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The negotiations over a new wage agreement for 700,000 workers in the public sector will start before the elections, probably at the beginning of March. The chairman of the Histadrut labor federation, Ofer Eini, reached an understanding on the matter with Acting Prime Minister Ehud Olmert, who is also finance minister.

An official agreement between the sides has not been signed since the last one ended in 2001, though the Histadrut did agree to a number of temporary measures with previous finance minister Benjamin Netanyahu for the 2003-2005 period, when wages were cut as part of the economic recovery plan.

The Histadrut will not say how large a wage increase it is asking for, but sources put the figure at around 15 percent. The treasury claims that despite the lack of an agreement, real wages in the public sector have actually risen since 2001, and the government will only agree to a small increase of a few percentage points.

A number of unions had pressured the Histadrut to start the talks before the elections so as to apply the maximum amount of pressure during a politically sensitive period. In any case, it is expected that the talks will end only after the elections are held and a new government is formed.