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and private owners have been granted limited compensation and usually offered management positions in the fully nationalized firms. Less pressure has been applied to small private enterprises and craftsmen, and a December 1972 party plenum promised state support and "generosity in granting trade licenses" for artisans, shopkeepers, and small tradesmen. (U/OU)

The latest data available do not yet reflect the new organizational changes. In 1971, state-owned enterprises produced 82% of the gross output in manufacturing, an increase of only one percentage point from 1968. In the same 3-year period the output of cooperative enterprises grew very little, and the contribution of private firms to total manufacturing output declined. State-owned facilities play a larger role in metal processing and chemicals than they do in light industry—including textiles—and agricultural processing, in which cooperatives and semistate-owned enterprises accounted for about 82% of total manufacturing employment in 1971, a slight increase over the 1968 figure of 79%. The most dramatic change occurred in cooperatives, where the employment level in 1971 was only 61% of the 1968 level, a decrease of 27,600 workers in the 3-year period. Within this category of cooperative enterprises, those in the textile and metal processing sectors registered the largest percentage decreases in employment in the 3-year period. (U/OU)

Most state-owned enterprises (VEB's) are organized into slightly more than 95 VVB's (Associations of People-owned Enterprises), each comprised of similar enterprises. With the implementation of the reforms of the "New Economic System," the VVB's, which existed prior to the reforms, were given additional responsibilities and considerably more authority. They form an intermediate link between the state planning authorities and individual enterprises and acquired their new responsibilities at the expense of both. The VVB's are responsible for drafting their members' production plans and insuring their fulfillment, overseeing enterprise investment policies, technical and scientific research, working out wage norms and bonus systems, and sharing in both the domestic and foreign marketing responsibilities. Other enterprises are members of industrial combines—People-owned Combines—established in 1969. The position of the combines in the economic structure of East Germany varies. Some are subordinate to VVB's, some to industrial ministries, and others to organizations such as district (Bezirk) economic councils. The combines were established to prevent further concentration of power under the VVB's and to increase effectiveness in introducing technological change and innovation in the production process. There are also state-owned plants which are not centrally controlled, but which are supervised by Bezirk or county (Kreis) economic councils. Private plants are members of so-called Chambers of Industry and trade, which help integrate private production into the central planning process. (U/OU)

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200110021-0