Athens protest 311 R.
(photo credit: REUTERS/John Kolesidis)
Last summer’s demonstrations in Israel have brought to the forefront
socioeconomic issues. It was largely due to an increased sensitivity to the
somewhat nebulous concept of “social justice” that enabled the Histradrut labor
federation to launch a general strike last week for contract workers’
The horrid treatment of these outsourced, temporary employees has
been going on for years. But it was only after the summer’s demonstrations,
which managed to mobilize record numbers of average Israelis to take to the
streets over issues such as exorbitantly priced housing and consumer goods,
unaffordable education and gaps between the rich and the poor, that the
requisite public consciousness was raised. Indeed, unlike past strikes, there
was wide public support for the Histadrut’s battle for contracted
Delays at Ben-Gurion Airport, the stench of uncollected garbage,
closed banks and post offices were all worth it. Even the news media were
largely sympathetic to the strike.
Meanwhile, according to a study by the
Bank of Israel released this week, the socioeconomic demonstrations of the
summer helped to keep down inflation in the last two quarters of 2011. In its
Monetary Policy Report, the central bank noted that food prices dropped by 8.1
percent in the third quarter of 2011.
The price drop, said Bank of
Israel’s economists, was the direct result of the pressure put on large food
producers and importers by last summer’s demonstrators to reduce profit
And on Monday, the Knesset Finance Committee approved a transfer
of NIS 1.3 billion to help fund free preschool education for children aged three
and four. The move, which will lower childcare costs for thousands of
middle-class families and make it economically feasible for more mothers to get
a job, is one of the central recommendations of the Trajtenberg Committee, which
was created to answer the demands of the protesters.
But while the
demonstrations have raised public consciousness about “social justice” and
brought about positive change, it is important that the government remain
vigilant against attempts to undermine fiscal discipline or endanger in any
other way our economy’s ability to weather the economic slowdown that is
expected in coming months.
Our leaders must resist populist calls to
foster “social justice” by increasing government expenditures or by implementing
pseudo-socialist programs such as expanding the public sector.
context it is instructive to learn from Greece, a country facing economic
collapse. It would be an exaggeration to claim that the faults in Israel’s
economy are comparable to Greece’s. However, there are similarities worth
mentioning. Perhaps the most glaring distortion of Greece’s economy is its
Greece’s public employees are notorious for their
exceedingly attractive work conditions. Regardless of their skills, these
workers receive high salaries and cannot be fired. One cannot help but think of
our own port workers in Ashdod and Haifa or Israel Electric Corporation
employees – two of the strongest Histradrut-organized labor unions. Indeed, in
large part due to the Catholic-wedding style employer-employee relations in our
own public sector, there has been a growing reliance on outsourced, temporary
and contracted manpower.
Lacking labor market flexibility, many managers
in our public sector are forced to hire temps through manpower agencies. Though
the Histadrut is being credited with coming to the aid of the contract workers,
the labor federation’s own unions are largely responsible for creating the need
for contracted employment.
Last summer’s demonstrations have released
positive forces for change. Significant progress has been made in the fields of
contract workers’ rights, food prices and free preschool. The government must be
careful, however, not to get swept away in a populist flood of support for
spendthrift fiscal policies or imprudent, pseudo- socialist “solutions” to our
The best policy for economic health is minimizing
state intervention in the economy, reducing the size of the public sector and
encouraging free, fair competition.
Greece provides an excellent example
of what happens when these principles are abandoned.