Page 38 - Countertrade

The problems facing VOS were:

• legislation: the flow of new legislation and accompanying regulations
created many problems as directors struggled to understand the system
within which they worked.

• economic issues: management and control of the economy; monetary
financial systems; banking; integration into a hard currency system;
customs regulations; the attempts to stimulate foreign trade: all these
changes added their individual and collective pressures.

• psychological problems: there had been generations of managers and
workers unused to competitive market conditions on; socialism had
masked inefficiencies and ignored problems; the leadership in VOS were
unprepared for the new environment.

The organisation was pulled in new directions. This created tensions and
led to some of those involved questioning the reason for the existence of
VOS. The changing circumstances required that VOS enterprises
produce competitive products and, to achieve this, introduce new
technologies. However, these new technologies were not seen to co-exist
readily with the technologies appropriate to workshops for the blind.

In the 1980s it had been ‘business as usual’. This meant that the
enterprise operated in an environment which was stable and predictable.
The VOS enterprises were supported within the government’s overall plan
and thus were guaranteed raw material supplies and market outlets. By
1989 that environment was changing. By 1993 it had changed to such an
extent that about 80 per cent of the VOS enterprises were insolvent. The
winds of free enterprise and the competitive market had blown away the
security that monopoly and privilege had bestowed on them. From that
time on these enterprises had to operate competitively with all the
opportunities and threats that that implied. The cosy, comfortable Say’s
Law where supply creates its own demand no longer operated.

State subsidy still existed. For example, no taxes were paid on profits, soil
(rates) or on social and medical insurance. They did pay the full charge for
energy - heat, light, and power. In 1990 one kilowatt of energy cost 40
Kopecks. In 1995 the cost was 180 Roubles. General inflation in February
1995 was running at between 15 and 30% per month.