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Implementation of the public sector wage agreement, which promises an incremental increase totaling 5% over a period of three years for 700,000 public sector employees, has not begun, even though it was approved in principle last July.

The first 1.5% increment was to have been paid last month, and it is now clear that it will not be paid in this month's salaries either.

The second part of the increase, another 1.5%, is scheduled for this December, and another 2% is scheduled for December 2009.

The agreement will cost the state more than NIS 4 billion.

A Histadrut spokesman explained that the final version of the agreement was never signed with the Ministry of Finance because, he said, "Each union is considering how to distribute the increase among the various groups of workers within their union".

In any event, the spokesman assured, "it will be applied retroactively from January 1."

One union leader said that the Histadrut may be holding up implementation of the agreement in hopes of raising the increase to 5.3% instead of the 5% agreed in July 2007.

The agreement also includes a clause which provides for a 10% - 17% increase in non-contributory pension benefits paid to hundreds of thousands of employees, which have been eroded over the past seven years.

It was also agreed that these pensions would be adjusted yearly, based on the change in the consumer price index over the 12 preceding months, instead of once every few years with the signing of a new wage agreement as is currently done.

The agreement also says the Histadrut and treasury will discuss means to include various groups of employees in collective wage agreements who are not currently covered by them, such as employees hired through outsourcing companies and others. In exchange, government ministries and authorities will be given more authority to fire or move employees from one position to another.