Differentiation of wages in the Ural industry: on the way to the “Great Turning Point”

Borodkin Leonid Doctor of History Corresponding Member of the Russian Academy of Sciences, Professor, Head of the Department for Historical Information Science at Lomonosov Moscow State University (MSU) 119991, Russia, Moskva oblast', g. Moscow, ul. Lomonosovskii Prospekt, 27-4 borodkin-izh@mail.ru Other publications by this author

Salary regulation in Soviet industry during the NEP years was an important aspect of the state's social policy. It was carried out mainly on the basis of the tariff grid, its structure and the number of tariff categories were repeatedly changed in the 1920s. The general direction of this regulation can be characterized by an equalizing trend initiated and supported by trade unions. At the same time, the "business executives" sought to maintain a certain wage differentiation in industry in order to maintain the necessary level of labor incentives.

The policy of wage equalization in industry was implemented by limiting the rates of payment of the upper categories of the tariff grid, tightening the rates of the lower categories, limiting the earnings of workers, which made it possible to use the tariff system as the main instrument of equalization policy.

The implementation of this policy in the Urals had some peculiarities, in particular, due to the fact that the wages of Ural workers were on average noticeably lower than in the industrialized regions of the country's center. So, at the VIII All-Union Congress of Trade Unions (December 1928), the speech of the Ural delegate sounded sharply, who drew attention to this reality: "If we look at the wages of workers in the Urals, we will see that the average salary in 1928/1929 will be equal to 55 rubles. 21 kopecks, i.e. the salary of the entire industry, which took place in 1925-26. In 1928, we have 78% of the average salary in industry for workers in the Urals. But, comrades, isn't the Urals an industrial region, doesn't it occupy an appropriate place in our republic, aren't the workers of the Urals proletarians?" ^{[1, p. 184]}.

As in other parts of the country, the "equalization" provoked protests from various strata of the workers of the Urals.  This can be judged, for example, by the materials of the multi—volume documentary publication "Top Secret": Lubyanka to Stalin on the situation in the country (1922-1934). The electronic version of these volumes is presented, for example, here: Historical materials. URL: https://istmat.info/node/22548 There were various reasons for the discontent of the Ural workers. Skilled workers were dissatisfied with the artificial restrictions on their salaries and the reduction of tariff rates for the upper categories. Thus, in the OGPU review for September 1925, it was noted that "the departure of skilled workers on the basis of low earnings is taking on ever wider dimensions"; in this regard, the factories of the Urals are mentioned ^[2].As for the low-skilled workers, their protests often arose during the renegotiation of collective agreements, when the hopes of "low-ranking workers" for a significant salary increase were not properly realized. In this regard, there are cases when an insignificant increase in low-skilled workers caused their indignation. At the Nadezhdinsky plant (Ural), in connection with the increase of only 50 kopecks to the rate of the 1st category, the indignant workers said: "Let them charge us these 50 kopecks. Let them add to the highest ranks" ^[2].

Another reason for dissatisfaction with the course of equalizing workers' salaries was the policy of sharply reducing the side jobs, which often amounted to more than half of the total salary. So, a strike of workers of the open-hearth shop of the Verkhny Iset plant "Red Roof" (Ural) in May 1927 took place in a tense mode ^[2]. The earnings of the workers of this workshop, which reached 220%, were limited to 82% by raising the standards and switching from progressive piecework to direct, and then by calculating the workers was lowered to 41%. The initiators of the strike were dismissed. At the meeting of the trade union that preceded the strike, a group of activist workers prepared in advance a resolution "on the termination of work, the establishment of duty patrols in order to prevent workers who do not join the strike from entering the furnaces, and sending two delegates to Moscow" ^[3].

The end of the 1920s was a period when trade unions gradually lost their relative independence, their focus shifted from protecting the interests of workers to meeting the needs of production ^{[4, p. 78]}. In 1928, a tariff reform was carried out, which reduced the difference in wages for skilled and unskilled labor, sharply limited the opportunities for workers to earn extra money, and changed the ratio of time-based and piecework wages in favor of time-based. As a result, a more skilled worker was more concerned not with the growth of professional skills, but with finding an enterprise where there were more opportunities to earn money (which increased staff turnover ^{[5, p.14]}). These processes were aggravated by the rapid growth of the urban population of the Urals and the number of industrial workers in the 1920s, especially as they approached the "Great Turning Point" (see Table 1).

 Table 1. The number and share of workers in the self-employed urban population of the Urals in 1923, 1926 and 1931.

Compiled by the author according to the data: Socialist construction of the Urals for 15 years (main indicators). Sverdlovsk, 1932. Table 2, page 6.

In this article, the task is to assess changes in the level of wage differentiation of industrial workers in the Urals during the years of the "late NEP". Do the statistics confirm the reality of the course of "equalization", which was conducted in the 1920s? Or did the economic managers of Ural enterprises have mechanisms to support salary differentiation at a level that would help stimulate productive labor?

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To answer these questions, it is necessary to refer to statistical materials on workers' salaries in the second half of the 1920s. In this work, we use a number of statistical publications published in these years in the Urals.

To begin with, these same issues were studied in the 2000s by the famous researcher of the socio-economic history of the Urals, M.A. Feldman ^[6]. Studying the Ural statistical publications of the NEP period, he used data on the earnings of three categories of workers that were taken into account in the statistics of that time: skilled, semi-skilled and unskilled workers. So, in 1926, the ratio of earnings of these categories of workers was 2.04: 1.71:1.00 in the metal industry and 2.44: 1.80: 1.00 in the textile industry. In 1928, these figures amounted to 1.81:1.38 :1.00 in the metal industry and 1.60: 1.35: 1.00 in the coal industry ^{[6, pp.51-52]}. For comparability of data on the textile industry, I will add that in 1928 the ratio of earnings for these three categories of textile workers was 1.59: 1.29:1.00, respectively ^{[7, p.106]}. The data provided convincingly indicate a compression of the scale of wage differences between the three categories of workers considered during the short period 1926-1928, which characterizes the implementation of a course to equalize the salaries of workers of different skill levels.

As another consequence of the course towards "equalization", M.A. Feldman considers the decrease in the share of highly paid workers in 1924-1928. In the Urals, the proportion of workers who received salaries in the amount of more than two average earnings, judging by metalworkers in 1927, remained the same as in 1914 (6.7%). The essence of the problem, the author notes, was that those workers whose real earnings were inferior to the pre-revolutionary wages of pre-revolutionary skilled workers were also included in this group ^{[6, p.53]}. This observation reflects some conditionality of assigning certain layers of workers to the specified qualification categories.

The conclusions obtained by M.A. Feldman can be supplemented with more detailed data on wage inequality in the industry of the Urals in the second half of the 1920s. These are interval data on the salaries of workers in a number of industries, which were published annually in statistical publications in the Urals, which allows the use of generally accepted coefficients for measuring inequality – the decile coefficient, the Gini index.

Table 2 contains such data for two branches of the Ural industry for three years, separately for men and women.

 Table 2. Intervals of monthly wages of industrial workers of the Urals in 1926, 1927, 1928. (two branches, adult men and women). The cells in the table show the percentage data for each salary interval.

Sources: Data for 1926-1927: Labor in the Urals in 1926-27 Statistical reference book. Sverdlovsk. 1928. Table 62, compiled from the materials of the survey of differential wages (salaries by profession, gender and age in March 1926, 1927 and 1928), conducted selectively by 52 enterprises of the Urals. The most powerful enterprises were taken for use. When calculating real wages in absolute terms, the transfer of red rubles to real (in budget sets) was carried out according to a budget set of 40 goods and services. pp. 100-101. Data for 1928: Labor in the Urals in 1927-28. Statistical handbook. Sverdlovsk. 1929. Table 63, pp. 108-109.

Table 3 shows the values of the calculated values of the decile coefficient and the Gini index. Recall that the decile coefficient measures the ratio of the salary of 10% of the highest-paid workers to the salary of 10% of the lowest-paid. The Gini Index provides a more accurate estimate of inequality, taking into account the distribution of income across ten groups, each of which contains 10% of the people in the studied population. Its value can take values in the range from 0 (in the case of absolute equality) to 1 - in the case of absolute inequality, when, for example, one person will receive the entire salary. The higher the level of inequality, the higher the value of the Gini index.

Table 3. The values of wage differentiation indicators for industrial workers in the Urals in 1926-1927.

Calculated by the author according to Table 1.

As follows from the comparison of the values of the decile coefficient in Table 3, the dynamics of wage differentiation of workers (men and women) in both industries demonstrates a noticeable decrease in the level of differentiation over three years. At the same time, differentiation in the textile industry is lower than in the metal industry. These conclusions are also confirmed when using a more accurate tool for measuring differentiation - the Gini index (see Table 3). Comparison with similar estimates of wage differentiation of pre-revolutionary workers shows lower coefficient values for the 1920s.

                Consideration of the issue of wage differentiation of workers in the Urals in the second half of the 1920s leads to another question: what was the wage gap between workers and employees of Ural industrial enterprises? Is it possible to see a trend towards equalization of these salaries here? Let's turn to the relevant data for 1927 and 1928. (Table 4).

Table 4. Salary of industrial employees of the Urals by profession/position (rubles/month) in March 1927 and 1928. (and as a percentage of workers' earnings)

Compiled by the author according to the data: Labor in the Urals in 1927-28. Statistical reference book. Sverdlovsk. 1929. Table 68, page 120.

Table 4 shows that the wage gap between industrial employees and workers in the relevant industries was very high and increased even more in two years (the only exception is the change in wages of craftsmen in the metal industry). Top-level employees at the enterprises of the industries under consideration had salaries 4-5 times higher than the average salary of workers. This characterizes the existing shortage of qualified engineers and specialists at enterprises of the growing industry, in conditions of insufficient graduation by universities.

* * * 

The article shows that the policy of equalizing workers' salaries, which was carried out in the 1920s, was not only proclaimed in the governing documents, but also implemented, in this case, in the Ural industry. Measurements carried out using various methods confirm a decrease in the degree of differentiation of wages of workers in the Urals at the final stage of the NEP. At the same time, the wage gap between workers and industrial employees was significant and showed a tendency to further increase.

However, after a couple of years, the course of salary equalization was strongly condemned. Thus, in a memo from the Board of the People's Commissariat of Labor of the USSR to the Council of People's Commissars of the USSR on the organization of labor and the wage system (late October 1931), it was noted that the tariff grids in force up to that time for each industry, transport and construction "represented the cultivation of petty-bourgeois equalization and hindered the stimulation of interest in raising the qualifications of workers." The document indicated the ratios in these grids, which established a low salary scale in the main industries (about 1:2.8). It was noted that the ratios between the categories of the tariff grid reflected the principle of a "fading" curve from the lowest to the highest category, which did not create an incentive to improve the skills of the worker. At the same time, in practice, it was not uncommon for "a highly skilled worker to earn less than a low-skilled worker," there was a large gap "in wages for homogeneous professions," and incentive wage systems ... introduced depersonalization and equalization in wages." https://istmat.org/node/8763 .       

Solving the tasks of the first five-year plans required radically different approaches to stimulating productive labor.  The trend of reducing wage differentiation in industry has been over for a long time.

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