Hard-pressed Hungary scraps old economic tactics

Economic efficiency must be raised. . . . Persistently unprofitable production units must begin to pay their way. . . .

The themes sounded like Britain's Margaet Thatcher and her monetarist-minded advisers, or the manager of cash-troubled BL (British Leyland).

But the speakers were Hungary's Communist leaders Janos Kadar and Prime Minister Gyorgy Lazar. At their party's congress in Budapest this week (March 24 to 27), they prepared Hungarians for tightened belts and more difficult years ahead. Only greater economic efficiency all 'round, they said, would see the country through.

It was by far the toughest, most realistic plain-speaking from leaders of any East-bloc regime since the world energy and raw materials crises turned the terms of trade against all the East Europeans.

For six years the Hungarian economy and consumers had benefited from imaginative moves toward a more market-minded economy that brought better living standards and more trade and economic cooperation (including new technologies) with the West.

By 1975, however, the depressed world market conditions and inflation had forced Hungarians to modify their reforms and revert to some measure of centralization.

Difficulties have worsened since then. Now they have made the firm decision that they must adapt to the unavoidable effects of changes in the world economic conditions, not return to old methods.

Mr. Kadar seemed almost to regard it as a blessing in disguise. World recession, he said, had "shown up our weak spots.

"We cannot stay independent of the world economy," he said. "Though our own greater efforts can significantly help reduce its unfavorable effects, we must, nonetheless, adjust more and more to changed and changing [world] conditions."

He acknowledged public uneasiness over cuts in food subsidies, which already have begun, and over letting many prices find their own market level. He indicated that Hungary could no longer afford to hold food prices down while the costs of its raw materials -- almost all of which it must import -- soared.

He promised more worker participation in industrial relations and greater incentives, with more individual responsibility for management.He also made clear that bigger and better efforts would be expected from both sideS.

Economic criteria for enterprises would be tightened. None should "expect any lasting exemption." From now on wages will be strictly related to the way work is done.

Prime Minister Lazar was even more forthright, foreshadowing an unequivocal drive against either indifferent workers or managers who count on "lame duck" subsidies to keep them going.

"Our new system of higher wages for more productive work may lead to conflicts with those who prefer an easier way," he said.

But if people like that cannot take a hint or a warning, then we are entitled to fall back on the appropriate measures."

(This, apparently, was an allusion to management's new authority to use the redundancy system [under safeguards] to shed superfluous labor and a system of forfeits from wages for bad work.)

government encouragement was promised to enterprise managers who show "a spirit of daring and initiative and will not shrink from responsible risk." And the time had come, Mr. Kadar said, for the postwar generation -- "those born and brought up under our system" -- to be "boldly promoted."

Elsewhere in the bloc, only Czechoslovakia is talking about substantive economic reform.

A plan under the short-lived Dubcek government in 1968 was quashed by Soviet intervention and the hard-liners who followed. But a decade of stagnation has forced rethinking.

For two years, some 150 industrial units have experimented with enterprise autonomy and work incentives. The government has just decided to put the program in most industries, though the actual changes will not take place until 1981.

Finally, however, much will depend on the regime's political courage -- and ability -- to remove party apparatchiks of scant qualifications to make way for managers and other experts who were fired 10 years ago solely because of their reformist sympathies and their support for Alexander Dubcek.