There's one area that the Histadrut certainly won - public relations. At a reception held for him by the large unions, the chairman of the Histadrut, Amir Peretz, was quick to claim victory on two issues that were under negotiation - wages and firings. He added that he would win the battle for pensions as well. Some of the press bought the bluff. So it's worthwhile examining what Peretz went into the negotiations with, and with what he came out.
The Histadrut chief went into the meetings with Finance Benjamin Netanyahu carrying an alternative plan with five articles: a compulsory 2 percent loan to be deducted from wages, cancellation of the ceiling on National Insurance Institute and health insurance payments, cancellation of abatements to NII payments made by employers, postponement of the next cost of living increase, and a tougher line against black money - a particularly absurd demand, since who isn't against catching tax evaders.
Not one of those demands was met by the treasury, which did not even agree to discuss "the Histadrut plan." In addition, Peretz objected to all of Netanyahu's proposals: He opposed any wage cuts, firings and transfer of the pension funds' control to the government. He called the proposals "the destruction of democracy." But what happened in the end? Public sector wages were cut - for the first time in the history of the state; firings are on their way; it will be possible to move workers from their jobs and close unnecessary units (another precedent); strikes are forbidden for two years; and control over the veteran pension funds will move to the treasury - a major revolution that will save pensioners. The treasury didn't get all it wanted, but it got a lot. So, how can that be called a "Histadrut victory"?
On second thought, there is an advantage to the public's perceiving the agreement and Peretz' far-reaching concessions as a Histadrut victory: It will enable implementation of the moves, including his commitment to cut NIS 2 billion from wages in 2003, since the Histadrut chairman is perceived as strong enough to stand up to the militant unions.
The treasury plan's goal is to move the economy into a state of growth. But meanwhile, it turns out that various Knesset committees have refused to approve large sections of the program, and its key parts - which involve proposed structural changes - have not yet reached the implementation stage. Here are some examples.
Israel Electric Corp.: Breaking up the company into three separate firms - one devoted to production, a second to supply, and a third to distribution, with opening competition in the production and distribution sectors.
Oil Refineries: Splitting the company into two - Haifa and Ashdod - to compete over price and quality.
Bezeq: Introducing competition for land lines.
Education: Decentralization of the system by moving authority from the districts and the supervisors to the principals, who will finally be able to introduce differential pay for good teachers.
Local authorities: Unifying some 100 local authorities to make the public services more efficient, while reducing redundant bureaucracies.
Health: Transferring well-baby clinics and the psychiatric service, as well as parts of government hospitals, to the health maintenance organizations.
Privatization: Bank Leumi, Bank Discount, El Al, and Bezeq.
Pension funds: Putting their funds in the capital markets as a source of financing long-term investment in infrastructure.
Each one of these reforms will advance growth and reduce unemployment, but Netanyahu forgot a key element - the Achilles heel of the economy: the Ashdod and Haifa ports. The works committees at the ports can cut Israel off from the world, preventing imports and exports, which means paralyzing the business sector and causing lethal damage to economic activity. Therefore, the first reform on the list should be implementation of the Jubilee Port plan for establishing a port beside Ashdod, and allowing the Israel Shipyards to operate another port in Haifa. This would improve ongoing service for importers and exporters, which is currently both poor and slow, and enable the economy to continue breathing during the worst strikes.
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