On Monday night, Finance Minister Silvan Shalom received an urgent phone call from Uri Shani, director of the Prime Minister's Office. Shani tried to convince Shalom to agree to the PM sending a letter to the One Nation faction declaring Ariel Sharon's intention to honor the coalition agreement with the faction on the minimum wage. Shalom was quite shocked. The prime minister and the Knesset had already agreed to freeze the minimum wage for one year in order to boost employment, contrary to the agreement with One Nation.
But Shani, master of obfuscation, told Shalom that it was very important to keep One Nation in the coalition, and that some suitable phrasing would have to be found. Shalom refused to give in and the next day One Nation's cabinet member Shmuel Avital submitted his letter of resignation to the government.
In his letter, Avital said he could not continue to sit in a government that had "stolen the poor man's lamb" by freezing the minimum wage and the Employment Agency Law. (And let's make things clear, freezing the minimum wage means not increasing it 1.6 percent next April).
Chairman of the Histadrut labor federation MK Amir Peretz, also of One Nation, has wanted for a long time to raise the minimum wage to $1,000 a month. That sounds very tempting, but one of the reasons for closing the Bagir clothing plant was the sharp rise in the minimum wage in the past two years (up by 16 percent) which caused many factories to lose their competitive edge. Recently mayor of Daliat al-Carmel Ramzi Halby said "The entire Druze sector is ready to forego an increase in the minimum wage so as not to close factories." Chairman of the Yarca local authority concurred, "I would prefer the minimum wage not to rise at all, just that there should be work."
Indeed we should worry about those on minimum wage, but sensibly, through negotiations, and gradually, taking into account the factories and the state of the economy, not just blindly following populist proposals that only cause further unemployment. The second grievance that drove One Nation out of the coalition was the condition of employment agency workers. Today the law makes an employer convert temporary workers into permanent staff after nine months. The only problem is that the factory owners are not prepared to increase their payroll, so they are dismissing the temp workers left, right and center before the law takes its effect. In order to ward off the evil decree, the government decided to put off this law for another year. What's so bad about that then? It prevents further job losses at a particularly troubled time. And when things get better, in another year, the issue can be debated afresh.
But Peretz is fighting an electoral battle for leadership of the Histadrut in May. The actual content isn't important to him, just the public image. So it doesn't matter if his proposals cause more unemployment. He's not responsible for jobs. He's only responsible for his own PR.
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