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The negotiations between the teachers unions and the Finance Ministry are turning into the most expensive in Israeli history. The latest estimates are that the salary increases demanded by the teachers - which the treasury does not object to in principle - may reach NIS 10 billion. Of this sum, NIS 8 billion will be added to the annual budget every year, and NIS 2 billion will be a one-time expense.

The major cost will go to an increase in teacher salaries, by an average of 30 percent.

There is no major disagreement between the treasury and the teachers on the amount of the salary increases. The ministry admits that Israeli teachers' salaries are unacceptable and need to be changed, despite the the implications of a wage increase for the single largest sector in Israel. There are 150,000 teachers covered by these agreements.

The implications are dramatic: Every 10 percent increase for teachers costs the state another NIS 2 billion annually.

There is a very good possibility that the wage adjustment for teachers will be even greater, due to the cumulative erosion of teachers' salaries compared to the state's wage scales for engineers. Teachers' salaries are linked to those of the engineers as part of their collective bargaining agreement. Also, the Histadrut is negotiating a general wage increase for the entire public sector, which would also apply to teachers.

Therefore, a 40-percent average raise for teachers seems likely at this stage, after all the various agreements are factored in. This means an additional NIS 8 billion per year would be budgeted for education. In addition, the Education Ministry is demanding another NIS 2 billion as a one-time expense to improve outdated infrastructure in the educational system.

The increase is expected to be phased in over several years. However, even if the process takes five to seven years, the final sum would still mean NIS 6-8 billion more per year for the education budget.

However, the agreement is being delayed not by the huge cost, but by treasury demands: In return for the raises, the treasury is demanding a reform in the educational system. The reforms will give school principals more managerial freedom - including the ability to promote and fire teachers. Also, new salary scales will be introduced to enable teachers to be payed according to performance. However, the main point of dispute revolves around increased teaching hours.

In return for the large raises, the treasury is demanding an equally large rise in teaching hours. This is particularly an issue for middle and high school teachers, whose union is adamantly opposed to the demand. For now, the two sides have broken off talks over the matter, and this has also lead to the current strikes in secondary education.

The union representing elementary school teachers has made progress in the talks, including over the issue of managerial flexibility, and possibly over new salary scales. However, the union is willing to add only an hour or two to teachers' weekly schedules.

Treasury wages director Eli Cohen seems inclined to accept the union's proposal, while the budgets division is unwilling to compromise without a significant increase in teaching hours.