Labor Affairs: Striking victory?

Who's the real winner in the Histadrut's wage settlement with the Treasury?

eini bar-on 88 (photo credit: )
eini bar-on 88
(photo credit: )
While the general strike may have come to an end early Thursday morning, with both Finance Minister Ronnie Bar-On and Histadrut Chairman Ofer Eini claiming victory after agreeing to a 5 percent wage increase over the next three years for the country's public sector workers, the real winners in this latest wage debate will only become clear over the next few months. "Nobody came out on top and I think that the negotiations were not handled properly," said Uriel Lynn, president of the Federation of Israeli Chambers of Commerce. "Concerning the government, you don't start by offering an increase of 0.2% and end at 5% - it completely erodes its credibility as it proves it didn't really mean what it said but only offered the 0.2% as a negotiating tool. Meanwhile, I believe the Histadrut could have reached the same agreement without striking and only resorted to this tactic because it was impatient." Lynn added that while the Histadrut may have further tarnished its reputation by calling for what he perceived to be a "collective strike," Eini is also sensitive to public opinion. "On the one hand, there was no reason why he called the strike for every sector of the Histadrut, but Eini also delayed the strike at the airport and didn't halt payments into the National Insurance, somewhat mitigating the effects of the strike. I don't think that the Histadrut will be hurt, but it doesn't help it either." The government, said Lynn, must now work to regain credibility in the eyes of the public. While these negotiations may not be as damaging to the government as Prime Minister Ehud Olmert's intention to significantly raise the salaries of Bank of Israel employees, a decision that is expected to come within a few weeks, it will not be easy for the Finance Ministry to enter into negotiations in the future without raising questions as to its true intentions, he explained. "I understand the government's need to act this way, but it must rethink it," he said. Meanwhile, the federation is planning on introducing legislation that will block the Histadrut from calling another general strike. According to Lynn, while he isn't opposed to the right of unions to strike, he stands firmly against "collective strikes." "This strike should not have included sectors that are most vital to the country's ability to function, such as the ports, hospitals and the electric and water companies and should have been limited only to government workers, municipalities and employees in state-owned companies," he said. Under the terms of the agreement reached between Eini and Bar-On, the wages of the Histadrut's approximately 700,000 public sector employees will be raised 5% over the next three years, beginning with an increase of 1.5% at the end of this year, followed by 1.5% in 2008 and 2% in 2009. The two sides also agreed that the retirement plans for permanent employees would be fixed and would not need to be frequently reevaluated. The agreement has been estimated by the Finance Ministry as costing an average of NIS 4 billion a year once the increases reach 5%. "Both sides won," Prof. Rami Friedman, a labor relations expert and Dean of the Lauder School of Government, Diplomacy and Strategy told The Jerusalem Post, "but obviously the Histadrut was the big winner here, as it established itself as an economic unit with a good bargaining team and secured for its members a significant pay raise." He also said that he didn't think it would hurt the government and that the state budget would not need to be increased as a result of this agreement, at least until 2010. "For NIS 4b. a year, the government bought itself industrial peace for at least the next two and a half years and avoided the damage that a prolonged strike would have caused." However, the government is now faced with the task of dissuading the public that it can be squeezed for cash and proving that it is not, in the words of Friedman, "a softie." "We have to think about the image of the government, especially of the new finance minister, and how it will look coming out of this agreement," he said. "I think the government will be faced with a situation in which various parties are going to see that they can get money from the Treasury, and it's now up to Bar-On and the Finance Ministry to communicate to the public that they only gave the Histadrut what was fair and not a shekel more." This task was complicated by the fact that the government didn't seek to end the wage negotiations earlier, explained Friedman, noting that Bar-On will be faced with accusations that he only negotiated a compromise when faced with the reality of a strike. "It's going to be hard for the Treasury to prove that it isn't soft, and we will have to wait and see if it is capable of doing so in future negotiations." "I think this is a fair settlement and it does not set what I see to be a bad precedent for the government in terms of negotiating settlements," said Dr. Roby Nathanson, director of the Tel Aviv-based Macro Center for Political Economics. He did point out, however, that the Treasury is going to have to continue to prove that it is capable of negotiating wage settlements. According to Nathanson, this agreement is only the first step in further negotiations that will take place between the individual unions and the government over the coming months. "On top of the 5% that will be awarded to Histadrut members, each sector has the ability to negotiate on its own with the government, and I have already heard from the Teachers Union that it is not happy with its current agreement, so the verdict is still out on how the government will handle these negotiations."