Soviet Strike Settlement Sets Costly Precedent
THE PRICE OF REFORM
WHATEVER Moscow promises striking miners in the way of more pay and benefits, one thing is certain: It cannot afford it. More Kuzbass-style strike settlements will either destroy the economy, destroy the reform program, or force Soviet leader Mikhail Gorbachev to speed up economic change. Government negotiators got Siberia's Kuzbass miners back to work with a long list of promises that include more pay and consumer goods, increased pensions, improved housing and health care. But the government is already printing money to cover its current payroll, the production of consumer goods decreased even further last year, and a crisis in housing and health care persists throughout the country.
The Soviet government is facing an annual deficit of between 100 and 120 billion rubles ($156-187 billion at official rates). For the last 18 months it has been printing enormous quantities of money to cover its expenses.
Independent Soviet economists say this is intensifying a dangerous inflationary spiral. Salaries are growing fast, but workers have nothing to spend money on. Retail prices rose by about 8 percent last year, but some Soviet economists believe that inflation is now running at about 20 percent a year.
Full details of the Kuzbass strike settlement have not been published in major national newspapers - perhaps from fear that it would spark a chain reaction of demands by other industries. But striking miners in the Ukraine's Donbass and Vorkuta in the far north are demanding that the Kuzbass agreement be the blueprint for their settlement. And there are persistent reports of labor unrest on the railroads and in the steel industry.
The coal strikes were the most serious crisis yet in the four-year history of reform, Mr. Gorbachev told the Supreme Soviet on Monday. Opinions are divided about how Gorbachev will react if unrest spreads. What is clear is that under present economic conditions the Kuzbass model of settlement - money plus consumer goods - cannot be used in every strike. The government simply does not have enough goods to go around.
One line of speculation suggests that Gorbachev will call for a freeze on labor stoppages. Another possibility is that he will decide to speed up the pace of reform, rather than slow down.
Gorbachev has shown an inclination to do this recently. He told senior Communist Party officials last week that the party needed new blood from top to bottom. On Monday, he suggested that the country's constituent republics and localities hold elections for representative assemblies when they feel like it. At the beginning of May, in what seemed to be a step designed to give anxious party leaders more time to prepare, the government postponed local elections from late this fall to early next year.
Independent economists would like him to show equal daring with the economy. Government specialists argue that they need 18 months to two years to stabilize the economy before embarking on fundamental reform. But Pavel Bunich, an academic economist whose ideas are said by informed sources to be close to those of Gorbachev, called during last month's Congress of People's Deputies for an immediate shift to radical economic reform.
Mr. Bunich's sense of urgency is shared by influential commentator Vasily Selyunin. Postponing reform for three to four years would be fatal, Mr. Selyunin says in a long article to be published later this year. The government should give land to peasants, stop the bank's printing presses, and abolish price controls. It should cover the shortfall in consumer goods by large-scale purchases of basic commodities overseas.
The total cost of the Kuzbass settlement has not been announced, but clearly runs into hundreds of millions of rubles. The government is allocating a further 70 million rubles to cover higher pay for night and evening shifts. An increase in the hardship bonus paid to Siberian miners will add several million rubles a month to the payroll. Promises to increase miners' pensions to 70 percent of their final salary could effectively double the maximun pension.
Meanwhile, the consumer goods that negotiators have promised the miners - everything from meat to soap, cloth, shoes, cars, refrigerators, and furniture - read like a checklist of the most desperately sought-after consumer items. To give the Kuzbass all this, Moscow will have to deprive another part of the country.
Meat has been rationed in many parts of the country for several years. Last year output failed to increase. Shoe production fell last year by 4 percent, cloth by 6 percent. And even before output dropped, these items were in desperately short supply.