Haim Shani (Tomer Appelbaum)
Haim Shani Photo by Tomer Appelbaum
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The Finance Ministry supports increasing public-sector salaries, but wants to overhaul wage mechanisms as a whole, says ministry director Haim Shani.

The ministry is in the middle of negotiations with the Histadrut labor federation over a collective wage agreement for 2009 to 2011 (yes, retroactively ), in an effort to avert a general strike. Negotiations over the weekend came to naught, and the union is threatening to start striking on Tuesday.

The ministry is trying to change salary structures in several ways, says Shani. One would be to give larger raises to the people who earn the least, in an attempt to reduce salary gaps in the public sector. The second would be to give raises to employees who do the best work.

Shani didn't say what the Histadrut thinks of these proposals.

The Finance Ministry is willing to raise public-sector salaries, but insists that the raises meet three criteria, says Shani. First, the raises can't be too large, given the global economic uncertainty at the moment.

"Large raises could create budget deficits, forcing us to cut the budget in other, unintended places, such as education or health," he says. "And this could also pull private-sector salaries in its wake, which would damage that sector's competitiveness."

Second, the ministry wants differential raises - larger raises in percentage terms for the lowest earners, and smaller raises for the highest earners. As the country's largest employer, the government should be setting an example and seeking to reduce salary gaps, Shani says.

This means giving larger raises to people who earn NIS 5,000 to NIS 7,000 a month gross, he says. People who earn more than NIS 25,000 a month would get the smallest raises.

"That will help fix social inequality," says Shani. "It will be our modest contribution to reducing wage gaps."

The ministry believes that the Histadrut will support this, he says. "This is [Histadrut chairman Ofer] Eini's opportunity to be a partner in changing the salary trends and the growing inequality in Israeli society."

Until now, however, the Histadrut has been demanding the equal raises - in percentage terms - for all, as has been done in the past.

The ministry's third demand is encouraging excellence by giving more money only to workers who deserve it.

"We want to give more to people who do better work," says Shani. The ministry hasn't worked out how this would be done; whether, for instance, through bonuses or a 13th salary - a bonus equal to one month's pay.

In addition, the ministry is making a demand that it makes during every round of negotiations with the Histadrut: that raises be given responsibly.

"Over the past decade, public-sector salaries increased 4% in real terms, while private-sector salaries increased 3%. We also need to remember that in the wake of the global financial crisis the private sector contracted and laid off workers, while public-sector workers have job security," he says. They may have given up on convalescence pay (havra'a ), but that was all they gave up - a relatively small sacrifice, he says.

The Finance Ministry's wages director found that 30% of public-sector workers earn less than NIS 5,000 a month. How is that?

"It's an optical illusion. These workers do indeed have low base salaries, but they receive lots of benefits beyond that, all of which are factored into their pension-plan deposits, by the way. In practice, those workers take home NIS 9,000 a month on average."

And how about the teachers? That's not an optical illusion; most of them still earn less than the country's average wage.

"Remember that 2009 was the first year of the New Horizons education reform [which offered teachers higher salaries in exchange for more classroom hours]. In truth, teacher salaries were lower than average before the reform, but those taking part in the program earn NIS 10,000 a month. That will be the average salary for a teacher once the reform is fully in place."

How do you explain that social workers with college degrees earn NIS 7,000 a month, while port logistics workers earn NIS 60,000?

"That's exactly what we're talking about right now - reducing salary gaps in the public sector." Yes, but these gaps didn't come out of nowhere. They reflect the negotiating power of different groups of workers. You agree that there are "suckers" in the public sector?

"I want to address the lowest earners whoever they may be, and not specific groups. It's true that there are some workers who are paid less, such as social workers and interns, but we want to address all the lowest earners, not one group or another."

Ultimately, the best paid public workers are those in sectors that can exert unreasonable power - workers at the big monopolies like the Israel Electric Corporation and the Israel Airports Authority.

"Monopolies are another issue."

Really? The salaries director said the Histadrut is largely concerned about the most powerful workers, those at the monopolies, which explains the salary gaps in the public sector.

"I can't say who the Histadrut cares for most, but I can see the situation at hand and the fact that there are thousands of public-sector workers who earn low salaries. It's our job as an employer, no less than it's the Histadrut's job, to take care of the weak workers."

And what about the weakest, those employed by subcontractors?

"Subcontracted workers aren't connected to the public-sector salary negotiations."

Meaning they won't get raises?

"No."

Isn't that problematic? The government is forced to employ workers through subcontractors because the wage agreements are so inflexible.

"The government doesn't need to employ workers in certain fields, because it has no advantage in these fields."

But this still exposes a basic problem in the public sector. Isn't it time for a major overhaul, and a major overhaul at the Civil Service Commission?

"Indeed, the Finance Ministry and the Prime Minister's Office are working to reform the commission to make public service more proper and better at giving service. Given the current salary negotiations and the fact that a new civil service commissioner is being chosen, this is an opportunity to take Israel's civil service up a notch."

Yes, but for now, the candidates for civil service commissioner are pretty lousy.

"You didn't say that."