Wages Fund

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Wages Fund


the fund of financial resources representing, in monetary form, the part of national income that is distributed among the members of socialist society for the satisfaction of their material and nonmaterial needs, distribution being based on the quality and quantity of work performed. The wages fund is used to pay industrial workers and other employees for the work they perform; it is also used to pay workers during regular vacations, any additional holidays or leaves of absence, and any time spent in carrying out civic duties or performing tasks at the behest of the state. Bonuses and other types of additional payments to workers are also covered by the fund, as are the costs of any apartments, municipal services, and work clothing that are supplied without charge to employees by enterprises, institutions, and organizations. The wages fund is also used to cover any other payments to workers dictated by existing legislation. However, it does not cover bonuses and other payments for which there are special sources, such as the material incentive fund, the fund for the introduction of new technology, and the consumer goods fund.

The wages fund, which is broken down on a quarterly basis, is authorized annually for the national economy as a whole and for each Union republic, ministry, and department. Provision is also made for the economic activities overseen by executive committees of the soviets of people’s deputies. Administrative bodies set the wages funds for each quarter, with a breakdown by month, for the enterprises and organizations under their jurisdiction. The wages fund is an indicator established by directive; either an absolute sum will be approved, or a planned standard will be set, for example, so much per ruble of output, per ruble of work performed, or per ruble of services. Five-year plans covering wages funds are authorized for enterprises annually.

In industry, the planned wages fund is the sum of money considered necessary for reimbursing labor of a given level expended in meeting production targets within a given period (month, quarter, year). Here, a distinction is made between the labor costs for industrial workers, that is, those directly involved in production, and those who are only indirectly involved. The projected amounts, which are expressed as both absolute sums and percentages, are based on the labor inputs required for a given program of production; the calculations for arriving at the labor inputs take into consideration the appropriate planned standards and the need for certain types of industrial workers and auxiliary personnel. The projections for the wages funds are also based on current wage scales, piece rates, and servicing norms, on the salaries and sizes of the engineer-technical, administrative-clerical, and maintenance staffs, on the policy regarding bonuses, and on existing legislation on labor and wages.

Between 70 and 90 percent of the figure for labor costs is determined through the wage rate system. The wages fund is determined as the product obtained by multiplying the average wage rate for each category of work by the number of workers in each category; in some branches, it is expressed in terms of a planned standard, that is, so much per unit or per ruble of output. In projecting and analyzing actual wage levels, bonuses and other payments for outstanding performance covered by the material incentive fund must be added. As a rule, the rise in labor productivity must exceed the rise in average wages and payments from the material incentive fund.

In the event that the production plan is overfulfilled, the wage payments that exceed the approved totals are met by the State Bank (Gosbank) of the USSR. The bank’s payments are governed by existing norms, which specify amounts to be paid for each percentage point of overfulfillment on the basis of the labor inputs involved and the structure of the wages fund. Here, the bank payments are used to supplement only the wages fund for the industrial workers, not the overall wages fund.

In the nonproduction sphere, the wages fund is calculated differently. In trade, for example, it is a percentage of turnover, with allowance for any increase in labor productivity. In administrative agencies and in institutions financed by budgetary allocations, the wages fund depends on the number of employees, with allowance made for service norms; it is determined by multiplying the salaries corresponding to the various positions by the number of employees in each position.

The overall wages fund also includes an amount set aside to pay for the labor costs of temporary workers and for work that is not ordinarily performed by the permanent staff. Payments here are governed by the same norms and piece rates that apply to full-time employees. The wages fund for temporary workers depends on the volume of work foreseen in a given period, with amounts paid out in earlier periods used for comparison.

The size of the wages fund is closely related to other indicators of the national economic plan, first and foremost with plans covering consumer goods, services, and commodity circulation and with the cash plan of Gosbank, the plan of money circulation, and the balance of the monetary income and expenditure of the population.

The wages fund has a marked effect on indicators describing unit costs, profitability, and the financial position of enterprises and economic sectors. Expenditures from the funds are therefore closely watched by management, financial agencies, and Gosbank. Careful use of the funds, whose sizes are determined scientifically, is a prerequisite for an increase in social production and the standard of living of the workers.


Metodicheskie ukazaniia k razrabotke gosudarstvennykh planov razvitiia narodnogo khoziaistva SSSR. Moscow, 1974.
Trud i zarabotnaiaplata v SSSR: Sb. St., 2nd ed. Moscow, 1974.
Ekonomika truda v promyshlennosti. Moscow, 1970.
Maslova, N. S. Voprosy ekonomicheskoi effektivnosti novoi sistemy material’nogo stimulirovaniia v promyshlennosti SSSR. Moscow, 1971.
Gur’ianov, S. Kh., and L. A. Kostin. Trud i zarabotnaia plata na predpriiatii, 2nd ed. Moscow, 1973.


References in periodicals archive ?
Lakatosian concepts, which Vint adopts, include a hard core of theory (in this case wages fund theory), a protective belt (which, due to lack of empirical testing, are factors which protect the hard core) and "monsters" - mainly questions that the theory cannot answer.
Vint concludes that the classicals were rational (in a Lakatosian sense to be sure) to hold to the wages fund idea.
Thornton - that alleged idiot savant on the theory of supply and demand - in order to abandon the wages fund.
Vint apparently does not understand the interface between classical microeconomics and macroeconomics vis-a-vis the wages fund despite the homage he pays to Frank Taussig's masterful analysis of the question [3].
He might not have been led to this position had he not, as Marshall noted, put the cart (the wages fund discussion) before the horse (the theory of markets) in the Principles.
A book which presents a reasonable contrast in interpretations of the wages fund is surely needed, but this book does not fill the bill.
Finally, John Vint argues that McCulloch is the founder of the "rigid" version of the wages fund doctrine, thus meaning that he strove "to protect the idea of a predetermined real wages fund from the notion of wages paid in money" (p.