The Greek example

In the context of the social justice movement, it is instructive to learn from Greece, a country facing economic collapse.

Athens protest 311 R (photo credit: REUTERS/John Kolesidis)
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’ rights.
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 workers.
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 margins.
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.
In this 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 public sector.
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 economic ailments.
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.