Gorbachev's Wage Reform

The wage reform, an aspect of perestroyka, is described as it affects industry, and changes in the wage system are outlined. To stimulate better work, wages are being raised and differentials increased; to induce economies in labor, wage increases are to be financed from the enterprise's income. Self-financing and implementation of the reform to date are addressed as well, as are inconsistencies between the wage reform rules on self-financing and those of the Law on the State Enterprise. Finally, problems such as enterprise footdragging and unemployment and prospects for continued reform, inflationary pressure, and worker morale are considered. Journal of Economic Literature, Classification Numbers: 027, 124, 824.