The social costs of economic change East and West

IN the last few weeks, Mikhail Gorbachev's position seems to have strengthened, and as a result his reforms seem more likely than ever to become a reality. Regardless of Mr. Gorbachev's fate, though, the social contract in the Soviet Union is in for a major overhaul in the next few years. In addition to those policies designed to get the economy moving, there are also long-term trends in the use of new technologies that will fundamentally change the relationship between the state and civil society. Adjusting to new technology is proving to be painful for large segments of the population in the West, and it looks very much as if the Soviet Union is now going to share the experience. Some elements of the ``restructuring'' (perestroika) have already received some attention in the West, especially those involving the tying of wages to effort, and the growing emphasis on the profit motive.

Although the difficulties are enormous, it seems clear now that Soviet industries are in for major reorganization during the next decade or so. The emphasis on profitablility and efficiency, however, has already given rise to a heated debate on the social consequences of such a move. The very foundation of the social contract, the guarantee of full employment, is being put in jeopardy. The population, though, is being given mixed signals. Some commentators talk about the possibility of unemployment as a permanent feature of Soviet society, with others assuring people that displaced workers will be allocated new jobs.

But where? Given the current waste of labor which the system encourages, and the consequent shortage of labor throughout the economy, laid-off workers will find it relatively easy to find employment of some kind.

Also, Soviet economists claim, technological growth will create enough new jobs to prevent unemployment from becoming a problem.

So far, the discussion has sounded very much like that which took place in the West a decade ago. According to Soviet planners, though, the similarities are superficial, for they claim that a socialist economy can avoid the problems of the Western nations. My own examination leads me to think that the similarities may prove to be considerable.

Although the USSR has not automated its industries to the same extent as other industrial societies have, automation has nevertheless been developing steadily since the early '70s. Although it now affects only about 1 in 8 industrial workers, automation will rapidly spread in the coming years. As this occurs, displaced workers will have to find alternative work. Some will move to less skilled, lower-paid jobs in manufacturing and construction, but many will have to take jobs in the service sector.

Since automation affects primarily manufacturing jobs (about one-third of the labor force), the shortage of service workers is not likely to be eased through new technology, and so the demand for labor in this sector will remain high.

This reallocation will not only produce a change in occupation, it will also mean a significant decline in income. Not only are service workers paid less than those in manufacturing, but the gap has been steadily widening. In the early 1940s the gap was only about 5 percent, but by 1984 service workers were on the average getting 30 percent less. Wages of the least skilled service workers (probably 10 percent of the labor force) are even further behind.

For many Soviet workers, the old social contract will no longer be in operation. For some, unemployment may become a fact of life, and for many of those whose manufacturing jobs disappear there will be a significant decline in their incomes. The transition will be cushioned by the provision of full pay for up to three months during which workers can search for work or retrain, but for many this will just delay pay cuts. For those who fail to find work, the payments will presumably come to an end. Those who are not displaced may not be entirely safe, either, since it is already becoming clear that wages of workers in automating and robotizing workshops often decline as the job description changes.

As in the West, therefore, many workers will have to scale down their aspirations and settle for a future less bright than they had envisaged. So, of course, will their children, for an additional reason - the educational reforms of 1984. If the reforms survive the current public hostility toward them, they will result in up to 70 percent of 15-year-olds moving into special vocational-technical schools. It is clear that it will be the sons and daughters of those lower down the social scale who will populate these schools. Entry to higher education, and hence to a place in the intelligentsia, is most unlikely for these pupils, despite various ``affirmative action'' programs to take social background and experience into account. So for many parents the dream of upward mobility for their children may be another hope to be given up.

Popular resistance to Gorbachev's reforms has been aimed in large part at their consequences for ``social justice,'' in particular at the redistribution of income and the threat to job security. Letters to the editor complain that workers are having to pay the costs of change, and some workers have even begun overtly to resist some of the new programs.

Even if the reforms are scrapped, however, the continuing introduction of new technology will have the same effect. As in the West, automation and robotization may be expected to have a profound effect on social and economic life, and getting rid of particular leaders and policies will not prevent this from happening. Also as in the West, Soviet economists and planners are having to rethink their attitudes to technology. The earlier, blindly optimistic assumptions that new technologies bring nothing but benefits is giving way to a concern for the ``human'' aspects of industrial organization.

Indeed, there is much talk these days of reorganizing the workplace to make work more interesting, and of designing technology in such a way that it does not ``deskill'' jobs. Whatever the fate of these proposals, it is clear that the years ahead will see changes in the Soviet social contract, with or without Gorbachev.

Whether this will mean greater convergence of East and West, though, remains to be seen.

T. Anthony Jones teaches sociology at Northeastern University and is a fellow at the Russian Research Center at Harvard University.