Doing Business in Russia. Котова К.П - 22 стр.

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according to territorial location. Thus, means are redistributed from republics
with higher standards of living to republics with lower living standards, and this
will enable us to ensure a “socially fair” distribution of poverty all over the
country.
      If one considers the social benefits to the disabled and families with chil-
dren, it looks as if not they, but the state budget and the government, are the
things being protected. Truly invaluable is the idea of ex-Chairman of the USSR
State Committee for Labour and Social Issues Vladimir Shcherbakov, to set all
social payments not according to the subsistence wage (which can be counted
and which usually changes), but by minimum wages. Fixed minimum wages re-
liably guarantee invariable payments from soc• al consumption funds. What’s
more, all payment benefits to families with children, single mothers, disabled
persons, students, etc. have been fixed on the basis of a minimum wage of 70
roubles a month, established in 1972 (but not the 70 plus 60 to which all basis
rates of wages are now to be increased).
      The above shows that Pavlov’s apprehensions about “gravitating from the
price-formation reform as an essential factor in the transition to the market
economy towards a confiscation reform of retail prices” are, to put it mildly, in-
sincere. The reform was planned exactly like this and its success depends di-
rectly on the degree of confiscation. Here follow some of the likely results of the
reform and of the so-called social protection measures.
      In conditions of an unstable economy, prices will keep growing: this in-
cludes free prices, contractual and state prices. If compensation to working peo-
ple is included in basis wage rates, this will spark an uncontrolled rise in nomi-
nal wages. In addition, due to pressure by strike committees, the government
will be compelled to raise by a decree the basic wage rates. This will give rise to
greater inflation, which, in turn, will cause hyperinflation. The question of freez-
ing incomes will come up, but will the present Cabinet manage to do it, or will
the new Cabinet have to cope with these tasks? Time will tell.