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The Histadrut labor federation and the representatives of the major financial organizations have succeeded in overcoming the primary stumbling block in the negotiations for a collective pension agreement for over one million employees in the private sector.

The workers who stand to benefit from the eventual signing of the agreement are employed in various businesses which belong to the Federation of Israeli Chambers of Commerce and several other industrial bodies. The employers also include private businesses which belong to the umbrella organization for the self-employed, Lahav. Following the breakthrough in negotiations, Lahav president Yehuda Talmon said that he hoped the collective pension contract will be signed as early as this week.

The bone of contention that was resolved was whether the insurance will be covered by a pension fund or a provident fund. The employers had insisted on provident funds, while the Histadrut insisted on pension funds. The employers? association eventually decided to back down and accept the Histadrut's demand, thereby paving the way for the signing of the agreement in the near future.

The agreement would mean a collective pension agreement for workers of small businesses of up to 20 workers, such as law and accountant offices as well as architects and engineers working for small offices. Additionally, it will resolve the pension status of workers in private clinics, beauty and hair parlors, and other places of business.

The employers and the Histadrut hope to make the agreement effective as of January 2008. During the first year of employment, the employers will be required to donate 2.5 percent of the employee's salary for the pension fund. After five full years, the employer will be required to donate 15 percent. By comparison, other employees with collective pension agreements receive 17.5 percent to 20 percent of their salaries after five years of work.