Last-minute NIS 7.5 billion wage deals averts strike

Histadrut chief: For the first time, wage agreements have become an effective tool for reducing gaps for low earners in the public sector.

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December 23, 2015 16:26
2 minute read.
Finance Minister Moshe Kahlon

Finance Minister Moshe Kahlon. (photo credit: MARC ISRAEL SELLEM)

After hours of intensive negotiations, Finance Minister Moshe Kahlon and Histadrut labor federation chairman Avi Nissenkorn struck a 3 a.m. deal to increase public sector wages by NIS 7.5 billion, narrowly averting a public sector strike planned for 6 a.m. on Wednesday.

According to the agreement, half of the wage increase will be differential, based on current salary, while the other half will be a solid shekel figure. The idea behind the differential increase is to give bigger boosts to the lowpaid public sector workers and smaller ones to the highest- paid employees. Additional costs surrounding the agreement will amount to NIS 2b.-2.5b., bringing the total cost to as much as NIS 9.5b. over three years.

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“This agreement changes the rules of the game and clearly states that what was will no longer be,” Kahlon said, heaping praise on the public sector’s high earners for agreeing to divvy up the spoils from the strike threat to benefit their low-income peers.

The agreement stipulates that public sector earners will see a total of 7.5 percent in wage increases over five increments by the end of 2018, with half of that amount being distributed unevenly so that some of the lowest earners will see their wages rise as much as 14%.

Employees will receive an additional bonus payment of NIS 1,000 in January of 2016 and another the following year. Further, job announcements will be made on an interministerial basis instead of internally, in an attempt to increase job flexibility and efficiency within the sector.

Employees of local authorities that have non-collective contracts will get a 5% raise.

Parents in the public sector will receive an additional day off in August, which can be split up to shorten work days. August is a notoriously tough time for parents, as most summer activities for kids end and school has not yet begun.

The Finance Ministry’s annual wage report last week showed that salaries in the public sector varied wildly from office to office, ranging from minimum wage to salaries roughly 13 times the national average. Many of the disparities between areas in the public sector came from selectively negotiated collective wage agreements over the years, the report said.

Nissenkorn acknowledged that the deal was substantively different from previous ones.

“For the first time, wage agreements have become an effective tool for reducing gaps for low earners in the public sector. This is dramatic.

We are changing a fundamental convention,” he said, adding that the agreement set a precedent for wage agreement norms.

Even the Federation of Israeli Chambers of Commerce, a business group, praised the agreement.

“For the first time, the finance minister is taking a principled position of the utmost importance for society and the principles on which we build our society and state, and didn’t search for the easy solutions of personal convenience,” said FICC president Uriel Lynn.

He added, however, that the public sector needs further reforms to increase flexibility and efficiency. The public sector, he said, has grown too large in comparison to the private sector, and its 450,000 employees take home about half the state budget.


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