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Regulation of Bonuses

In: Wage Control and Inflation in the Soviet Bloc Countries

Author

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  • Jan Adam

Abstract

In the preceding chapter, regulation of basic wages was discussed. However, employees of enterprises also receive bonuses, premiums and rewards from funds outside the wage-bill,1 mainly from the incentive fund. Even if these bonuses2 are not very large—their present range in the Soviet bloc countries is from 5–12 per cent of the enterprise wage-bill including bonus fund3—they must be regulated in order to ensure that their magnitude does not exceed the plan limits and thus contribute to inflationary pressures. They must also be regulated since they serve as the main incentive,4 a function which can be filled only partially by basic salaries (and the same is true of wage rates), which are fixed by the centre and in most countries changed by it at long time intervals. The size of basic salaries is primarily supposed to be a reward for knowledge and experience gained over a long period. It is felt that it would be wrong to change them in accordance with short-term fluctuations in performance. In addition it would be politically difficult to reduce basic salaries (or wage rates or even basic wages) in the case of nonfulfilment of targets.5

Suggested Citation

  • Jan Adam, 1979. "Regulation of Bonuses," Palgrave Macmillan Books, in: Wage Control and Inflation in the Soviet Bloc Countries, chapter 4, pages 77-91, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-04892-2_4
    DOI: 10.1007/978-1-349-04892-2_4
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