During the Khrushchev era, especially from 1956 through 1962, the Soviet Union attempted to implement major wage reforms intended to move Soviet industrial workers away from the mindset of overfulfilling quotas that had characterised the Soviet economy during the preceding Stalinist period and toward a more efficient financial incentive.
Throughout the Stalinist period, most Soviet workers had been paid for their work based on a piece-rate system. Thus their individual wages were directly tied to the amount of work they produced. This policy was intended to encourage workers to toil and therefore increase production as much as possible. The piece-rate system led to the growth of bureaucracy and contributed to significant inefficiencies in Soviet industry. In addition, factory managers frequently manipulated the personal production quotas given to workers to prevent workers' wages from falling too low.
The wage reforms sought to remove these wage practices and offer an efficient financial incentive to Soviet workers by standardising wages and reducing the dependence on overtime or bonus payments. However, industrial managers were often unwilling to take actions that would effectively reduce workers' wages and frequently ignored the directives they were given, continuing to pay workers high overtime rates. Industrial materials were frequently in short supply, and production needed to be carried out as quickly as possible once materials were available—a practice known as "storming". The prevalence of storming meant that the ability to offer bonus payments was vital to the everyday operation of Soviet industry, and as a result the reforms ultimately failed to create a more efficient system. During the period of Stalinism, the Soviet Union attempted to achieve economic growth through increased industrial production. In 1927–28, the sum total of Soviet production of capital goods amounted to 6 billion rubles, but by 1932, annual production increased to 23.1 billion rubles.[1] Factories and industrial enterprises were actively encouraged to "achieve at whatever cost",[2] with a strong emphasis placed on overfulfilling stated targets so as to produce as much as possible. For example, the slogan for the first Five-Year Plan, "The Five-Year Plan In Four Years!",[3] called on workers to fulfill the state's objectives a year earlier than planned.
Frantically rushed production was very common in Soviet industry, and in particular a process known as "storming" (Russian: штурмовщина, pronounced shturmovshchina) was endemic;[4] it involved crash programs in which factories tried to undertake all their monthly production quota in a very short space of time.[4] This was usually the result of a lack of industrial materials that left factories without the resources to complete production until new supplies arrived at the end of the month. Workers then worked as many hours as possible to meet monthly quotas in time; this exhausted them and left them unable to work at the beginning of the next month (although lack of raw materials meant there would have been very little for them to produce at this point anyway).[4]
To encourage individual workers to work hard and produce as much as they possibly could, most workers in Soviet industry were paid on a piece-rate; their wage payments depended upon how much work they personally completed. Soviet workers were given individual quotas for the amount of work they should personally deliver and would earn a basic wage (stavka) by fulfilling 100 percent of their quota. The wage rate for work would grow as production over this level increased. If a worker produced 120 percent of his own personal quota for the month (for example, if he was supposed to produce 1,000 items, but actually produced 1,200) he would receive his basic wage for the first 100 percent, a higher rate for the first 10 percent of over production and an even higher rate for the next 10 percent. Soviet authorities hoped that this would encourage a Stakhanovite spirit of overfulfillment of quotas among the Soviet workforce. In 1956, approximately 75 percent of Soviet workers were paid under such a piece-rate system,[5] so the majority of Soviet workers could significantly boost their earnings by increasing their output.[6]
Average wage rates in the Soviet Union were published relatively rarely. Some academics in the West believed this was because the Soviet government wanted to conceal low average earnings. Alec Nove wrote in 1966 (when wage statistics were published for the first time since the Second World War) that the lack of transparency surrounding average wages was intended to prevent Soviet workers from discovering the huge disparities that existed between wages in different sectors of the Soviet economy.[7]