Crucial talks between Finance Minister Roni Bar-On and Histadrut Chairman Ofer Eini on Monday ended without agreement on public sector wages, in a failed attempt to avoid a public sector strike.

Eini said following the talks that he would meet with union bosses Tuesday morning in order to determine the date and scope of the strike. The strike is expected to begin either Tuesday at midnight or Wednesday morning.

The strike is expected to encompass all government ministries, the local authorities (including garbage collection), government companies, the ports, the trains, outgoing flights at Ben-Gurion International Airport, the post office, the National Insurance Institute, the Israel Lands Administration, university managements and outpatient clinics at public hospitals.

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It will not, however, include the banks or the Egged and Dan bus cooperatives.

The Histadrut would, however, set up an "exceptions committee" to approve violations of the strike in special cases, such as to allow the takeoff of a plane carrying a patient to urgent medical treatment abroad.

The dispute stems from the Histadrut's demand that the approximately 700,000 public sector workers be given raises of 10 to 13 percent.

Eli Cohen, the treasury's wage director, had been offering only a 0.2 percent increase - up from his initial offer of zero percent. Eini termed both proposals "an insulting joke." In Monday's talks, Cohen offered a one percent wage increase by 2009.

Cohen argues that public sector wages rise by about 1.5 percent a year in any case, due to increases in seniority pay and grade rises, both of which are automatic. Given the extremely low inflation of the past several years, no additional raise is justified, he says.

Cohen: Government "can't afford rise"
Moreover, a one percent public sector raise could cost the state some NIS 800 million a year; thus the Histadrut's proposed raise could cost NIS 10-12 billion a year - a sum the government cannot afford, Cohen says. As a result, acceding to the Histadrut's demands would require massive compensatory cuts in areas such as health, education, welfare and defense.

Finally, Cohen argues, any public sector raise would force private sector wages up as well, and not all industries can afford such a raise.

The Histadrut argues in response that public sector workers have not received a raise since 2001, and in 2003, at the height of the economic crisis caused by the intifada, the organization even agreed to public sector wage cuts of 4 to 17 percent over the ensuing two years. Thus to refuse the workers a raise now, when the economy has been booming for the past few years, is completely unjustified, it says.

In contrast to Amir Peretz, his predecessor as Histadrut chairman, Eini views employers as potential partners rather than automatic enemies; as a result, he prefers dialogue to confrontation. And this approach has hitherto been successful: Just last week, for instance, he signed an agreement with private sector employers' organizations to provide employer-supported pensions to all workers who currently lack them.

For the same reason, and again unlike Peretz, Eini has been extremely cautious about calling strikes. Since taking over the Histadrut more than a year and a half ago, he has called only two strikes - each lasting exactly one day. Both were in response to the nonpayment of salaries in local authorities and religious councils, and both enjoyed broad public support.

In contrast, this week's threatened strike is likely to outrage hundreds of thousands of Israelis - especially those whose planned overseas vacations will be disrupted or even canceled altogether. Yet he feels that Cohen's hard-line stance has left him with little choice.