Shchekino experiment (1967)

Origins

The Shchekino experiment began as a field test of the 1965 economic reform (the Kosygin reform). In March 1967 Kosygin charged the State Committee on Questions of Labour and Wages with developing and implementing an economic experiment at a nitrogen fertiliser plant, with the mission 'to improve production and lower the total number of employed personnel'. That April, Moscow bureaucrats inquired about running an experiment at the Shchekino Chemical Combine in the Tula region, and enterprise director Petr Sharov agreed. Between April and August 1967, Goskomtrud, the All-Union Central Council of Trade Unions and the Ministry of the Chemical Industry worked with Sharov and a team of industrial sociologists to design it. The experiment officially began on 16 August 1967.

Mechanism: decoupling the wage fund from headcount

Its core was the severing of the link between workforce size and the wage fund. In a typical Soviet factory the two moved together, so any change in the former produced a commensurate change in the latter. Decoupling them let the enterprise accrue a wage fund surplus and gave management an incentive to shed redundant labour. Combining job duties, mechanising production, training multi-skilled workers and improving the use of labour time were the main instruments. Russian Wikipedia states that the enterprise was assigned a stable wage fund for 1967–1970 and that the entire saving from higher productivity and staff reductions remained at the collective's disposal. Dismissed workers were not left to fend for themselves: management, together with the factory trade union committee, was responsible for finding them new positions, and 501 released workers were rehired into vacant posts while 220 were sent to a newly built synthetic fibres factory nearby.

Documented results

Results were striking in the early years. According to Russian Wikipedia, over two years the number of workers at the combine fell by 870, and over ten years output rose 2.7 times, labour productivity 3.4 times and profitability nearly four times, while wage costs per rouble of commodity output fell from 13.9 to 5 kopecks. Savings from higher productivity went to supplementing the wages of workers who took on additional duties and to regional development. Between 1966 and 1970 the combine's volume of profit increased by almost twenty-seven times. Social spending grew with it: experiment funds built two schools, a hospital and 30,000 square metres of new housing. Bonuses, however, were not large. By January 1969, 3,182 workers and 219 engineers and technicians had received bonuses for extra duties or extended service zones, and Sharov wrote that the average bonus was around fifteen roubles, generally 10 to 20 per cent of a worker's base rate.

Diffusion and the change of name

In 1969 the Party approved the spread of the experiment to other enterprises and industries, and around then the name changed from 'experiment' to 'Shchekino Method'. By November 1975, more than 47,000 workers had been released at over 400 enterprises; by 1978 some variation of the method was used in fifteen ministries affecting over 15,500,000 workers in 9,600 production associations and enterprises. It was most widespread in the chemical, paper and pulp, and oil refining and petrochemical industries, and it reached Poland and East Germany. By the mid-1980s it had been applied at over 11,000 enterprises employing more than 21,000,000 workers.

Contraction and divergent readings

Russian Wikipedia states that the experiment effectively ceased after a time: in 1976 the combine reached 143 per cent of its design capacity but failed to meet its plan, which cost it the thirteenth salary and a supplement it had been receiving. Other research holds that the method's influence peaked in the early 1980s. The two accounts place the experiment's end and disappearance at different points, so the 1976 plan failure as effective end and a diffusion peak extending into the early 1980s coexist as readings.

Assessment

James A. Nealy characterises the method as 'flexible production with socialist characteristics'. He argues the Party inaugurated its own variation of flexible production and in doing so inadvertently created the conditions of possibility for the transition from state socialism to capitalism on the factory floor. At the same time he notes the differences from capitalist flexible production: Soviet workers were guaranteed work even when released, and profits financed real efforts to improve the lives of workers and their families. After the Soviet collapse, its constituent elements such as multi-task labour, the elimination of clear job demarcations and detailed bonus systems were repurposed for Russia's new capitalist order. From the perspective of Sharov, who designed the experiment, the method also influenced the later development of planning practice.