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About 1 million employees in the private sector will receive vacation pay of 318 shekels per day with their June or July salaries, thanks to a deal between Histadrut labor federation chair Ofer Eini and the head of the Federation of Israeli Economic Organizations, Shraga Brosh.

The agreement applies to employees in industry, hotels, construction, and businesses linked to the Federation of Israeli Chambers of Commerce. The Industry and Trade minister is expected to sign an order expanding coverage under the agreement to all 1.7 million private sector employees.

Some 700,000 public sector employees from government ministries and local authorities will receive vacation pay of 355 shekels per day, in accordance with recent guidelines issued by the treasury's public-sector wages director, Eli Cohen.

The Histadrut and treasury also recently agreed to keep so-called retirement grade for thousands of public sector employees until the end of 2007. It was set to be canceled at the end of the month. Raising the grade just before an employee retires raises the basis for calculating the worker's state supported pension between 5 and 8 percent.