Treasury defeats BoI in salary battle

Ministry will continue to oversee bank wages; Treasury, Histadrut and manufacturers sign deal.

June 23, 2009 10:26
2 minute read.
Treasury defeats BoI in salary battle

fischer steinitz 88 248. (photo credit: Ariel Jerozolimski)


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The Finance Ministry will continue to oversee the salaries of Bank of Israel (BoI) employees, Prime Minister Binyamin Netanyahu ruled Monday night, seemingly ending a dispute between the two bodies regarding the mechanism for setting central bank salaries as proposed in the new Bank of Israel Law. Netanyahu thus accepted the position of Finance Minister Yuval Steinitz and rejected that of BoI Governor Stanley Fischer, who had demanded that the regulation be conducted by an external committee. However, Netanyahu also decided that the BoI would be allowed to appeal contentious decisions to a public committee, headed by a representative chosen by the attorney-general. Final say on such matters will be held by the prime minister. Meanwhile Steinitz, Histadrut head Ofer Eini and Manufacturers Association President Shraga Brosh signed a 'package deal' on Tuesday, which helps the government implement major reforms planned as part of its economic efficiency plan. "This joining of forces is an essential part of the economic plan to end the crisis and escape it," Steinitz said. "We cautiously estimate that we will effectively end the crisis and [rising] unemployment towards the end of 2009, and reach renewed growth towards the end of 2010." Fischer had last week called the Treasury's insistence on maintaining control over the central bank's salaries a declaration of "war." "At the Bank of Israel, we do not believe that we need to set our own salaries," Fischer had said at a press conference in Jerusalem last Sunday. "It does not appear anywhere in the proposed law. As with public institutions, in our proposal the prime minister needs to have the last word." "Tensions are created between the Bank of Israel and the Finance Ministry since we deal with the same issues in the economy," he said. "It is not acceptable that there is a situation in which the Finance Ministry has this tool [setting the central bank's salaries] in its hands that it can use against us every time we have a disagreement." "The supervision over salaries needs to be taken out of the oversight of the Finance Ministry as is the practice in many developed countries around the world," he said. According to media reports, Fischer has made adoption of the new law a condition for accepting a second term. His term ends next May. "I never take decisions before I have to make them," Fischer said in response to the reports. Under the proposed Bank of Israel Law, a committee would be appointed that would be responsible for making decisions relating to the management of the central bank, including approval of the bank's budget, financial statements, salaries and employment conditions. "The committee will present recommendations and decisions to the government and the Knesset," Fischer said. "The Finance Ministry will be able to appeal the decisions, but if there are disagreements, the prime minister makes the final decision."

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