Finance, Histadrut sign deal ending (Israel's) civil service strike

The Jerusalem Post ^ | 5 January 2004 | TAL MUSCAL

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Jan. 5, 2004
Finance, Histadrut sign deal ending civil service strike
By TAL MUSCAL

More than three months of labor sanctions at government ministries came to an end Monday afternoon when Finance Minister Binyamin Netanyahu and Histadrut Chairman MK Amir Peretz shook hands and said their 100-day duel was over.

At the Finance Ministry, Netanyahu told reporters that a major triumph of the deal was "the saving of Israeli pensions."

"I know you all want to know who won. Without doubt, the Israeli public is the winner. We are pleased with the result, and if the Histadrut is pleased, we are pleased sevenfold. Because a good agreement is one in which both sides are pleased," he said.

Commending Amir Peretz on his beliefs and assistance in finally attaining an agreement, Netanyahu said that the Histadrut's demands were never capricious. "Any money that needs to be spent is going to good causes," he said.

The agreement ends the ongoing strike Israel has suffered over three months. Various public institutions, which were on strike, will resume their work Tuesday.

Government offices are expecting throngs of people to arrive at offices of the populatuion registrar, employment and licensing bureaus.

Netanyahu opened the press conference saying that he was "pleased to present the people with good news," which, he said, conforms with the principles his ministry had determined are needed to cure the Israeli economy.

"The first principle, and one of the most important is to anticipate the future and solve today, not when it will be too late, the crisis in pension funds," Netanyahu said.

"We are beginning a revolution that saves Israeli pensions and we did this with the blessing of the central elements in the economy- the government, the Histadrut and of course the employers. We have also solved the retirement age problem, which will rise gradually. I must say that Israel is a pioneer in this matter. Throughout the developed world, life expectancy is on the rise. But this is a mixed blessing since until now the presumption was that many young workers carry a small number of pensioners. Now, this equation falls apart. Today we are returning the security of a pension to the people of Israel. Our pension infrastructure is now stabilized and prepared for the future."

"The second principle is creating an efficient and reduced public sector. I am pleased to tell you that as the year changes, 3700 people have left the public sector out of a total of 56,000. 1000 left voluntarily, 2,000 temporary workers have been discharged and will not be rehired, and only 700 have actually been fired. This is a 7% reduction of the force, totally unheard of in the country's history," the Finance Minister added.

"But most of all I'd like to thank Amir Peretz, especially for the quality time you gave me," Netanyahu added.

Histadrut Chairman Amir Peretz's message was aimed towards the workers: "Today is an important day for the Israeli economy and our society. First and foremost it's an important day because we proved that agreement is possible. It is also important because the Israeli government understands that cooperation with the Israeli worker is an economic asset."

But his message was also aimed at Netanyahu. "We have proved that legislation is not something that must be bowed down to. I bless the moment when we realized that legislation, which is a man-made object, is not divine writ."

The calm following the signing may not last long though, and experts are pointing to the coming struggle by regional councils to receive additional budgets, without which they face bankruptcy.

"Today we also have separated between the subjects we can agree upon and those we will never agree upon," Peretz said.

"I disagree with the minister's economic approach. And what is the state's obligation towards its citizens. Israeli workers have produced NIS 2 billion annually to provide the minister with better tools to deal with economic problems. But this cannot become the basis for a belief that the worker's rights, pensions and savings are public domain," Peretz concluded.

Both sides were set to sign the agreement Sunday afternoon; however, a last-minute disagreement over the future of an Agriculture Ministry supervisory unit created a "mini-crisis" and required Prime Minister Ariel Sharon's intervention in order to block the Histadrut from backing away from the agreement.

Even though negotiations over the fate of civil servants were concluded, the Treasury and Histadrut decided to delay a formal ceremony until all outstanding pension-reform issues have been worked out by the professional teams of each side, a decision which has cost the public at least one more day of closed government offices.

The main sticking point was the Treasury's insistence that 70 percent of the assets of new and veteran pension funds be invested in the Tel Aviv Stock Exchange. Currently some 93% of veteran fund assets, and 70% of the new fund's investments, are poured into government bonds.

So far the agreement calls for an increase in the pension age to 67 for men and 62 for women. There is also to be a 3% increase in pension contribution, with the amount split equally between employer and worker, 1.5% each.

"For us, the most important aspect of the agreement, once it is signed, is that no public-sector workers will lose their jobs in 2004," Civil Servants' Union head Ofer Eini said late Sunday night before the Treasury canceled its late-night meeting.

While civil servants will not be laid off in 2004, the Treasury will be able to launch structural reforms including unification of Finance Ministry tax departments (Income Tax Authority and Customs and VAT Authority), and transforming the Public Works Department from a dependent agency to a government corporation, for the purpose of privatization some time in the future.

On Friday morning negotiating teams from the Histadrut and Treasury initialed a preliminary agreement aimed at ending the sanctions.

Since September 29, government ministries and most of their dependent agencies have been closed to the public. Israelis requiring new passports or other government documents have either been left to wait until the end of this current industrial action, or have been at the mercy of an appeals committee receiving direct orders from Eini and Peretz.

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To Israelis this is front page, story #1 news. The strikes have seriously disrupted life for a lot of people.

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