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Something needs to be cut in the budget, but what? Photo by Bloomberg
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PM, treasury have budget work cut out for them: As the people of Israel peacefully slumbered, Prime Minister Benjamin Netanyahu and his team were holding a "secret" meeting late Monday night with Finance Minister Yuval Steinitz and top treasury officials, to discuss next year's budget cuts. The fact of the meeting was not broadcast. Although the state is raising taxes to help stay within deficit limits, spending already planned has to be reduced by as much as NIS 15 billion. The prime minister hadn't liked the treasury's original proposals, broached on July 27, for where to cut budgets; apparently he was no more impressed last night. Suggestions so far include cutting civil service wages, slashing child allowances, canceling clothing allowances for public servants, and freezing road and train development plans.

Mizrahi to float new REIT: Bank Mizrahi-Tefahot plans to assign its property to a new subsidiary, which it intends to float on the stock exchange as a real estate investment trust. Mizrahi-Tefahot owns half its 130 branches and leases the other half; it also owns a number of office buildings. Market sources think the bank owns somewhere from NIS 600 million to NIS 700 million worth of property, which would be assumed by the REIT. The bank would then lease the various buildings from the REIT. The bank should able to raise several hundred million shekels from the flotation, beefing up its capital resources.

Rumor hits Oil Refineries stock: A rumor that chemicals company Carmel Olefins faces another downgrade sent shares and bonds of its parent company reeling. Stock of parent company Oil Refineries fell 8%; shares of Oil Refineries' co-parent, Israel Petrochemical Enterprises, fell by an even steeper 14%. Bonds of both companies took a nasty beating, too. In August, credit rating agency Midroog downgraded Carmel Olefins to A3 with a negative outlook; another downgrade is cause for bondholders to call in their loans, should they choose to. Market animals surmise that the group's securities were hit so hard on Monday due to heavy selling by mutual funds. Or, it could be short-selling by institutional investors hoping to press the group companies into securing Carmel Olefin's debt. At present Carmel Olefin's bonds are unsecured.

Minimum wage to rise: The minimum wage will be rising by NIS 200 to NIS 4,300 a month from October 1. The increase is based on an agreement struck a year and a half ago between the Ministry of Industry and Trade and the umbrella union, the Histadrut. The minimum wage per hour rises to NIS 23.12; the minimum wage for teenagers up to age 16 rises to NIS 3,010 (which is 70% of the adult minimum wage). The minimum wage for teens aged 16-17 will be NIS 3,225 a month (75% of the adult minimum); ages 17-18 will get NIS 3,569 (83%).

Pelephone cowed workers, said court: The management at mobile operator Pelephone used illicit means to discourage workers from organizing and joining the Histadrut labor federation, the Tel Aviv Labor Court ruled on Monday. Saying the company had crossed a "red line," Judge Oranit Agassi ordered the company to stop acting to frustrate the workers' unionization. The union, which is the plaintiff in the case, claims that the company behaved unfairly by intimidating workers into canceling forms already signed to join the union. The company may point out the disadvantages of unionization, said the judge, but may not cow workers into forgoing a right they want. Pelephone is a subsidiary of the Bezeq phone company.

With reporting by Moti Bassok, Sivan Aizescu, Yoram Gabison and Haim Bior