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The data show some increase in social spending as a share of the total labor costs. In 1993. total registered social spending by enterprises amounted to 17 % of the total wage bill<sup>5</sup> (in industry -- 22%) and to 13% of the total labor costs estimated as a sum of the wage bill and the payroll tax (in industry -- 18%). In 1994, these shares for the whole economy amounted to 20 and 15% correspondingly (Table 3). This aggregate data is consistent with the results of the large enterprise survey. As shown by the World Bank survey of 420 industrial firms held in the of summer 1994, average per capita social spending in this sample were equivalent to 18% of the wage bill. Social spending was positively and significantly correlated with the average cash wage. According to this survey, very few firms, only about 5% of the sample, did not provide any social services, while more than 60% provided five or more various types of such services (Commander and Lee, 1995).

The data suggest that 1994 social spending in industry as percentage of the cash wages returned to its traditional pre-reform level exceeding 20%:6 overall reduction in real enterprise social spending over the years of reforms did not exceed the decline in real cash wages. This makes a dramatic contrast to Poland, where the initial pre-reform level of social spending, of 6%, was only as third as high, and it has been showing some moderate decline since reforms started (Schaffer, 1995).

# Under-reporting.

The presented data on the total enterprise social expenditure is likely to be significantly underreported. This happens because of (i) insufficient enterprise coverage in Goskomstat form No. 10f used for preparing tables 2 and 3, and (ii) statistical biases in the data provided by enterprises.

(i) While the annual form 10f is supposed to cover the whole enterprise sector (as it follows from the employment data) in 1994, Goskomstat was able to collect this form only from enterprises amounting to total employment of about 85 % of the overall labor force. One might assume that the most of largest enterprises, being the main providers of social services, are covered by this form, and therefore above mentioned under-reporting is not very large. Small firms, and newly-emerging private businesses in particular, are much likely to be under-presented in Goskomstat data. This part of the enterprise sector, however, is less involved in the delivery of social services.

(ii) A number of reasons. such as widespread barter transactions, the delivery of goods and services to employees at low prices, exclusion of depreciation and costs of renting corresponding premises from the total costs related to the provision of social services, etc., make the reported social spending volume substantially under-estimated. Enterprise managers had and retain incentives -- e.g. the excess wage tax - - to include some actual expenditures made in the social sphere under their general production costs by using deficiencies in the existing accounting classifications. Additionally, most social services are provided by enterprises on a non-profit basis. As a result, the opportunity costs of getting the same services through independent providers might be higher. Therefore, the actual burden of all types of social financing for enterprises is likely higher than that reported by Goskomstat but it probably does not exceed 4% of GDP.

s Including bonuses from profit.

6 Estimated on the basis of Finance in Russian Federation, 1992. - M: Goskomstat, 1993, p.30; Russian Federation in 1992. Statistical Handbook. M: Goskomstat, 1993, p.p.121, 224.