ABSTRACT
This chapter focuses on Russia, one of the primary Central and Eastern European countries undergoing transformation to a market economy. It explores historical and pay practices in state-owned and joint-venture enterprises in Russia. Joint ventures in Central and Eastern European countries have encountered numerous challenges, some related to the bureaucracies in the various countries while others seemingly relate to cultural differences between these and Western countries. Joint ventures are free to establish wages as they deem appropriate, without the shackles of past enterprise practices. Contrary to the most past, joint ventures in Russia are best advised to use direct wage incentives which can be used by the workers to purchase whatever they desire. Joint ventures in Russia have the opportunity to reverse the trend by recognizing education and skill as primary factors for pay differentiation. Wage leveling is considered a primary source of low labor productivity in Russia-largely the result of no incentive for education and skill development.
