The Labor Party and the Histadrut labor federation spoke out sharply on Tuesday
as media reports suggested that Prime Minister Binyamin Netanyahu was planning a
severe austerity budget that would eat into their interests.
chairman Ofer Eini vowed to “fight to the death” any cuts to workers’ salaries,
saying “the Histadrut will not allow the reduction, not even by a single shekel,
of workers’ money.”
He added that any attempt to undermine the National
Labor Court, which the Federation of Israeli Chambers of Commerce has called
“extremist,” would undermine Israel’s democracy and rule of law.
leader Shelly Yacimovich blasted Netanyahu for his “secret” plan, saying “anyone
who cooperates with him in a government will be judged by the middle class and
the poor, who will be the direct victims of his plan.”
reactions, the exact outlines of the overdue 2013 state budget remain unclear, a
fact highlighted by the vast disparities in the media reports. Reported plans
ranged from NIS 15 billion to 30b. in cuts and variously cited raising revenue
by increasing VAT and inheritance tax, closing loopholes or simply keeping taxes
steady. With coalition negotiations not yet officially under way and the
deadline for sealing a budget deal being 45 days after the next government is
installed, that is not surprising.
But some budgetary facts of life
According to the spending law, Israel must cut NIS
14b.-15b. from next year’s budget, and possibly raise taxes to meet its deficit
goals. Given that a budget will not likely pass for a few months, the government
will try to pass a plan covering the rest of 2013 and 2014. That will help them
avoid rehashing the same arguments again just a few months after it finishes the
current process. The extended budget period accounts for some of the higher
figures being thrown around in the media, both for tax increases and spending
cuts. In any case, those cuts will not be easy.
“We have two options –
either go on this way and be like Spain and Greece, or we cut, and we cut from
the living flesh of us all,” economic analyst Nehemia Shtrasler told Army Radio
According to Globes, one of the main proposals for cutting
spending is reducing public sector salaries, pulling back big pay hikes and
benefits to keep them in line with stagnant private sector salaries. That would
save NIS 1b. (3b., according to The Marker), but undo the 1 percent increase
included in the collective agreement signed with the Histadrut in
But public sector salaries are far from the only area being
considered for cuts. Budgets across the board would also need to be reduced, and
Finance Minister Yuval Steinitz specifically cited the Defense Ministry on
Monday as one target. Yediot Aharonot cited a plan that included canceling
long-term programs for transport, including building intercity roads and a
subway in the Dan region, scaling back housing construction, and cutting back
payments to the National Insurance Institute.
Netanyahu is said to be
consulting on the budget with a team including Finance Ministry budget director
Gal Hershkowitz, Prime Minister’s Office director-general Harel Locker, and Ori
Yogev, a close adviser to the prime minister and a former budget
Yogev was a key figure the 2009- 10 budget process, where he
worked closely with Eini.
Hershkowitz aroused surprise when he dismissed
his deputy Eyal Epstein, the man largely responsible for overseeing the budget
process, this week.
“The second the Treasury leaders are unable to create
a policy that will fix the problem, they start to fight among themselves,
because they don’t have faith in one another,” former Finance Ministry
accountant-general Yaron Zelicha told Army Radio on Tuesday.
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