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After years of battling for control over wages at state agencies Finance Minister Yuval Steinitz and Industry, Trade and Labor Minister Shalom Simhon reached an agreement over authority for setting the compensation package for the head of the new Employment Service. The treasury is to relinquish control over the salary paid to the chairperson of the new agency, who has yet to be appointed.

This marks one of the few times in the past 15 years when the Finance Ministry has conceded authority over supervising the salary of the head of a government agency. It could result in very generous terms of employment for the chairperson of the new body.

The law gives supervisory authority over wages in government companies and statutory bodies - exclusive of the chairman or chairwoman of the agency - to the Finance Ministry's wages director. In the past 15 years it has become customary to include in the law creating a new such agency a clause extending the finance minister's supervisory authority to the chairperson, in consultation with the cabinet minister who is responsible for the organization.

But the law establishing the new Employment Service, which was passed by the Knesset this week, does not contain any restriction of this kind. Steinitz agreed to remove it from the draft law at the last minute. As a result, the Industry, Trade and Labor Ministry will determine the salary of the chairperson.

Steinitz's spokesman said the law in any case allows the treasury to supervise the chairperson's terms of employment, but this interpretation is a matter of dispute.