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The Histadrut labor federation declared an industrial dispute in the public sector yesterday, a legal precursor to taking industrial action.

After a two-week cooling-off period, the public sector may take action, including an all-out strike.

The Histadrut said it decided to call for the strike to protest the government's economic policy, and because it had not signed a new collective wage agreement in the public sector.

Jihad Akal, acting head of the Histadrut's trade union division, said the union heads considered the action necessary to protest the deteriorating relationship between employers and staffers in the public sector, imposing structural changes such as privatization while ignoring the effect on workers.

The state was allowing public sector employers to manipulate their power "and was using legislation to harm public sector workers in various ways," Akal said. As an example, he pointed to a new "flexible" working pattern among some divisions that allowed the civil service to dismiss permanent staff members quickly and with no consultation with workers' representatives.

In addition, the government had taken no steps to renew the public sector wage agreements since the last agreement was frozen in 2001, the union official said.

Akal also pointed to the recent move to make veteran public sector workers pay contributions toward their pensions, which up until now had been noncontributory.

Uriel Lynn, head of the Federation of Chambers of Commerce, slammed the Histadrut's threat of public sector industrial action. "The Histadrut is misusing its power to strike and creating a superfluous drama in an attempt to shock the economy, before the government has even begun discussions on the budget," Lynn said yesterday from London.