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Some 700,000 public sector employees will receive a raise - retroactive from 2001. The question is, how much: the workers want 13% and the treasury wants just a hair over nothing. Negotiations start today.

The year 2001 was the last year that a public-sector collective bargaining agreement was in place.

The raise was agreed on by the Histadrut labor federation and treasury officials. Negotiations on a new public-sector salary deal will start this morning at Histadrut headquarters in Tel Aviv, after the long break for the Histadrut elections in May.

Unions are demanding a 13% salary increase, claiming that their wages have been eroded in real terms in recent years.

Also, the Histadrut claims that many government employees receive very low salaries and receive supplementary grants to meet minimum wage standards.

The treasury disagrees and proposes a symbolic raise of "slightly more than zero." Treasury officials say nothing has changed to merit giving employees any significant increase.

However, it seems that the state would be willing to grant a small increase in return for changes in work agreements allowing more flexibility in hiring, firing and transferring workers.