The Bottom Line / The favored few
The pension negotiations ended with a decision that workers would pay an additional 1.5 percent into their funds and so would employers. But while the workers will thus suffer a cut in their gross salaries, the employers will not.
The employers. The pension negotiations ended with a decision that workers would pay an additional 1.5 percent into their funds and so would employers. But while the workers will thus suffer a cut in their gross salaries, the employers will not: The treasury decided to compensate them with a parallel decrease in NI payments. This is tantamount to a gift of NIS 3 billion, and it is not clear where the money will come from.
According to the long-standing philosophy of the treasury, the cost of labor should not be raised, so that demand for workers will not be affected. Perhaps, however, the time has come to rethink this. The current recession is the result of a dearth of demand, and therefore it is wrong to reduce workers' gross pay, because this could lead to lower consumption and growth. Now if gross salaries are reduced, there will be less incentive to work instead of living off welfare.
Perhaps it would make more sense to invest that NIS 3 billion in the Wisconsin Plan? Or to introduce a negative income tax to encourage people to go out and work? Or at least to halve the NIS 3 billion? But in Israel, the employers are worth more.
There is another aspect to this issue: Not all employers contribute to workers' pension funds. Of 2.3 million workers, only about 500,000 pay into pension funds. In other words, most employers will enjoy the benefit for free. They will not have to contribute more for pensions, but they will still get a free gift from the treasury. If the NIS 3 billion were divided among the workers, everyone would benefit without such blatant discrimination.
The farmers. The farmers' representative in the government, Agriculture Minister Yisrael Katz, has recently been competing with the contractors' representative in the government, Housing Minister Effi Eitam, to see who is treating his constituents better. Both have submitted proposals to the cabinet to increase the number of foreign workers in the sectors they represent. They are not interested in the fact that these foreign workers will prevent unemployed Israelis from finding work. They are not interested in the health of society nor in the poverty caused by unemployment. They are only interested in the contractors and the farmers.
On Sunday, the cabinet decided to cut the quota of legal foreign workers for contractors by 33 percent (from 30,000 to 20,000). The cut in the quota for farmers, however, was merely a symbolic 7 percent (from 28,000 to 26,000). Once again, it was proven that the farmers' blood is the reddest. It is interesting to think what might have happened had our prime minister owned a factory or a construction company rather than a ranch that employs so many foreign workers.
The civil servants. Pension fund members suffered a severe reduction of their rights. It is possible that this was an inevitable blow that has saved the funds and made it possible to pay out pensions when the day comes. But why did the very same finance minister and the very same Histadrut labor federation not touch the civil servants? Why was their pension plan not affected? After all, it is the same state budget, the same coffers, and when one sector is not harmed, the other must be harmed even more.
Perhaps it was because the negotiations were carried out by the chair of the Civil Servants Union, Ofer Eini, who wanted to prove that civil servants are worth more. He succeeded. The fat have grown fatter and the thin are starving.