Publication and Revisions

A monthly press release on spendable weekly earnings is issued on the same day the latest Consumer Price Index is released-about the 25th of each month-showing a preliminary figure for spendable earnings for the previous month in both current and 1957-59 dollars. Revised figures for that month are later presented in the monthly publication Employment and Earnings and Monthly Report on the Labor Force and in the Monthly Labor Review. Historical data going back to 1939 are published periodically in Employment and Earnings Statistics for the United States.

The final data are subject to possible revision at the time of the annual adjustment of the BLS employment estimates to new benchmarks, since the employment estimates are used to weight the earnings data and the introduction of new benchmark levels may cause some redistribution of weights. In general, revisions of earnings averages caused by benchmark adjustments of the employment data are slight and relatively infrequent.

Married worker with 3 dependents

Gross average weekly earnings

Uses and Limitations

0-57.69 57.70-76.92 76.93- 92.31 92.32-96. 15 96. 16-115. 38 115. 39-136. 75 136.76-192. 31

0-57.69 57.70-76.92 76.93- 92.31 92.32-96. 15 96. 16-115, 38 115.39-136.75 136.76-192. 31

0- 57.69 57.70-76.92 76.93-96.15 96. 16-115.38 115, 39-126, 92 126. 93-136.75 136.76-192, 31

Formula (X= gross

average weekly
earnings)

.96375X .80375X+9.23 .79875X+9. 62 .835X+6.27 .825X+7.23 838X+ 5.73 .82X+8.19

.96375X .82375X+8. 08 .81375X+8. 85 .85X+5.50 .84X+6.45 847X+ 5. 65 .829X+8.11

958X .818X+8.08 .808X+ 8.85 .798X+9.80 .805X+9.00 .847X+ 3.67 .829X+6.13

The spendable earnings series, although lacking numerous refinements which would be necessary to make them precise tools, serve as a rough guide to the trend of "take home" pay and are therefore useful in union-management wage negotiations, in developing national wage policies, and in studying current economic trends. They furnish a measure of changes in the money amounts available to workers from current earnings for spending on goods and services and for personal savings. They show the effect on pay envelopes of revisions of tax rates and, when related to changes in consumer prices, indicate changes in the purchasing power of workers' earnings. The differing effect of these two factors on the earnings of a factory worker with three dependents in 1939, 1947, 1958, and 1965 is illustrated in the following tabulation :

remembered. These data measure the spendable earnings of workers who earn the average gross weekly earnings, have the specified number of dependents, and take the standard deduction. They may not represent the average spendable earnings of all workers with the specified number of dependents, which might, because of individual variations in earnings, tax rates, and deductions, be substantially different from the spendable earnings series. Moreover, since the tax rates depend on the total annual income, it must be assumed, in computing the deductions from average weekly earnings for a particular month, that the annual earnings are 52 times the weekly earnings.

If the spendable earnings series deflated by the CPI are used to measure changes in the general welfare of workers, certain technical and economic considerations should be borne in mind. First, the CPI represents only the purchases of wageearner and clerical-worker families in urban areas, and is therefore not strictly appropriate for de

flating the widely varying earnings of workers in all areas of the United States, rural as well as urban. Moreover, the CPI measures the price change from month to month for a standard list of goods and services; changes in buying habits, which take place slowly, are taken into account fully only on the occasion of comprehensive revisions of the index, every 8 or 10 years. Neither the CPI nor the earnings figures, of course, reflect the changes in welfare resulting from the expansion of free Government services, such as those for education, health, and other community services.

Two final cautions suggest that the spendable earnings series should be used in conjunction with other economic indicators for broad assessments of workers' economic well-being. The series refer only to the employed and naturally should not be used as a measure of the welfare of unemployed workers. It is also important to consider the effect on earnings of length of the workweek.

210-767 0-66- -4

Foreign Labor Briefs*

THE PROBLEM of preventing or curbing inflation has recently received close attention in many countries. In Germany, the Council of Economic Experts recommended a ceiling on average wage increases; in Indonesia, the President invited anyone who felt that he could halt the upward spiral of prices to apply for the position of Minister of Prices; in Latin America, wage and price guidelines were issued by various Governments.

Other problems occupied the Governments of other countries: Spain modified its categorization of all strikes as illegal; Switzerland wound up 23 years of debate by enacting a Federal Labor Act; the Greek Government adopted measures to strengthen the protection of Greek seamen on foreign-flag ships; and the Netherlands Assembly adopted a permanent minimum wage law. The decision in Iran to concentrate on increasing agricultural productivity during the third phase of the Government's development program was designed to promote more orderly progress in industrialization.

Germany-Wage Guidelines

Average wage increases in 1966 generally should not exceed the 4-percent productivity gain anticipated in the economy as a whole. This recommendation was made in the first annual report (1964-65) of the Federal Republic of Germany's Council of Economic Experts, a new public agency roughly comparable to the Council of Economic Advisers in the United States. Released in midDecember of 1965, the report pointed out that though high wage pressure affects productivity favorably by intensifying rationalization efforts, wage increases exceeding the national productivity increase could be considered noninflationary only where the ratio of capital cost to total cost declined.

The Government itself has not issued any guidelines, but a ceiling of 5 percent has been mentioned

unofficially. Though publicly expressing willingness to cooperate in efforts to maintain price stability, the German unions reject being bound by any overall figure.

Greece-Insurance for Seamen

The Greek Minister of Merchant Marine has introduced a number of punitive measures against Greek owners of about 100 ships under foreign flags who do not provide their Greek crewmen with insurance protection under the Greek Seamen's Pension Fund (NAT). In instructions issued January 7, 1966, the Minister (1) prohibited the hiring of crewmen for these ships through Government Labor Offices in Greece or abroad and the provision of any services or facilities to the ships (effective immediately); (2) prohibited the supplying by Greek authorities of any service or facility to Greek crewmen employed on such ships (effective March 7, 1966); (3) called upon Greek seamen not to serve on such ships after March 7, 1966; and (4) urged the Panhellenic Seamen's Federation (PNO) and its affiliates to strongly recommend to seamen that they not serve on such ships.

Indonesia-Inflation

Recognizing the accelerated rate of inflation in the last 3 months of 1965, President Sukarno asked in January 1966 for volunteers for the job of Minister of Prices. The condition attached to this "Help Wanted" announcement by the President was: "If after 3 months, that is by April 15, 1966, the prices or the economic situation should get worse, I'll shoot you. If prices do not go down or stay the way they are now, I'll throw you in jail, not for 5, but for 10 years." According to

*Prepared in the Division of Foreign Labor Conditions, Bureau of Labor Statistics, on the basis of information available in early March.

the Djakarta radio, there were two takers by late January.

Between October and December 1965, the price of rice and other essential commodities more than doubled, a rate of increase greater than in any similar period since 1955. By mid-February, prices for these commodities were almost four times their September 30, 1965, level. The value of Indonesian currency on the free market has been I declining rapidly; it took 47,000 old rupiah to obtain US$1 on December 31, 1965, compared with 17,250 old rupiah on September 30. As of the most recent date for which data are available, February 17, 1966, the rate stood at the old rupiah equivalent of 46,000 to $1. The runaway inflation has led to demonstrations by student and labor groups, and demands by the army and other groups for the replacement of Cabinet officers held responsible for the economy's weakness.

The rapid increase in prices stems in part from the disruptive effects of the abortive attempt at a coup by Communists or Communist sympathizers on September 30, 1965. The rising index in late 1965 was also affected by announcements of increases (as of January 1, 1966) in the costs of goods and services provided by the Government, e.g., gasoline and kerosene, railroad fares, electric power, and postal rates. Designed to eliminate the burden of heavy subsidies on the budget, these raises immediately increased costs of production. Early in 1966, the Government reduced or rescinded a number of these increases because of protests by consumers, unions, and student groups. Inflation in Indonesia has two underlying causes-heavy Government deficits financed by money creation, and disruptions of transportation and production which prevent an adequate flow of goods to major markets. Other contributing factors are an overstaffed bureaucracy, lack of foreign exchange for essential imports, and sales of Indonesian currency on black markets.

The Government attempted to cope with the inflation in December by issuing new currency at the rate of 10 old rupiah for 1 new rupiah. In an effort to cut the money supply, the Government decreed in February that in excess of 500,000 old rupiah bills could not be exchanged for cash but had to be deposited in special accounts from which withdrawals are restricted. The period for the ex

change of old 5,000-rupiah and 10,000-rupiah notes was cut off at February 25, 1966.

The Government has also sought to control prices and distribution of rice, food, textiles, and other essential commodities. In the absence of basic reforms and because of extensive hoarding and a rising wage level, these controls have been only partially effective.

Iran-Land Reform

The third stage of Iranian land reform, which began in January 1966, stressed improvement in agricultural productivity and the raising of living standards in rural areas, but does not involve further distribution of land and water rights. Major objectives of the third stage include utilization of modern farm technology, with emphasis on mechanization and the use of fertilizers and insecticides; training of farmers to use modern technology; support of agricultural cooperatives; establishment of "minimum land holdings with optimum conditions from an economic point of view"; coordination of agricultural and industrial development programs; and protection of the rights of farmers and agricultural laborers through an Agricultural Labor Law.

On January 9, 1966, the fourth anniversary of the basic Land Reform Law, the Minister of Agriculture announced that in the first stage (reduction of landlord holdings to a maximum of one village each), 12,875 villages had been purchased by the Government and distributed to 455,959 farmers, and in the second stage (reduction of holdings to prescribed hectarage limitations), 38,792 villages had been affected.

Latin America-Wage Policies

The problem of an upward spiral in wages and prices is a perennial one in several Latin American countries. The Governments of Argentina, Brazil, Chile, and Uruguay, in efforts to stem the upward movement, recently have issued official guidelines which would limit wage increases either to no more than the increases in official living costs or to increases slightly less than the intervening rise in living costs. Both Argentina and Brazil recognize the benefits of increasing produc