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The clerks union declared a labor dispute yesterday throughout the banking system, which employs 40,000 workers.

The dispute will cover not only the banks but also stock exchange and Bank of Israel employees.

The declaration, to be officially delivered today to national labor relations director Shlomo Yitzhaki, is a legal prerequisite, enabling the workers to go on strike or take labor actions in two weeks, closing branches and bringing securities trading to a halt.

The Histadrut labor federation's bank employees unit chief, Zion Shema, attributed the decision to declare the dispute as part of a process seeking to torpedo Bachar Committee capital market reforms.

The Histadrut and bank workers' committees object to the Bachar reforms because they claim that removing banks from the pension and provident fund sectors would harm free competition in the capital markets. "Paid employees who deposited savings into the funds managed by the banks did so through free choice," asserted Shema.

"It's inconceivable that a regulator would come and remove these entities by force from the banks and transfer their management to another body, such as an insurance firm or broker, which the member did not choose."

A Finance Ministry executive commented, "The Histadrut's fears are unrealistic because no significant layoffs at the banks are expected in wake of the Bachar report recommendations. The Histadrut should encourage capital market reforms which both benefit consumers and generate jobs in the businesses taking over the funds."