RECENT SOVIET COMPARISONS OF LABOR PRODUCTIVITY IN SOVIET AND US INDUSTRY (RR E

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RECENT SOVIET COMPARISONS

OF LABOR PRODUCTIVITY IN SOVIET AND US INDUSTRY

CENTRAL INTELLIGENCE AGENCY Office of Research and Reports

Economic Intelligence Report

RECENT SOVIET COMPARISONS

OF LABOR PRODUCTIVITY IN SOVIET AND L'S INDUSTRY

CIA/RR ER

CENTRAL INTELLIGENCE AGENCY Office of Research .mil Reports

Tliis report summarizes end evaluates three studies of con-par alive labor productivity Id the US and the USSR recently published by Soviet economists. The findings of these studies apparently are the basis for the numerous official statements concerning relative levels and trends In labor productivity ln the tvo countries. Because tbe growth of labor productivity measures economic advancement, these studies represent Soviet assessments of their progress in the "economic race" with the US.

Summary aad Conclusions

T. Introduction

II. Recent Soviet

Study of Comparative Labor Productivity in

Industry

Conclusions and Methodology

of the Increase In Soviet Indus-

trial Production Implied by Rats' Study

with the Increases Indicated by Other

Measures of Soviet Industrial Production

of Kats' Results with Those

Obtained by Comparing tbe Value ofper Worker

and Ioffe's Studies of Comparative

Productivity

Conclusions and

Appendixcu

Appendix A. Comparison of Labor Productivity in Soviet

Industry6 with That ln the US

by Branch of

Appendix B. Methodology for the Construction ofIndexes of Labor Productivity Inand US Industry

Appendix C. Source

tJ

of Labor Productivity in Soviet Industry in

ith That In the US, According to Kats

Annual Bates of Increase in Industrial Produc-

tion ln the USSR, According to Various Indexes

3- Official Soviet Indexes of Labor Productivity in Soviet

and US Industry, Selected

h. Comparison of Labor Productivity in the USSR with That

in the US, According to7

of Labor Productivity ln the USSR with That

in the US, According to

Productivity in Soviet Industryercentage

of That in the US, Selected Years,

of Industrial Production, Employment, and Labor

Productivity in the USSR, Selected .

of Industrial Production, Employment, and Labor

Productivity in the US, Selected

RECEWT SOVIET COMPARISONS OF LABOR PRODUCTIVITY IN SOVIET AND US INDUSTRY*

Suamary and Conclusions

, three International comparisons of laborwere published in the USSR. These were the first such studies published since thes. Appearing in the Journals Sotslal-istichcskiy trud and Planovoyehe comparisons purport to measure present levels of labor productivity in the USSR and the US and to assess the rate of Soviet progress in this aspect of the "economic race" with the US. Tlie comparisons, which were made by Soviet economists A. Kats, A. Aganbegyan, and Ya. Ioffe, are being widely used as the basis for the numerous official statements on the role of labor productivity in the economic race.

In his study, Kats found that physical output per production worker In Soviet industry6 was fromoercent of that in US industry- When these ratios are moved by an index of US labor productivity, theyatio ofoercent Kate* study is basedample ofbout two-fifths of all production workers. Except for theof his sample, Kats' study of the comparative Soviet and USlevels of labor productivity appears on the whole toareful and scholarly approach to this subject. Kats' estimate of the relative level of Soviet labor productivity, however, is somewhat above the upper limit of the measures constructed by this Office for the value of total industrial production per production worker in the twoercent when output is measured ln rubles and 4lwhen measured in dollars).

* The estimates and conclusions in this report represent the best judgement of this Office as

** The Journals of the State Committee on Questions of Labor and wages under the Council of Ministers of tbe USSR (Gosudarstveonyy Komltet Soveta Ministrov SSSR po Voprosamarabotnoy Platy) and the State Planning Committee (Goeudarstvennyy Planovyyespectively.

*** Excluding most of the machinery and metalvorking industries.

Kats1 study, when taken together with the comparison of Soviet and US labor productivity based7 and made by the Soviet economists Ye. Vasil'yev and Kh. Koval'zonhows overage annual increases

in Soviet industrialercent during the

- This rate is much lower thanercent increase given by the official Soviet index of industrial production but agrees approximately with the rates shown by the Kaplan-Moorsteen Index of All Industrial Products and the industrial production Index of this Office, extended backward by G- Warren Nutter's Index of All Industrial Products, including miscellaneous machinery.

According to Aganbegyan's study, labor productivity in the Soviet economyholepproximatelyoercent of that in the US. Employing the same general methodology but using somewhat different measures and adjustments, Ioffe estimated the over-all Soviet level of productivity7 to have beenoercent of that in the US. The higher over-all ratio found by Ioffe results primarily from the higher ratios estimated for transportation and agriculture.

Using their respective ratiosase for their projections, both Aganbegyan and Ioffe attempt to forecast when the USSR will "catch up" with the US in labor productivity. Aganbegyan predicts that the USSR will reach the US level in the economyhole and in industryn construction byand In rail transport Aganbegyan further predicts that output per capita in the USSR will match that in the US by thes. Ioffe asserts thathe USSR will overtake the US in the level of industrial labor productivity.

Aganbegyan's and Ioffe's estimates clearly overstate the relative labor productivity of the Soviet economyhole ln comparison with that of the US. These overstatements result from the following; the use of inflated ratios for labor productivity of individual sectors; the omission from the comparison of all economic sectors except those closely connected with production of physical products, which is ln line vith Marxist conceptions; and the selection of unspecified weights that are favorable to the USSR. An indication of the minimum amount of overstatement, caused by the weights alone, is given by the fact that when Aganbegyan's ratios of labor productivity in the USSR to that in the US for individual sectors (industry, construction,and agriculture) are combined by US and, alternatively, by Soviet employment weights, Soviet productivity is shown to beo Ul percent of the US, instead of tbeo ko percent claimed by Aganbegyan. Moreover, Aganbegyan's and loffe's predictions of the rapid closing of the gap between the USSR and the US in laborand in output per capita are exaggerations resulting from tbe use of the official Soviet Indexes of gross value of output forSoviet labor productivity. The official indexes probablySoviet achievements relative to the US, vhleh uses value-added indexes to measure changes in industrial production and labor

Durings, Soviet economistsumber of attemptsLevels and trends ln Industrial labor productivity ln thethose in other countries. The most Important of these attemptshighly regarded ln the-tudy madeasil'yev and Kb. Koval'ton. 2/ According to this study, theindustrial labor productivity in the USSR relative to that2 percent2 percentIn

No other studies of comparative labor productivity appeared in Soviet journalshen two major articles, one by A. Kats and thc other by A. Aganbegyan, were published ln the official Journal of the Soviet State Committee on Questions of Labor and Wages.hird article on comparative labor productivity, written by Ya. Ioffe, appeared in the0 Issue of

These studies reflect tbe increased research effort currently being devoted to the subject of labor productivity in the USSR. tbe Soviet leadership has long emphasized tbe importance of Increased labor productivity in the "building of socialism andonly recently have specific institutional arrangements been made to stimulate reccurch on labor productivity. In general, under the new arrangements, industrial research institutes vlll concentrate on means for increasing labor productivityor example, decrease of Idle time, better production flow, tlme-and-motlon studies, and use of more advanced machineswhereas the research institutes eub-ordlnate to Caspian, to the State Coenalttee on Questions of Labor and Wages, and to the Academy of Sciences (Aaademlyaill study the economic and statistical aspects of trends and measurement of labor productivity. 6/ In thc past few years these institutes havepate of studies or. labor productivity, some of themof high caliber.

for serially numbered source references, see Appendix C.

These results agree generally with those obtained by several other Soviet economists of the period and with those of the US econo-mlct Walter Calenson, who found Industrial labor productivity in the USSRo be abouto tp percent of thut of the US.alenaon's figures, however, were intended to be approximate orders or magnitude rather than precise estimates.

The research Institutes are tne Scientific-Research Economic(nauchno-lBSledovatel'skiy Ekonomlclieskiy lnstitut) of Cos-plan, -he Scler.tif Ic-Researcr. Institute of Labor (Nauchno-Issledovatel*-skly lnstitut I'ruda) of tbe State Committee on Questions of Labor and ^cz, and the Institute of Economic* (lnstitut Ekonomlki) of thc Academy of Sciences.

A. Kats' Study of Comparative Labor Productivity ln Industry

1. Conclusions and Methodology

The study by A. Kats compares physical output perworker in Industryhole and Ineparate Industrial branches in the USSR6 with corresponding data for the USJ* and concludes that over-all industrial labor productivity In the USSR wasoercent of that of the US.* Kats omitted from his sample most of the machinery and metalworking Industries, including sxjtor vehicles, which employ about one-third of all workers ln Soviet Industry. To obtain these results, Kats first calculated tbe relative levels of labor productivity in each of theranches and thenaggregate ratios using two sets of weights namely, Soviet wage bills and Soviet employment. The results, showing tho effects of using alternative weights and of including or excluding coalare shown in* The comparisons for theranches are shown in

* Kats also concludes that labor productivity ln Soviet industry is higher than that in the UK, West Germany, and France. However, the sanples used by Kats in comparing Soviet labor productivity with that ln Western European countries are small and unrepresentative, and the available evidence suggests that Soviet labor productivity relative to the leading Western European countries has beenoverstated.

ollows on p.

t The -production" figures used for the US represent "shipments" by manufacturers rather thanhereas Soviet data represent production.

In general, Kats' presentationetailed and careful one. His methodology is similar to that used by L. Rostas in his studies of UK and US labor productivity jj and by Walter Oalenson in his study of Soviet and US labor productivity. 8/ In making hisKats adjusted data on US production' to fit the Sovietof industry, which Includes mining and electric power, and Soviet employment data to fit the US definition of "production workers." His adjustment of Soviet employment was made by adding to wage workers the number of apprentices and Junior service personnel. Kats, however, falls short of attaining full comparability between Soviet and US data on employment because he failed toart of Soviet engineering-technical workers, who also should have been added to wage workers to match the US definition of "production

Comparison of Labor Productivity in Soviet Industry6 with That in the USccording to Kats

US Labor, Productivity

Annual Output per Production Worker g/

Weighted by wages paid

Weighted by number of workers

4

All Industry, Excluding Coal Mining

growth In Soviet Industrial production76 that may be compared with tbe rates of growth found by several US studies of Soviet Industrial production. Second, Rats' estimates of the ratio of Soviet Industrial labor productivity to that In tbe US willimilar ratio calculated by converting the value of total Industrial production per worker in the two countriesommon currency by meansuble-dollar ratio weighted first by Soviet employment weights and second by US employment weights.

a. Comparison of the Increase in Soviet IndustrialImplied by Rats' Study with the Increases Indicated by Otherf Soviet Industrial Production

In9 study, Vasil'yev and Koval'sontbe level of industrial labor productivity in the USSR inof that ln the US Kats estimated that tbe

level of labor productivity in Soviet Industry6 was between a5 andercent of that ln the US These findings, togethereasure of US industrial production adjusted to approximate the Soviet definition of industry, give an implicit index of Sovietproduction. Tbe average annual rate of Increase in industrial output implied In Kats' study" Is compared inith the average annual rates Indicated by the index of production of this Office extended backward with G- Warren Nutter's Index of AllProducts, including miscellaneous machinery; the Kaplan-Moorstecn Index of All Industrial Products; Nutter's Index of AllProducts, excluding miscellaneous machinery; and the official Soviet index of industrial production. The index of Soviet production implicit in the studies by Kats and by Vasil'yev and Koval'ion agrees approximately with the index of Soviet industrial production of this Office and also with the Kuplan-Moorsteen Indexhat 1b, they have an average annual increaseercent. The implicit index Is

Tbe index of Soviet Industrial productionmplicit in the studies by Kats and by Vasil'yev snd Koval'zon vas estimated as

follows:

So. in

ofot

i(lloa

r*ow *

of th. WIMHit V! US W*

** ollows on p. 7.

jw

Table 2

Average Anouol Rates of Increase in Industrial Production

in tbe USSR According to Various Indexes a/

Period of tbe Index

percent

Average Annual

Index implicit ln tbe labor productivity studies

Kats and by Vasil'yev and Koval'zOD

Index of production of this Office d/

Index of All Industrial Products

Warren Putter's Index of All Industrial

c/

Soviet index of industrial production

annual rates of Increase ere computed ot the caapcunderminal years.

two rates of grovth result from tbe use of Kats* low andndercent, respectively, foromparison. Toe Indexesproductlor. and labor productivity are baaed on tbe Soviet definition(see If the recently revised index, froa the Boardof the Federal Reserve System, for US Industrial production (whichapproximately the Soviet definition or Industry) is used ln theAverage anr.unl rates laplicd by the studies by Kats and byercent, respectively.

Index of this Office linked to G. Warren Putter's comparable IndexIndustrial Products, including miscellaneous nscbinery,0 (secB).

aisceUaneous machinery.

annual rate of increase is calculated for thenly. excludes most machinery products and Is heavily weighted with the outputmaterialsemifinished Industrial materials.

higher than Nutter's Index of All Industrial Products, excludingmachinery, which is based largely on productionut is much lower than the official Soviet index.

The inconsistency between the official Soviet index of industrial production and the index Implicit in studies by Kats and by Vasll'ycv and Koval'zon also may be shown by moving the Kats* findings concerning the relative levels of labor productivity in the USSR and the USackward7 (or by moving the results of Vasil'yev and Koval'zon forward) by means of the official Soviet indexes of industrial labor productivity in the two countries (sec. Uj If Soviet labor productivity6oercent of that in the USs Kats claims, the

ollows on p. 8.

Official Soviet Indexes of Labor Productivity lo Soviet and US Industry Selected

Year

5/

The origin and derivation of tbis index is not explained ln official Soviet sources. heck ofpublished production and employment seriesthat Soviet economists may have constructed this index from data of the Board of Governors of the Federal Reserve System adjusted to the Sovietof industry. If this surmiseorrect, the index probably represents physical product, or real output, per production worker.

* Because Soviet indexes of labor productivity are calculated from the official indexes of production, the /footnote continued on p.

Soviet levels Indicated by the relative rates of change74 iD the US and76 In the USSR, shown in the official Soviet indexes, must have been aboutoercent of that in the US. Conversely, If the Vasil'yev and Koval'zon ratioercent7 is moved forwardu for the US and6 for the USSR by the official Soviet indexes of labor productivity in the two countries, the Soviet levels shown to beoercent of the USl. Thus the official Soviet indexes of labor productivity in the two countries are sharply inconsistent with the findings of three currently reputable Soviet economists.*

b. Cceiparlson of Kats' Results with Those Obtained by Comparing tbe Value of Production per Worker

Although the rates of change implicit in Kats' study and that by Vasil'yev and Koval'zon are roughly consistent with the index of production of this Office, as extended, and with the Kaplan-Moorsteen Index of All Industrial Products ln the USSR, Kats' estimate that labor productivity In Soviet industry6 represents -r; toercent of the level of the USiffers considerably froa the results derivedurrent comparison of the value ofproduction in the US and tlie USSR made by this Office. This comparison, employing ruble-dollar price ratios shows Sovietproduction to beercent of that of the USeometric mean of/ ough estimate of the ratio of labor productivity in Soviet industry to that in the US may then be obtained by multiplying the two production ratios by the ratio of US to Soviet -production workers"s defined by By this method, Soviet laborin industry may be estimated atnd Ul percent of that In the US" When Kats' estimate for the US is extendedI.6 using an index of US labor productivity of this Office, as described innd* Soviet laboris shown to beercent of that in the US. Thus Kats' results are somewhat above tbe upper limit of the measures oflabor when calculated in terms of value.

indexes of labor productivity are subject to tho same biases as are the Indexes of production, which are gross value indexes rather than value-added Indexes and therefore may exaggerate the increase Inthrough This exaggeration theoretically is greatest during periods of rapid change when new Industries arc being established and Industrial specialization is increasing, as was the case ln the USSR durings. urther upward bias may result free tbe Soviet practice of Introducing new products into the index at their relatively high initialJ

' These estimates were calculated as follows;

cie-.-

r1

Appendix B, pp.nd 2a, respectively, below.

The difference between Kats' results and those obtained by the method of the ruble-dollar ratio probably is accounted forby the fact that Kats' study measures physical output per worker and is necessarily limited to simple, homogeneous, and mass-produced commodities that are physically comparable between the two countries.omparison thus omits the numerous specialized products that are unique to, or are given greater emphasis in, the US, therebythe labor productivity of the USSR. Pull account is taken of such products, however,omparison of labor productivity made bythe value of total industrial production per worker in the two countries.

Other characteristics of Kats' study probablyhis comparison, butesser extent. First, although Kats' employment and production data apparently were not selectedtoesiredhe omission of most of thebuilding and metalvorking Industrieserious shortcoming, and the degree and direction of distortion in Kats* findings that might result from the omission of this sector cannot be determined. Second, in making over-all international comparisons, the ratios for the various Industries may be weighted by data from either country to arrive at over-all estimatesboth results being equally valid. Kats' comparison uses only Soviet (employment and payroll) data as weights. The result may have been actually to understate Soviet labor productivlt; slightly relative to that in the US.** Third, Kats* omission of some engineering-technical workers froo the Soviet employment datanderstates Soviet employment relative to that in the USerhapsoercenthereby overstating the relative level of Soviet labor productivity. Finally, because Kats usesrather than "production" for the US and because US shipmentsUS productionj the effect of the use of data onmay be to overstate slightly the level of US labor productivity.

* Arcadlus Kahan of the University of Chicago recently attempted to compare Soviet and US labor productivitysing data different from those employed by Kats. He found6 ratios in the various industries to be somewhat lower than the ratios reported by Kats6 ln tbe USSRn the US. Although Kahen was unable to judge definitely the reliability of Kats' estimates, he expressed the opinion that Kats* figures might be somewhat too

** In his comparison for thealenson found that the use of US employment weights raised the Soviet level of labor productivity relative to that of the US above that obtained by using Sovietweights. Seebove.

1. Conclusions and Methodology

Unlike Kats' study, which compares only industrial labor productivity in thc USSK and the US, the study by A- Aganbegyan and that by Ya. Ioffe attempt to compare levels of labor productivity in the two economieshole. In line with Marxist economics and Soviet statistical practice, however, both Aganbegyan and Ioffetheir comparisons to the "productive" sectors (industry,transportation, and agriculture) and exclude servicegovernment, and retail trade.'

Aganbegyan's study concludes that the over-all level of labor productivity in the USSR7 wasoercent of that

In the US (seend Ioffe estimates the level to behigherhat isopercent (see- For the four sectorsganbegyan's ratios areercent in industry,ercent in construction,ercent in transportation, andoercent in agriculture. Ioffe's ratios for the four sectors3 areercent in industry,oercent in construction,

,"; In rail transport tsUvc ol all transpor-

ndercent in agriculture.

Both studies appear to be based on the same general icevhodologyhat is, the compjtatior: of ratios of physical output per worker in each of the various sectorsnd these ratios are then combined, by employment or by payroll or by value of outp.it weights. This methodology was endorsed strongly by V. Starovskiy of the Soviet Academy of Sciencesecent issue of Voprosy In making the various sectoral productivity estimates, Aganbegyan does not explain his sources or methodology, whereas Ioffe is quite specific on these matters. Most of the differences between the estimates made by the two authors appear to result from differences In production estimates for the various Sectors and in the adjustment of data on thc labor force to "insure" comparability between the Soviet and tbe US data.

iofre also makes an estimate for the economyhole, which includes wholesale trade as one of tbe "productive" sectors. ** ollows onollows on

With their computed ratio? of labor productivity as bases, both Aganbegyan and Ioffe forecast when the USSR will "catch up"ie US ln labor productivity. Aganbcgyan notes that during the pastears the average annual rate of growth in Soviet labor productivity

Com pari son of Labor Productivity la the USSR with That ln the US According to Aganbegyan a/

la tbe USSRercentage of That Ir. the US

of Workers

(Million)

USSR US

of Workers In the USSRercentage

of That ln the US

Productivity in the USSRercentage

of That in the US

Construction Transportation Agriculture

0

6

5

o/

6 to/

3o 25

to 66

toJ

tod/

of production and labor productivity ln the USSR, with the data rounded to indicate rough orders ofrather than exact percentage comparisons. To simplify comparisons with Kats' study, Aganbegyan'sare presented in this table and in tha text shoving production and labor productivity ln the USSR asof production and labor productivity In the US.

lover figure represents average annual employment, and tbe higher figure(seasonal)adjusted the figures for the USSR to eliminate agricultural workers engaged ln construction oractivities.

total.

arithmetic mean la the reciprocal of Aganbegyan's estimate that US labor productivity5 tothat of tbe USSR. It cannot be calculated directly from tha sector ratios aa presented lnalculation would give the harmonic mean of Aganbegyan's original sector ratios rather thanmean. To reproduce Aganbegyan's arithmetic mean directly from his sector ratios, it Is necessarythe reciprocals of tha sector ratios, aa presented ln thla table,iberal allowance formethod of rounding.

Comparison of Labor Productivity in tbe USSR with That in the US, According to Ioffe

6 7 8 9

Output per wage earner b/ Output per person employed cf

Construction Transportation d/ Agriculture

Total

Including wholesale trade

12/

odnogo rabochego,

odnogo ganyatopo.

transport only.

not reported.

1.0

58

ke

For this conclusion it is assumed that labor productivity will8 percent annually in the USSP.

hasercent inercent inercent in rail transport,oercent in agriculture, and he concludes that the annual growth of labor productivity for theeconomy hasercent. These rates probably were derived from the official Soviet indexes of production and labor For the US, Aganbegyan claims that the average annual rate of growth in labor productivity has beenercent inercent inercent Inercent in agriculture,1 the 'national economy"hole. These estimates for the US are reasonably consistent with. US indexes of labor productivity published by the US Bureau of Labor Statistics. Using these rates of growth of labor productivity ln the two countries together with his estimates of their relative levels of productivityganbegyan concludes that tbe level of labor productivity in the USSR will reach that of the US2 in tbe economy2 in industry, 7 In construction, and

h in rail transport.* Ioffeimilar prediction for labor productivity in the industrial sector. Noting that, according to his calculations, Soviet labor productivity in industry will beercent of that In the USe asserts thathe USSR will overtake the US in industrial labor productivity.

2. Evaluation

Because Aganbegyan's and Ioffe's comparisons of laborrelate only to the "productive" sectors of the economythat is, to those sectors closely connected with production ofgoodstheir conclusions regarding the relative levels of labor productivity in the economyhole necessarily relate only to the "productive" sectors. In calculating over-all labor productivity ratios in the "productive" sectors, moreover, Aganbegyan and Ioffe apparently have combined the ratios for various sectors by using weights that show the USSR in the most favorable light. Although Aganbcgyan and Ioffe do not explain In detail their methods ofthe ratios of labor productivity in the USSR to that in the US which Aganbcgyan and Ioffe obtained appear to be the results of weighting in order to minimize the influence of the relatively low levels of labor productivity of Soviet agriculture and transportation. Aganbegyan appears to nave weighted the ratios for the individualby US employment data or to nave computed an unweighted average. The use of Soviet employment data aB weights for the four sectors shows the over-all level of labor productivity in the USSR to beoercent of that in the US, rather than theo Uo percent obtained if an arithmetic average is used or theo'Ul percent obtained if US employment data are used. Ioffe used the comparison of labor productivity in rail transport as representative of thetransportation sector, thereby raising substantially theof the over-all Soviet level of labor productivity in comparison with the US.

* In addition, Aganbegyan uses his findings concerning relative levels of labor productivity in the US and the USSR to drawconcerning relative levels of physical output per capitane of tbe yardsticks used by Soviet leaders to measure the relative levels of economic achievement in the two countries. He concludes that the USSR will catch up with the US in per capita output inears.

** See the footnote beginning on p.bove.

Aganbegyan's and Ioffe's use of the official Soviet Indexes of labor productivity in projecting their results7 mayajor source of bias. As discussedhese indexes probably overstate tbe rate of increase in Soviet labor productivity, particularly for the early years. The indexes therefore are optimistic

for tbe Soviet present relative to tbe past and, when used foralso are optimistic for the Soviet future. This fact can be shown by comparing the levels of labor productivity in the USSR and the USsees estimated from the official Soviet indexes and from preliminary indexes of US and Soviet labor productivity of this Office. Tbe relative level ofercent)ypothetical figureprobably of about the right order of magnitudeut is used in this report for purposes of Illustration only.

ollows on

labor productivity in soviet industryercentage of that in the us a/ selected

evel of labor productivityercentage of the5 level

levelthe

yearercentageof the5 evel

evel of aborercentagehe us level in he terminal year j

equali

level of labor productivity in the terminal yearercentage of the us level in the terminal year

estimates5 are based on projections of the average annual increase in labor productivityor both countries. these rates are. tor the ussr and thek9 percent, respectively, according to the official soviet indexes,0espectively, according to the preliminary indexes of soviet and us labor productivity of this office. although tbe estimates given by the preliminary indexes of this office probably are of the correct order of magnitude, they are subject to further refinement, b. see appendix 6.

AFFLUX A

PAlULiOKAECB6

T IN THEU BY ERAKCH OF

Physical Output per "Production Worker" Soviet Labor Productivity

ercentage

Branch of Unit of Measure USU USSR6 of US Labor Productivity

Metal-cutting machine tools

Logging

Saw wood

Pulp, paper, and cardboard

Cotton fabrics Silk fabrics Woolen fabrics Footwear Rubber footwear Artificial fiber Synthetic rubber Cement

Building brickB Lime and plaster

Meat (first grade) Milk and dairy products Vegetable oils Margarine Flour

Macaroni and spaghetti Bread and bakery goods

METHODOLOGY FOR THE COSSTRUCTIOM OF PRELIMINARY OfDEXBSH FHOLUC/riVITY IB SOVIET INDUSTRY ASP US INDUSTRY

1. Soviet Labor Productivity

Tbe preliminary Index of labor productivity in Soviet Industry of this Office that was used for the calculations in Tableaaby dividing an index of Soviet Industrial production by anof Soviet industrial employment. These indexeB are shown In*

Index

Tbe Index of Soviet industrial production waa obtained by linking the Index of All Industrial Products (including miscellaneous machineryhich was constructed by G. Warren Nutter for selected, to the index of Soviet industrialwhich has been constructed by this Office for each of the years. Because Butter's index does notr the yearshe two Indexes were linked0 to obtainfor those years. Nutter's index used ln this calculation Is thatumber of indexeB constructed by Kutter and is the most comparable to the index of this Office, with respect to Industrial coverage. Both indexes measure tbe growth of industrial output according to the Soviet definition of industry, cover the same sectors (manufacturing, mining, and production of electricmploy value-added weights, and thereforealue-added index of Soviet industrial production appropriate for comparison with indexes of US production.

Index

* bove. ** ollows on

The index of Soviet industrial employment presented ins based on officially published data on employment in industry plus estimated employment in Industrial cooperatives and ln kolkhosIt was constructed by linking0 Nutter's index ofemployment, which was computed for selected years,to an employment index based on recent estimates by this Office for the. This composite index of Soviet industrial employment Includes wage workers, engineering-technical workers, white-collar

_ ui T"

Table 7

Indexes of Industrial Production, Employment, and Labor Productivity in the USSR a/ Selected

100

y

sol oyri cut

of All Industrial Products

Indexes

$J

cj

cj

Because of rounding of the indexes of production and era-

to three significant digits, figures for labordo not always equal production divided by employment.

8 weights. Miscellaneouswere included.

reported by Nutter5 are as follows: ;; and labor.

workers, apprentices, and Junior service personnel Including armed and fire guards for all industry.

c. Evaluation of the Index of Labor Productivity

The levels end tbe directions of changes in Soviet laborshown in the preliminary index of this Office seem to fit well with other studies concerning both the levels and the direction of movement. For example, Irving Slegel wrote the following

If it were possible to compute Soviet output per worker by thc most authoritative Westernecline would probably have been recorded for theearubstantial gain for thc subsequent periodeclinehaky recovery thereafter to something like the maximum prewar levelew years ofhe USSR should be able to raise Its Industrial productivity well above the prewar level, as it reaps the benefits of previous and new Investments ln personnel and equipment. Attainment of parity with Creat Britain and prewar Germany (already claimed In thes) and eventhem would not seem difficult. But the USSR could hardly catch up with tbe US, whichubstantial productivityover tbe leading European nations and isstill

2. US Labor Productivity

The Index of labor productivity In the US shown in Table S* vas obtained by dividing an index of US production based on the Soviet definition of "industry" by an Index of US industrial employment that covers the same categories of workers as does the index of Soviet employment.

a. Production Index

Tbe Index of US industrial production was made by extending6 Nutter's index of US industrial production, which he constructed for selected years. Nutter's index woe extendedomposite of the

* ollows on p. 2k.

Indexes of Industrial Production, Employment, and Labor Productivity in the US a/ Selected

Labor

Indexes Based on Nutter's Index of All Industrial Products g/

Tndexcn

/

of rounding of the indexes or production andto three significant digits, figures for labordo not always equal production divided by employment

from the Indexes of the Board of GovernorsFederal Reserve System adjusted to correspond tocoverage.

indexes for production and labor productivity areIndex of All Industrial Products, and the indexis implicit in the other two Indexes.

i. Data reported by Nutter5 are as follows: ;; and labor.

indexes' of industrial and mineral production of thc Board ofof the Federal Reserve System together with an index of output of electric power, the three components being combined by Nutter's The Nutter index and its extension are shown in Table

b. Employment Index

Thc Index of industrial employment was made by extending6 an Index of US industrial employment constructed by Nutter for selected years. The extension was made by means of an index of US employment obtained by taking an unweighted arithmetic mean of two lndexea which are regularly published by tbe Bureau of Labor Statistics and which cover production workers In US lnduatry and allemployment. The index constructed from data of the Bureau of Labor Statistics corresponds closely vibb Nutter's index for the years covered by both indexes. The Mutter index and its extension are presented ln Table 8.

* The new index of the Board of Governors of the Federal Reserve System also could be used to approximate the Soviet definition of The use of this index would raise the US production Index67bove.

SOJPCE REFERENCES

fdesignated

tvoi., nave tbe following significance:

of Information

source,

ompletely- Probably true

sually- Po6sibly true

D

airly- Doubtful

Not usually- Probably false

ot- Cannot be Judged

^annot be Judged

"Documentary" refers to original documents ofns of such documents Tsfarf off? eltraCCeddocuments by men^rjhich My Carrv"*ld evaluation

Evaluation, not otherwise designated are those appearing on the

report No RP evaluation is given when the author agrees with the evaluation on the cited document.

Except for CIA rinished intelligence, all sources used ln this report are evaluatednless otherwise indicated.

USSR, Academy of Sciences of the USSR. SovetsRaya eotsla-Ustlchcsxaya ekonomlka.os7 (Soviet Socialistoscow,. U.

Planovoye Ichozvaystvo. no- U.

3- Galenson, Walter. Labor Productivity ln Soviet and American

ev York,. u.

*. Kats, A. "Sopostavlenlyc urovney prolzvodltel'nostlromyshlcnnostilavnykh kapltallstlcheskikh stran" {Coroparatlve Levels of Labor Productivity in Industry of the USSR and thc Chief Capitalistotsiallsticheskiy

trud, nooscow,. U. Eval.

Aganbegyan, A. "Dognafi pcregnat' SShA po urovnyu proizvoditel'-nostl truda" (To Overtake and Surpass the USA ln the Level of LaborotslallBtlchcakiy trud, nooscow. U. Eval. Doc.

Ya. "Uroven' proizvodltel'nostiShA"

(The Level of Labor Productivity ln the USSR and in tbe USA) Planovoye khozyaystvo, nooscow,. U. Eval. Doc.

Ye. "Ob ltogakh nauchno-issledovatel'skoy

raboty otraslevyrh Instltutov po voprosaaoncerning the Results of Scientific-Research WorkInstitutes on Questions of Labor andoscow, U. Eval.I. "Organlzatslya nauchnoy raboty porosta proizvoditel'nostl truda" (OrganizationWork for the Study of Reserves for Growtharabotnaya plata, U. Eval. Doc.

L. "International Comparisons of Productivity,"

International Labor Review,. u.

Galenaon, op.bove).

CIA. CIA/RR,, Soviet Industrial Production

(unpublished draft). nd. "An Index ofbe American Economic Reviev,

. U.

Mutter, G. Warren. "The Structure and Growth of Soviet omparison with the Unitedomparisons of the United States and Soviet Economies, pt I, Washington, U. USSR, Central Statistical Administration. Karodnoye khozyaystvo8 ftodu (The National" Economy of the USSR- U. Eval. Doc (hereafter referred to as USSR, Central Statistical Administration. Nnrodnoye khozyaystvo) Board of Covernors of the Pederul Reserve System. Federal Reserve Bulletin. U. Eval. RR Nutter, G. Warren. Industrial Output ln the Soviet Union, Newt. U.

Central StatlBtlcal Administration. Narodnoye

. U. Eval. Doc.

Donald. "Industrial Production," Soviet Economic

Growth, Abram Bergson, edr, RAND Corporation. ollar Index of Soviet Machineryy Alexander

. u.

la. CIA. CIA/RR,unpublished USSR, Central Statistics! Administration. Narodnoye. U. Labor, Bureau of Labor Statistics. Monthly Labor Review, U.

Arcadius. Paper9 for the Office of Agricultural

Economics Research, University of Chicago, "Soviet-American Labor Productivity9 Jununpublished). U.

Survey of Current Business, annual review number,

U.

Aganbegyan, U.

loffe,bove).

Starovskly, V. etodlke aopostavleniya ekonomicheaklkb

pokasateleyShA" (Concerning Methods for Comparison of the Economic Indexes of the USSR and theoprosy ekonomiki,. U.

Kats, op. cit. (Ii, U.

Karpukhln, D. "Elektriflkatslya narodnogo kboiyayntva 1

roet' proizvoditel'nostl obshchestvennogo truda" (Electrification of the National Economy and the Increase ln tbe Productivity of Sovietoproay ekoncelkl, no U.

op. clt., above).

2*. CIA. CIA/RR, Labor Supply and Employmentct

Irving H. Soviet Lubor Productivity,

Chevy Chase, p. a. U.

, above).

Original document.

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