(photo credit: Ariel Jerozolimski)
Prime Minister-designate Binyamin Netanyahu and Histadrut chairman Ofer Eini on Thursday agreed to cooperate in an effort to find ways to cope with the economic crisis and deal with rising unemployment.
"I found it appropriate, at a time of an economic crisis, to discuss with the Histadrut chairman new ways to rescue the economy from the crisis and how to deal with the threat to factories and workers" Netanyahu said. "This is a first meeting to discuss the depth of the crisis. We have decided to continue the dialogue and cooperate in the face of the economic crisis and rising unemployment, for the good of the economy."
At their meeting, in Tel Aviv, the two discussed the concerns of a deepening economic crisis, rising unemployment and looming layoffs and employment problems in the periphery.
"Netanyahu has chosen the form of dialogue with the Histadrut, in contrast to the behavior of the previous government," Eini said. "The meeting marks a new beginning for the cooperation between the Histadrut and the government. The economic crisis is the most important issue today. I'm glad that Netanyahu is carrying this issue seriously upon his shoulders, and we hope that through cooperation we will be able to cope with the crisis and move the economy forward."
Eini has accused Finance Minister Ronnie Bar-On of turning a deaf ear to the plight of workers. Eini and Manufacturers Association president Shraga Brosh have called upon Bar-On to sit down with employees' organizations and employer groups to avert more layoffs.
The Finance Ministry is deliberating whether to freeze a planned increase in public-sector wages, a move that would save the government NIS 2 billion.
The government and the Histadrut agreed in 2007 that the salaries of some 700,000 public-sector workers would be raised by 5 percent over a period of three years. The pay raise is to be given in three stages: a 1.5% salary increase in both January and December 2008, and another 2% raise in 2009. Until now, only the first stage of the pay raise has been implemented.
Netanyahu is expected to be in favor of the plan to freeze public-sector wages. In the past he has likened the public sector to a fat man riding on the back of a thin man: the private sector. If nothing changes, the fat man will continue to get fatter and the thin man will progressively weaken until the entire structure collapses, according to Netanyahu's economic credo. One of his solutions is to narrow public-sector spending by a wage freeze, together with a long list of reforms in the electricity sector, the ports and the Israel Lands Administration, so the economy will receive a few shots in the arm to encourage growth and employment.
In addition, Netanyahu has pledged that cutting taxes is the crucial component in reversing the crisis and the best engine of growth. Against the Treasury's and Bank of Israel's recommendations, he plans to cut corporate and income taxes in an effort to boost the private sector and encourage consumer spending.
Although Netanyahu is in the process of forming a new government, and the identity of the next finance minister is not known, he has started to assemble his economic team. Having formerly served as finance minister, Netanyahu understands the urgency of the economic situation and is determined to keep a close eye on economic policy-making and take an active part in economic decision-making. Bank of Israel Governor Stanley Fischer, who was brought to the central bank by Netanyahu, is expected to play an important role. Controversial former accountant-general Yaron Zelekha, a close economic aide of Netanyahu, is also expected to be part of the economic team.