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Hungary Wages, Salaries, and Incentives
In a traditional command economy, the government
regulates
each enterprise's wage fund and fixes wage scales for
workers in
different job classifications. Managers receive bonuses
based on
their ability to fulfill plan targets. The government
regulates
farmers' incomes by establishing prices for deliveries to
the
state; some farmers legally supplement their earnings by
selling
produce grown on private plots.
In the late 1980s, labor income was composed of wages,
salaries, and profit-sharing payments. In addition to
levying
taxes, the government regulated wages and salaries by
setting
basic pay brackets depending on skill classifications and
working
conditions. For unskilled job categories, the highest-paid
workers made 50 percent more than the lowest-paid workers;
for
skilled categories, the highest-paid workers made 100
percent
more than the lowest-paid workers in the same category.
Other
regulations governed profit-sharing distributions. The
government
used these income regulators to counterbalance forces that
tended
to force incomes up and thus create inflationary pressures
and
widen income differentials. These forces resulted from the
enterprises' monopoly over the domestic market and
enterprise
managers' insufficient economic interest in profitability.
Wage
increases and profit-sharing payments have been linked to
enterprise profits since 1968, and in 1985 the government
introduced a radical reform of wage and income rules that
abandoned the practice of controlling incomes with a check
on
average wages.
Data as of September 1989
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