Egged subsidy cutbacks to save public NIS 2b.

The ministry said Egged has agreed to lay off workers and cut costs by millions of shekels each year until 2015, which will result in peak savings of NIS 415m.

egged logo biz 88 (photo credit:)
egged logo biz 88
(photo credit: )
The Transportation Ministry and Egged bus cooperative agreed Wednesday to a gradual reduction of the state subsidy to Egged over the next 10 years, which will lead to a total public savings of about NIS 2 billion. The Knesset Finance Committee said the total subsidy Egged will receive over that period would be NIS 5.4b., according to the subsidy schedule. It unanimously approved the agreement, also on Wednesday. The ministry said Egged has agreed to lay off workers and cut costs by millions of shekels each year until 2015, which will result in peak savings of NIS 415 million. In this manner, within 10 years Egged would operate at costs similar to the proposals received through tenders to open new public transportation lines today, the ministry said. "Although the running subsidy to Egged will be canceled, the state will continue subsidizing [Egged's] equipment fund, as well as the ticket prices of particular population groups, [such as] the young, the elderly, the disabled, soldiers, and students," the ministry said. Transportation Minister Meir Sheetrit stressed that the agreement also allows the state to open to competition "significantly" more public transportation lines currently operated exclusively by Egged. The agreement also enables the state to increase its ability to regulate the cooperative, Sheetrit noted. He also hopes that the Dan bus cooperative will follow in Egged's footsteps. "By the end of the process, Egged must become a businesslike, competitive company, without limits dictated by the cooperative corporation," Sheetrit said. Egged, on the other hand, preferred to stress the continuity of the subsidy, putting the reduction in the context of the efficiency measures themselves, which it valued at only NIS 1b., half of the ministry's estimate. "Widespread lay-offs will not be carried out," Egged said, noting that the cooperative naturally loses 150 to 200 workers annually. "The number of workers will be matched with the level of users, as needed, also in the event of increased use of public transportation services," the cooperative said, adding that other sources of income would also be considered, including participation in projects abroad and light rail projects in Israel. Roughly 12 percent of Egged lines will be put up for sale via tender by 2008, according to the agreement and a transportation competition agreement signed five years ago.
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