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(US$181.43) in 1967. Earnings levels vary considerably according to the branch of economic activity, because of differences in the skills required, in wage rates and supplemental payments which reflect the regime's priorities with respect to economic growth, and in the number of regular and overtime hours worked. In 1970, average monthly earnings (in DME) were as follows:

Within industry, average earnings are highest (DME873 per month in 1970) in metallurgy. All branches of light industry paid less than the industrywide average, with textile and apparel manufacture ranking lowest (DME618 per month).

Annual wage gains were modest in the early 1960's, when the regime responded to serious inflationary pressures by holding down wage increases and raising some consumer prices in order to reduce the excess of purchasing power over available goods. Average industrial earnings had risen 25% during 1955-60, when the border was open and East German firms were competing for labor with the West. This led to serious distortions in the economy which the regime sought to correct by limiting wage increases to only 18% in the 1960-67 period. With the introduction of new work norms in 1962, the annual increase in average industrial earnings dropped sharply compared with earlier years; throughout most of the 1962-67 period the yearly gain in earnings was less than 2%. With the stabilization of the economy in that year, the clampdown on wage increases was eased, and between 1967 and 1970 average industrial earnings rose 13%.

In addition to base pay and bonuses—a widely used form of incentive payment, based usually on attainment of enterprise production goals or other standards of efficiency—workers receive a number of supplementary payments and nonmonetary fringe benefits. If actual full-time earnings are less than DME300 monthly, the employer makes a payment (for which he is reimbursed by the government) to raise them to the minimum, DME300 level. Workers whose spouses are not working receive an extra DME5 a month. Heads of household also receive DME40 monthly for each of the first three children; DME60 monthly for a fourth child; and DME70 for each additional child. There are also special payments for those working in mines, in tuberculosis sanitariums, or other places where there is danger of infection, and in the restricted zone near the West German border. Finally, each worker receives a Christmas bonus of DME25 if single or DME35 if married. Most of these payments were designed to benefit the lowest paid workers.

Most enterprises provide nonmonetary benefits, such as meals at subsidized prices. Industrial enterprises furnish work clothing and special protective garb, and provide for its cleaning and repair. Large enterprises generally provide child-care facilities and insure that housing is available for their workers. In the large enterprises the labor union sponsors health and recreation facilities, reading rooms, and various social and cultural activities.

E. Living conditions and social problems

In East Germany, as in other Communist countries, the welfare of the individual is subordinated to the purposes of the state and to the state's concept of social welfare. Economic plans prescribe, among other things, consumer goods supply, retail prices, wages and hours, sick benefits, and pensions. The state has full control of the welfare services, which it uses to support the economic plans and Communist political and social objectives. The system, however, provides the individual with a certain level of economic security; nearly everyone is entitled to free medical care and hospitalization, and workers are assured of at least subsistence pensions.

After dropping below subsistence levels in the immediate postwar period, East German levels of consumption had reached their prewar position by 1955. Under the influence of the regime's policy of trying to equal West German levels of consumption, East German consumption between 1955 and 1960 rose another 30%; the level remained about the same through 1964, and then resumed its upward trend. The rise in consumption has tended to ameliorate some of the earlier popular discontent, but the people, prone to comparisons with West Germany, still are not content with the availability of goods. Figure 14 details the improvement in consumer goods availability since 1955 and the continuing lag behind West German levels.

In an effort to match West German increases in nominal per capita income, the regime in the late 1950's allowed wags to rise at a greater rate than the supplies of consumer goods. As a result, in 1958, after food rationing was abolished, the demand for meat and butter exceeded the supply. After construction of the Berlin Wall cut off the people's normal method of avoiding unpopular measures, the regime was able to stabilize wages and raise prices in order to stem inflation. Rationing, albeit this time informal, was reintroduced for butter in 1960, and for meat in 1962, and was continued in many areas until 1966. Under

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200110024-7