East Europe tightens its belt - but prices keep bulging
Up, up go prices. And down, down slip living standards. Belt-tightening is a general order of the day in Eastern Europe. And it is likely to last.Skip to next paragraph
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Five years of world recession have taken their toll on all the countries in the area. But in most cases, a rigidly orthodox and centralized system of planning and management are as much to blame for present troubles and failures.
Worst off are Poland and Romania.
For Poland, three years of crisis and now, ironically, the first effects of economic reform, which has allowed prices to rise to reflect costs, have dramatically widened the gap between incomes and rocketing living costs.
In Romania, the government has refrained from decentralizing and reducing its controls on all levels of management. This, in the opinion of some observers, has led to economic and social stagnation every bit as grave as Poland's.
Here is how Eastern Europe looks economically just now:
* Poland. After the investment extravaganza of the '70s, economic reform which included trying to boost productivity, allowing prices to rise to reflect costs, and limiting consumption, seemed the only feasible way out of the crisis.
But following three years of domestic turmoil, it is still a delicate political question whether Gen. Wojciech Jaruzelski's program can be carried through as ruthlessly as the economic reality demands.
The first results have been a sharp fall in living standards, above all for 61/2 million people at or below an officially set subsistence level of a monthly 3,600 zlotys (about $40) per head for food.
Despite income hikes of up to 60 to 70 percent to compensate for rising prices, real income has dropped by between 16 and 24 percent, and living costs in the last 18 months have risen 240 percent for the population as a whole.
* Czechoslovakia. Two years of experimenting with a measure of managerial independence in selected enterprises have yet to show significant results. Hard-line centralists still block efforts of political moderates to push the process more boldly.
* Hungary. Of the two mavericks in the East bloc - Hungary in domestic and economic policy, and Romania in foreign affairs - the Budapest regime is more realistic in its pioneering policies. For years Hungary has been the bloc's one success story.
But it, too, is in trouble after the recent industrial slowdown and an unexpected and crippling drought loss of some 2 million tons of cereal.
The drought means Hungary will not be exporting wheat either westward or to the Soviet Union this year.
Food prices have been raised again. Officials say candidly that it will be hard to maintain present living standards, let alone offer consumers something more.
* Romania. This year the growth rate is only one-third of the target rate for the 1981-85 plan. Romania still has the most pinched of living standards in the Eastern bloc.
Despite persistent food shortages, the regime holds down the prices it pays to peasant farmers for their private produce.
Recently even the theoretical right of employees to confirm or reject their enterprise directors was overridden. A new ruling makes directors direct party appointees again.
* Bulgaria. Smallest in population and resources, Bulgaria has for years exhibited the economic liberalization at which bigger allies balk, with notable results in agriculture and relative consumer standards.
* Yugoslavia. Hard-liners point sneeringly at Yugoslavia, which is in a prolonged economic doldrum. ''Reform'' is still a dirty word. Russians, Czechs, and Romanians prefer talking of ''improving'' the system.
How will they set about these improvements?
Certainly not by conceding the kind of open society that helps non-bloc Yugoslavia through its troubles.
But the Poles, amid all their economic difficulties, are at least trying along Hungarian lines. It remains to be seen if they will follow the Hungarian example by giving new unions some modestly meaningful role, or by allowing the private sector to expand.
Trade-union power is peripheral still in Yugoslavia and more so in Hungary, but it shows increasingly that it can play an immense role for hard-pressed economies in purely human terms.