CAUSES OF WAGE INEQUITIES IN THE HUNGARIAN ECONOMY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700250025-5
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: July 8, 2011
• Sequence Number: 25
• Publication Date: February 20, 1956
• Content Type: REPORT

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STAT
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Statisztikai Szemle~ Vol iGI;CIII, No u
Budapest, Jun 1955
In the changeover from a capitalistic to a socialistic wage system in
3lungary, considerations of the utmost importance included: the practical real-
ization of the principle equal pay, for equal work, the introduction of s piece-
work system consonant with the principle of distribution according to labor, and
the creation of a wage system which would be beneficial to industrial develop-
ment. however, there have been several very adverse factors which have compli-
cated the realization of a socislist wage system.
In cant' cases, wage regulations are not enforced according to the spirit
of the law. Rather, they are interrn?eted arbitrarily, handled liberally, and
often not enforced at all. Thus, wage discipline has become extremely lax and
inequities have arisen.
Unger socialist theory, an increase in wages is ,justifiable only on the
basis of increased output. However, there is nn increasin6 number of workers
who are earning unjustifiably high wages, exclusively as n result of relaxed
or obsolete norms, rather than on the basis of increased output. A natural
consequence of the relaxation of norms is that the wage scale in the individ-
ual sectors of the economy has formed spontaneously and not in conformity with
the intent of wage regulations.
The scope of this article does not permit an analysis of wage patterns
throughout the economy, therefore, wage inequities in only the ministerial
and construction industries and in a3p?iculture will be considered.
In 195=~, the average monthly wage of workers in the industrial establish-
ments under the ministries was 11.5 percent higher than in 1953; in the con-
struction indu^,try, 10 percent Y,igher; and in agriculture, 1~.3 percent higher.
In t`e final yea: o: the Five-Year ?lap, the average wage of the workers
in these sectors of tl:e economy chan.;cd relative to one another, as is shown in
the following table:
;lade Lndexes in Certain Sectors of the Economy
Averaf;e Monthly Earnings of F7orkers
Sector 1953 1954
linisterial industries
100.0
100.0
Actual construction
(ministerial and local)
89.3
33.0
Agriculture
70.7
75.0
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The differential between the earnings of workers in agriculture and in
industry is actually less than is indicnted, if account is taken of payments
in kind received by agricultural wor]cers and of the fact that the seasonal
nature of their work limits working hours. In fact, if agricultural workers,
especially t?!CS tractor drivers, worked the same number of hours as industrial
workers, their earnings i~rould exceed those of industrial workers. Actually,
greater wage inequities exist within the economic sectors than exist between
them. The principal inequity between the sectors lies in the disparity is
wages paid for identical work in different sectors. For example, skilled
workers in the construction industry earn less than their counterparts in
the manufacturing industry, even though they may be doing exactly the same
kind of work.
47ithin the individual sectors, the various r_omponents compete for workers
by paying unjustifiably high permiums and by relaxing norms. In many fields,
unqualified workers receive more pay than qualified ones, and frequently the
pay for heavy physical work requiring professional knowledge is leas than for
light physical work requiring professional knowledge.
['iinisterial Industries
Since 1949, the average wage for workers in heavy industry has increased
at a greater rate than in light industry and in the food industry, partially
by reason of wage measures and partially by reason of technical advances.
Using 1949 as a base period, the following indexes show the pattern of
average monthly earnings in the ministerial industries:
Index of Average [donthly Earnings
(1949 equals 100)
Industry 1 50 191 1952 1953 1954
All ministerial
industries 114.5 122.4 155.7 162.9 181.7
Heavy industry 114.4 122.0 156.2 163.3 183.2
Light industry 115.0 122.0 153.6 156.3 174.2
Food industry 112.3 117.6 141.4 14?3.8 166.9
The rise in wages from 1953 to 1954 was largely a result of relaxed wage
discipline, and wage inequities became more marked. For example, in June 1954,
cabinet workers in enterprises of the Ministry of Light Industry earned 10.8
percent less than those itt enterprises of the Pinistry of [?ietallurgy and the
Machine Industry and 21 percent leas than those under the Ministry of the Chem-
ical Industry.
At the Scales Factory (Iderleggyar), the norm for sawing up two pieces of
iron rod was set at 16 hours, while the actual time required for the fob was
only 57 minutes. Thus, the workers exceeded the norm by 1,700 percent and
earned about 4,000-5,000 forints per month throughout the year.
Construction Industr
Despite incrensed wages in the construction industry, by the last quarter
of 1954, its work force was only 95.2 percent of the requirement. The shortage
is attributable to higher earnings obtainable in other sectors of the economy.
STAT
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In Peat tdegye during September and October 1954, the nationalized con~truc-
tion industry paid stonemasons 23 percent less, carpenters 58.9 percent less,
and unskilled workers 1~2.1F percent less than they could 'nave earned as independ-
ent craftsmen.
The average monthly pay of construction workers in the ministerial indus-
tries was 37.2 percent higher than that of equivalent workers Sn the construction
industry.
The administrative system for accounting for work performed and for wages
ie so complicated that the workers find ways to draw pny for work they have not
performed. This, coupled with n lowering of norms, has resulted in the expendi-
ture by the r_onstruction industry of millions of forints not backed by produc-
tion. An examination of eight completed construction pro,lects revealed, for
example, that wade outlays exceede3 technically justifiable labor costs by 27
percent.
Agriculture
41nge laxities have played a lesser part in the increase of agricultural
earnings than in other sectors of the economy; rnther, the marked increase in
earnings in 1954 was a result of specific xage improvement measures.
The following table shows the increase of the average monthly earnings of
agricultural workers in several branches of that sector during 1954.
Average Increase
Branch {index: 1953 equals 1C0)
State farms 121.0
1'iPS 100.7
Forest conservation 111.5
Special enterprises 117.1
Despite the favorable pnttern of agricultural wages as a whole, there are
several inequities in the wage scale of the state farms, and the wages of the
MPS tractor drivers did not increase in ln?oportion to the general rise in xagea.
On the state farms belonging to the 2?linistry of State Farms, plant culti-
vntion workers in 1954 earned 15 percent less than those engaged in animal hus-
bandry. The facts that the premium system,. in animal husbandry is more favorable
than in plant cultivation and that work in the latter field is seasonal do not
fully explain the xage differential. In 1954, even during the second quarter,
the most favorable season for plant cultivntion, such workers earned 24 percent
less than animal husbandman on the state farms under the t?Sinistry of State Parma
and 27.6 percent less than those on all state farms.
The inequitable wage system not only induces brigade leaders to falsify?
work reports but also to stress extensive rnther than intensive culti?ration.
As a result, workers on small farms who engage in quality production often
earn less than those on the larger farms.
Although most bYPS employees enjoyed sizable wage increases in 1954, the
earnings of the tractor dri?rers increased by only 4.1 percent during the first
half of the year. In this same period, the average earnings of hII'S shop workers
rose by 24.8 percent.
In 1954, tractor drivers earned an average of only 5 percent more (including
grain payments) than cultivntion workers on state farms.
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In addition to the disparity between the earnings of tractor drivers and
the earnings of workers both within and without a~z?iculture, there are consider-
able variations in the earnings of tractor drivers of the various LIPS.
For example, the average earnings of h~S tractor drivers in Szolnok biegye
exceeded the national average (probably of tra^_tor drivers' earnings? by 36.2
percent. In Ilograd !degye, their earnings exceeded the national average by 14.8
percent, while in Zaln ttegye, they were 19.1 percent below the national average.
But, at certain t?iP5 in both Szolnok t?Iegye and 'Laln !legye, the earnings of the
tractor drivers were as much as 40 percent below the national average.
In some cases, such inequities are a result of the failure to estimate
?varying ^, oil conditions. FIowever, where soil conditions are identical, in-
vestigation revealed that wage inequities are a result of serious laxity in
~rork discipline, which is evidenced by the railure of many tractor drivers to
fulfill their technical norms (musznknoryE) [i.e., the daily output prescribed
for bifS tractor drivers].
In addition to the aforementioned causes, variations in the earnings of
tractor drivers are attributable to inclement weather and to equipment break-
down resultin; from poor maintenance, the lack of spare parts, and the use of
worn-out equipment.
',A~ere wort: discipline and maintenance are food and the soil conditions
appropriate, the earnings of tractor dri~rers are high. At six of the better
t?iPS in Szolnok tfe~ye, for example, out of a total of 66i; drivers, 153 earned
o?rer 1,800 i'orints during September 1954, includin3 many who earned up to
tr000-6000 forints.
The average earnings of the state farm tractor drivers are higher than
the average earnings of the t?1TS tra^.tor dri?:ers, because the work flow and
working conditions are more favorable ..^.:td the norr,:s frequently are loxer. The
average monthly earnings of state farm tractor drivers range between 3,000 and
5,000 forints.
During the first half of 1954, i?~i; "haulin:;-tractor" drivers earned an
average of about 200 forints per month n;ore tlan IfPS tractor drivers. Such a
disparity is unjustifiable, because the tractor driver does the more important
work of the two.
r.ven though the hauling-tractor drivers increased their earnings by work-
ing overtime (often 30U !~00 hours per month) dtu?in~; the period January-June 1954,
their basic pay (for 250 hours ner month) was still higher than that of tractor
drivers, including ~?sin payments and premitu:m.
[Comment: In addition to the information presented in the foregoing text,
the source includes specific examples of local practices which give rise to
wage inequities. Also inclu:ied are tl:e followin;; tables:
1. A percentage comparison of the average wages earned in June 1954 by
skilled worY.ers (lathe operators, ulaners, welders, en;ine fitters, blacksmiths,
and mill-machine operators) of six machine factories with the average wages
earned by their counterparts in the enterprises under the ldinistry of t~fetal-
lurgy and the Afachine Industry.
2. A percentage comparison of the June 19516 earnings of skilled workers
(lathe operators, welders, building and decorative metal workers, and vehicle
fitters) in the coal mining, chemical, electric power, light, food, and con-
struction industries and in transportation and postal work with the June 195t~
earnings of employees of enterprises wider the Dlinistry of I?Ietallurgy and the
ASachine Industry.
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3? The number of technical norms and workdays completed by tractor drivers
o_ five t?fPS in September 1954.
!+? The classification of the tractor dri?rers of seven t?II'S in accordance
with the number of technical norms fulfilled, including the number of tractor
drivers at each hII'S.
5? The number of tractor drivers and the pattern of their earnings at
se?ren DII'S, according to the number of technical norms completed.
6. A percentage comparison with the national aaera~e monthly va6e (prob-
ably of tractor drivers) of the average earnings in September 1951r of the tractor
drivers in S.:olnok ide6Ye and at several MPS.)
STAT
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