Labor confederation, employers reach agreement on universal pension plan
All workers will be required to will have pension coverage, up to the average wage
The Histadrut Labor Federation and the Federation of Israeli Economic Organizations (FIEO), which represents the country's large private employers, have agreed on the principles under which all employees in Israel will have pension coverage.
Employers' associations for industries in which most workers do not have pension coverage, including the Israel Chambers of Commerce and organizations representing the self-employed, are expected to ratify the deal on Wednesday.
Other FIEO members, such as the Israel Manufacturers' Association and organizations that hoteliers and contractors, have been providing pensions schemes for their workers for years.
Implementation of the new plan is scheduled to start in January 2008.
Under the plan, every worker will be insured for up to the average wage, now NIS 7,440 a month. The pension plans will include not only a retirement pension, but also coverage for disability and pension benefits for survivors in case of death.
The deal is considered a significant achievement for the Histadrut and its chairman, Ofer Eini, who is preparing for national trade union elections in mid-May. This is the first time that an agreement to provide pensions for all workers has been reached among all employer organizations, without exception.
In the past, various bodies representing business sectors in the service sector, such as the Chambers of Commerce and the self-employed, have objected to pension rights for all workers, due to the costs for employers, who will be required to contribute to the pension plan on the workers' behalf as well. However, these bodies have recently become convinced that the step is necessary.
The new agreement will make the Finance Ministry's mandatory pension plan superfluous. The treasury announced a proposal to require pensions for all workers starting in 2010.
The Histadrut had objected to the proposal, seeing in it state intervention through legislation in labor relations, and a threat to its power.
The Manufacturers' Association, led by Shraga Brosh, also objected to the treasury plan, saying that it failed to take into consideration differences among various industries. Brosh, who is also the chairman of the FIOE, instead acted to reach agreement among all employers on a separate plan, and succeeded.