale price of the item, including
wages, deductions for social security and profit. 1ne existing "Methodological In-
structions Concerning the Policp for the Development and Application of the Indica-
tor. af Net Output (Normative) in Planning"* stipulates that the normative of net
output for a specific item is determined by the total of wages and normative profit.
In general form, the formula~for calculation can be written as follows:
H y!1 = 3~,I, -I- 30 + nH , c l)
where 3�r --c~~orkers' wages (basic and additional), including deductions for
s~:.ial security in the projected (planned) calculation of the production cost of
~ the item; 3� --the wages of the remaining industrial production personnel for ser-
vice and administration of production per unit of item; ~jN --normative profit per
unit of the item.
Net output normatives and wholesale prices are established on the basis of un~fied
calculation and progressive technical-economic norms, and they are of a brancY~ na-
ture. The branch net output normatives, which have the same calculation base as
prices, include not just any labor expenditures of a particular enterprise, but the
socially necessary normative expenditures on the production of the products that 1�re
used in the formation of wholesale prices and provide the greatest economic effect
from ttie production and application of the products. At the Pavlodar Tractor Plant
imeni V. I. Lenin, for example, expenditures on the praduction of tractors with a
capacity of 90 horsepower exceed the maximum price level caiculated taking into ac-
- coiint their technical and economic parameters and efficiency. Therefore the new
whol.esale prices that went into effect on 1 January 1982 were reduced by more than
10 per.cent below the level projected by the enterprise and the net output normatives
_ were reduced by 30 percent. Labor expenditures in excess of the necessary norms
*See "Methodological Instructions Concer.ning the Policy for the Development and Ap-
plication of the Indicator of Net Output (Normative) in Planning" (in the collec-
tion "Improving the Economic Mechanism" Izdatel'stvo "Pravda", 1980, pp 69-79.)
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are not reimbursed either through the price or through the normatives, which makes
it possible to economically "punish" the enterprises for wasting labor.
When calculating the nornatives, the wages of the production workers ( 3n~,) are ap-
~ plied at the level ti:at was taken into account in determining the prices in the cor-
responding article of the calculation per unit of output. As for the wages of wor-
kers for service and administration of production ~3~ in the calculdtion per
unit of output it is determined with a special coefficient (,K,) which is the same
for the enterprise or branch. This coefficient characterizes the ratio between the
sum of wages of industrial production personnel for administration and service of
production and the wages of production workers. The level of this coeff icient de-
pends on a number of factors, among which one should mention the number of workers
in the d~sign and technological services, the ratio between the number of auxiliary
and basic production workers, and so forth. On an average for machine building it
amounts to 1.5.
The established normatives (froin formula 1) remain stable throughout the five-y~:ar
plan. An increase in labor productivity with stable normatives (and, as a rule,
with the same number of workers) can be achieved on the basis of economizing on la-
bor resources per unit of output both through reducing the labor-intensiveness of
the products that are produced .ind through reducing losses and utilizing working
time better. The reduction of ~.he labor-intensiveness of the products depends on
many factors, including improvement of production organization and increasing its
technical support, that is, on factors that are related to the concrete activity of
_ the enterprises which is directed toward increasing production efficiency.
The significance of the indicator of net output increases especially when determin-
ing the labor productivity of enterprises that manufacture products that use less
expensive materials and substitutes. The existing policy for price setting stipu-
lates that when materials that are less expensive than the present ones are used
and the product quality remains at the previous level, wholesale prices remain un-
changed until the end of the fi~~e-year plan.
Tt~e utilization of less expensive materials requires, as a rule, additional proces-
sing of them, which leads to a~ increase in the labor-intensiveness of the produc-
tion oF products. For example, the replacement of the lead casing of a long dis-
t.nce cable with a corrugated steel one (while retaining the main technical and
- economic parameters of the cable) led to a reduction of the weight of one kilometer
of cable by 28.5 percent (from 1,105 to 790 kilograms) with a reduction of the pro-
duction cost by 28 perc~nt (from 948 to 682 rubles). But the labor-intensiveness
of the manufacture of the cable in corrugated steel casing increased 1.4-fold as a
resule of the additional operations for cutting the sheets, welding the casings and
applying the polyethylene hose.
In titich cases, with the "gross" method of calculation of labor productivity, re-
taining the existing prices for the cable in lead casing does not fully solve the
problem of increasing the motivation of the manufacturer to assimilate a new pro-
duct using less expensive raw material since labor productivity decreases at the
manufacturing enterprise even through the mass of profit increases. Replacing the
cable casing with a less expensive one and one that is in greater supply provided
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an annual savings of more than 500,000 rubles for the national economy. But with
the "gross" method of calculating labor productivity the interests of the manuf ac-
turing enterprise end up in opposition to natianal economic ones.
- I3ut when labor productivity is calculated according to the normative net output it
is advantageous for the manufacturing enterprise to produce cable with relatively
less expensive materials since the net output normativ2 increases. It reflects the
economically justifiable increase in labor expenditures which provides for an eco-
nomic effect in the production of the cable. It is known that one of the main
principles of price setting is the principle of identity of prices for identical
products. Therefore the price~ of the cable remains unchanged since its consumer
qualities do not change. And t.hus the new indicator more objectively takes into
account both the savings of labar expenditures on the production of products and
the economically justified increase in labor-intensiveness related to savings on
material expenditures when materials are replaced with less expensive ones or to
- the increased technical and economic parameters and effectiveness of the new pro-
ducts.
The changeover from experimental (test) verification of the indicator of normative
net output to its planned introduction into economic practice requires that a number
of problems be solved, particularly the problem of whether when calculating the
NChP for a new product the stable coefficient K,y taken from the basic price list
should be used or whether it should be calculated annually. According to the
"Methodological Instructions Concerning the Policy for the Development and Appli.ca-
tion of the IndicaCor of Net Output (Normative) in Planning," the coefficient K3 is
used for the same accounting periods in which materials are presented for the sub-
stantiation of wholesale prices and normatives, that is, it changes from year to
year, which is brought about by the dynamic nature of overhead expenditures in the
production of products.
As was already noted, the amount of the coefficient K~ depends on the number of
workers in design and technological services, the ratio between the numbers of aux-
iliary and basic production workers and on other factors. Would it be correct to
increase (or reduce) the volume of net output if, for example, the design bureau
were transferred to the books of the enterprise (or transferred to independent
books)? Would not the change in the coefficient K3 lead to unjustified changes in
the rates of growth of production and labor productivity? After all the influence
of this coefficient on the level of the normative net output is great since the
proportion of wages of workers in service and administration comprises more than
40 percent of the NChP.
i'urther, witn mechanization of auxiliary loading-unloading and repair work and a.
reduction in the number of workers employed in these operations, the wage fund for
service for production in the enterprise as a whole can be decreased, which leads
to a reduc~ion of the coefficient K3. Its reduction can also be brought about by
an absolute or relative reduction of expenditures (wages) for administration. In
a11 of these cases, with an economically justified increase in labor-intensiveness
cluring the assimilation of new, more complex and effective items, the normatives
f.or the new products, as a result of the reduction of the coefficient K3, can be
unjustifiably lower. than those for previously assimilated, less labor-intensive
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products, but with a greater K3. Therefore it is expedient to keep this coefficient
stable throughout the entire period of the five-year plan. On the whole, in c~ur
opinion, the role of normatives in economizing on labor resources will be more sig-
nificant if it is made dependent mainly on changes in labor-intensivenzss.
With the applicatic;*_: of the indicator of NChP in planning, it becomes especially im-
portant to have scientifically substantiated planning of labor. The basis for the
development of normatives of net output should be the normative labor-intensiveness
which is determined taking into account progressive technology and organization of
production. The substantiation of the normatives of net output depends on the
qu;ility of the norms, their objectivity and precision. Increased norms lead to ad-
ditional expenditure of labor resources and the wage fund, and they distort indica-
tors that are calculated on their basis. T'his is why the changeover to the NChP in
planning requires introducing a strict policy in norm setting for labor.
One oF the complicated problems in the development of normatives of net output con-
sists in making branch normatives take into account the conditions of cooperation.
As we know, the level of labor expenditures at a specific enterprise depends on its
cooperation with other enterprises. Moreover the conditions for cooperation at en-
terprises that manufacture the same kinds of products can differ significantly,
which brings about different levels of labor-intensiveness for the same products.
Thus manufactured products, for example, fabrics, can be manufactured from one's
own yarn and gray cloth, from others' (purchased) yarn and one's awn gray cloth,
or from others' gray cloth. Ln all of these cases labor exper,ditures on the manu-
facture of the fabric of the same article differ essentially.
In a number of branches (light, food, pulp and paper and others), the normatives
are established in terms of limits (for various operations). The overall volume of
normative net output is determined by the total of normatives (volumes) from indi-
vidual limits and kinds of work performed at a specific enterprise. In these
c