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Amir Peretz's speech two days ago at the meeting of the Labor Party's Central Committee proved he is capable of being flexible.

He's still not Tony Blair, but neither was it a speech about "an enslaved people starving to death." It still wasn't the "New Labor," but neither was it "The Left Wing Zionist Workers Party."

In any case, the direction was perfectly clear: to the center. Maybe some day he will even speak in support of privatization.

On the eve of the privatization of Bank Leumi, Amir Peretz told me he objects to privatizing the bank, as well as to privatizing Israel Military Industries and the Israel Electric Corporation.

In his opinion, there should remain one large company owned by the state in every sector of the economy, so that this firm would set low prices for the citizens' benefit.

This is of course a mistake. Government companies are always inefficient firms that charge the highest prices - sometimes even when they are on the brink of bankruptcy. Just look at what happened in the 1980s to Koor, Solel Boneh and the Sneh insurance company - all of whom collapsed and fired a total of 30,000 people.

Joseph Ackerman, the CEO of Elbit Systems, also thinks Peretz is wrong. Elbit wants to merge with Elisra and Tadiran, and in doing so establish a large company capable of buying out the state-owned defense industries.

Ackerman said: "I believe Amir Peretz, if he is elected prime minister, will also understand that privatization serves the interests of the workers in the end. Just look at Elbit Systems, a private company that constantly recruits employees, and look at the government-owned defense industries, which are constantly forced to fire workers," he said. "All governments understand that business is better managed in private hands. There, the degrees of freedom in management are greater," said Ackerman.

Peretz II

In the same programmatic speech, Peretz spoke about raising the minimum wage to $1,000 a month. It is true he did not say "immediately" or "now," but is it really that simple?

Before she left Israel, Condoleezza Rice met the heads of the Druze sector. They asked the U.S. secretary of state to intervene in the government's apportionment of funds for developing the Galilee. They told Rice that not a single new factory has been opened in the Druze towns in recent years, as opposed to hundreds built in Jewish towns in the Galilee. They also told her that some 3,000 Druze women were fired during the same period when their seamstress jobs disappeared.

A few years ago I interviewed Dr. Ramzi Halabi, the head of the local council of Daliat al-Carmel. He said: "The entire Druze sector is willing to give up on the latest rise in the minimum wage to prevent factory closings." The head of the Yarka council said: "I prefer that the minimum [wage] not rise at all, the most important [thing] is that there is work."

A similar picture exists in part of the Jewish sector. Yitzhak Aloni, CEO of Aloni Enterprises, which makes floor tiles and other building materials, said: "Raising the minimum wage forced us to fire 30 workers in our floor tile factory in Haifa, and prevented me from hiring another 20 workers in our [polished stone materials] factory."

Veteran flag manufacturer Avi Marom said: "If Peretz succeeds in raising the minimum wage, it will finish us off completely. It will push us to import."

Peretz III

The level of unemployment in Australia is one of the lowest in the Western world, only 5.2 percent. But Australians want to lower it even more - and justifiably so - since there is no worse social disease than unemployment.

As part of the war on unemployment, the Australian government decided to pass a law that make the labor laws more flexible. The new law would allow public bodies to hire more workers on personal contracts - not just through collective bargaining agreements. The unions are against the law and they are demonstrating.

Peretz is also fighting personal contracts. But in the globalized world, a country that does not make its labor markets more flexible, that does not become more efficient and that does not lower costs - will not be able to compete and will move backwards.

Australia does not want to move backwards. We shouldn't either.