In the past four years, the Benjamin Netanyahu's government, abetted by the Ministry of Finance under Yuval Steinitz, has approved salary rises in the public sector amounting to NIS 15 billion, according to Ministry of Finance statistics. The figures show that about half this amount was given to the public sector as a whole in the 2010 agreement with the Histadrut (General Federation of Labor in Israel).
Since that agreement, which was considered exceptionally generous, there have been about 20 more labor disputes in the public sector, and they too have led to wage rises and improvements in conditions, costing an estimated total of more than NIS 7 billion. The two main beneficiary groups have been the teachers, in both primary and secondary schools, who received a salary increment of some NIS 3 billion; and the doctors (including residents), who received an increment of some NIS 2.5 billion. The recent commitment to the nurses is estimated at NIS 700 million.
These sums refer to the overall cost of the agreements, nearly all of which are spread over several years. Unlike regular budgetary spending, wage agreements are not subject to change or cancellation.
Talking to "Globes", a senior Ministry of Finance official said of the figures today, "Most of the agreements that have been signed are good, comparatively cheap, and in all of them there is an important structural change that improves service to the citizen. The agreements are not the problem. The problem is that there is no match between the agreements, which are multi-year, and the spending ceiling in the coming years. Most of the agreements were signed in 2010 and 2011, but in 2013 we have to cut $15 billion precisely for this reason."
One of the solutions that the Ministry of Finance proposes for carrying out the cut is reducing wage terms for public sector workers, a solution that looks impossible in the near future. Moreover, in 2013, the Ministry of Finance will be compelled to talk to the Histadrut again on a new collective wage agreement to start in 2014, so wage costs in the budget will probably only grow further.
Published by Globes [online], Israel business news - www.globes-online.com - on December 20, 2012
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