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Romania Productivity
Romania traditionally had one of the lowest levels of
labor
productivity in Europe. Agricultural units before World
War II were
small-scale and inefficient. Because of the high density
of the
rural population, much of the farmland had been subdivided
into
small parcels, making mechanization impractical. As a
result, per
capita farm output was low. Industrial labor productivity
was
somewhat higher. Employing less than 10 percent of the
labor force
in 1938, industry then produced 31 percent of total
national
income. The classic extensive development strategy pursued
after
the war accomplished gains in industrial output as a
result of
massive capital and labor inputs, not because of improved
labor
productivity and efficiency. But beginning in the late
1970s, as
labor reserves dwindled, continued economic growth
required
substantially improved productivity. The government's
inability to
make significant gains in this area and to make the
transition to
an intensive development strategy was a primary cause of
the
economic crisis of the 1980s.
The postwar modernization process inevitably brought
improvements in labor productivity in most sectors.
Agriculture,
however, because of the rapid loss of many of its most
productive
workers, underinvestment and neglect by the central
planners, and
peasant demoralization in the aftermath of forced
collectivization,
remained one of the least efficient sectors of the
economy.
Although agriculture still employed some 28 percent of the
labor
force in the mid-1980s, it accounted for only 14 percent
of
national income. And in 1980, Romania ranked no better
than
twentieth of twenty-three European countries in terms of
output per
hectare of farmland. Industrial labor productivity, on the
other
hand, improved steadily through the first three decades of
communist rule, growing an average 7.9 percent per year
between
1950 and 1977--primarily because of the acquisition of
modern
machinery and technology. These improvements
notwithstanding, in
1985 Romania ranked last among the East European Comecon
countries
in terms of per capita gross national product
(GNP--see Glossary).
Labor productivity growth rates slowed noticeably
toward the end of the 1970s. The annual target of 9.2 percent for the
Sixth Five-Year Plan (1976-80) proved unattainable. Instead, the
government claimed to have achieved an annual growth of
7.2 percent--still a respectable accomplishment. The
reliability of that figure, however, was questioned by Western analysts,
who were becoming increasingly distrustful of official Romanian
statistics.
During the decade of the 1980s, the government set the
unrealistic
goal of doubling labor productivity by 1990. But this
target would
not be met, as the economy took a severe downturn. Western
sources
estimated, for example, that 1988 gross industrial output
was no
higher than and possibly lower than that of 1987, which in
turn
might have been lower than output in 1986. Because the
government
had predicated most of its ambitious economic growth
targets on
improved labor productivity, the poor results in gross
industrial
output indicated that the labor situation had not
improved.
A number of factors underlay the chronically low
productivity
of Romanian labor. Foremost among these were the extreme
degree of
economic centralization, which gave workers little input
in
decisions that affected their working conditions and
incomes, and
the absence of rewards for personal initiative. The labor
force
endured low wages, few bonuses, ungenerous pensions, long
workweeks, poor living conditions, and a general sense of
powerlessness.
With an average per capita annual income of
approximately
US$1,000 in 1987, Romanian workers remained among the most
poorly
paid in Europe. Low labor remuneration, along with high
taxes, and
neglect of the consumer goods sector were deliberate
government
policies designed to accumulate funds for investment in
the
economy. Thus, while
national income (see Glossary)
rose an
impressive 9.2 percent per annum between 1951 and 1982,
wages
during the same period grew by only 4.9 percent. In 1983
Ceausescu, frustrated by persistent worker apathy,
abolished fixed
wages in favor of a policy that tied a worker's income
directly to
plan fulfillment by the enterprise. Previously every
worker had
been assured of receiving 80 percent of his or her nominal
salary
regardless of performance, with the remaining 20 percent
dependent
on the individual's productivity.
Rather than spurring the worker to produce more, the
new
remuneration policy in fact caused further demoralization
because
it invariably lowered wages. For example incomes fell by
an average
40 percent at the Heavy Machinery Plant in Cluj-Napoca
after the
new policy went into effect. Workers were now being
penalized for
factors beyond their control, such as parts shortages and
power
failures. Their reaction was predictable. Passive
resistance in the
form of sloppy workmanship, excessive absenteeism, and
drinking on
the job became commonplace. More alarming to the
government,
however, were the scattered but sizable strikes and
demonstrations
that were occurring with greater frequency in the late
1980s.
Across the country there were reports of work stoppages in
protest
of the new wage law. Following the November 1987 outbreak
of riots
at the Red Flag Truck and Tractor Plant in
Brasov--precipitated by
low wages, food shortages, and poor working
conditions--Ceausescu
announced that pay raises for all industrial workers and
larger
pensions would be phased in by the end of 1990. After the
raises,
the average worker theoretically would be earning 3,285
lei per
month, and average monthly pensions would pay some 2,000
lei.
The Ceausescu regime's approach to the problem of labor
apathy
in the late 1980s ran counter to the wave of reforms that
were
being tested in other Comecon nations at that time. Rather
than
encouraging workers with monetary incentives that
recognized
differences in skills and productivity, in 1988 and 1989
Ceausescu
offered modest wages that were graduated so that wage
differentials
between the highest- and lowest-paid workers were actually
reduced.
Wage hikes for the latter, averaging 33 percent, went into
effect
in August 1988, whereas increases of less than 10 percent
for
workers in the higher wage brackets were not scheduled to
take
effect until 1989. Instead of offering concessions that
would
improve their standard of living, Ceausescu continued to
exhort
the workers to sacrifice for the building of
socialism (see Glossary)
and a better life for future generations. But
these
traditional motivational appeals were becoming less
effective as
life grew harder for most citizens.
Workers increasingly felt alienated from the
institutions that
were supposed to be defending their interests,
particularly the PCR
and its labor organ, the General Union of Trade Unions of
Romania
(Uniunea Generala a Sindicatelor din Romānia--UGSR), which
they
viewed as merely another control mechanism, a conduit for
the
downward flow of directives from the central planners. A
survey
taken shortly before the economic downturn of the late
1970s
revealed that more than 63 percent of a sampling of 6,200
young
Romanian workers felt their union was not representing
their
interests.
Because of the late emergence of a working class,
Romania had
little experience with grass-roots labor movements. In
1979,
however, Paul Goma, a prominent exiled dissident, and
three
compatriots inside Romania -- Vasile Paraschiv, Theorghe
Brasoveneau, and Ionel Cana--led an ill-fated attempt to
organize
an independent union. The PCR would not tolerate such a
threat to
its control of labor, and within a month, the three
principal
leaders had been arrested and the nascent union movement
had been,
at least temporarily, crushed.
In addition to low wages and nonrepresentation of the
workers'
interests, several other developments contributed to the
growing
disaffection of labor. For years the government had
promised a
shortening of the workweek, which was supposed to have
been cut to
forty-five hours by 1985. Although a forty-six-hour week
was
proclaimed in 1982, in practice most Romanians continued
to work
forty-eight hours or more. Adding to their misery, average
workers
wasted hours each day waiting in line for basic
foodstuffs,
gasoline, and other consumer items that were becoming ever
more
difficult to obtain.
Poor placement practices created immediate job
dissatisfaction
and were a primary cause of the high labor turnover rate.
A survey
of some 6,000 workers aged fourteen to thirty, taken in
the
relatively prosperous 1970s, revealed that more than half
wanted to
leave their jobs, and about one-quarter had already done
so at
least once. The problem of high turnover was most acute in
the
construction industry, where more than 28 percent of the
work force
quit their jobs during the 1982-86 period, and in the
mining
industry, which reportedly was hit even harder. To
discourage
turnover, the new wage system announced in September 1983
contained
a provision that required newly hired workers to remain
with an
enterprise for at least five years. Failing that
provision, they
would forfeit a large share of their salaries, which had
been
withheld in compulsory savings accounts, and they would
have to
repay the enterprise for training expenses. But punitive
monetary
measures of this type proved ineffective in an economy
that offered
workers few consumer goods on which to spend their money.
Data as of July 1989
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