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Only 10 days before Tefahot mortgage bank is scheduled to merge with its parent company United Mizrahi Bank, CEO Eli Yones has awarded staffers raises of up to 3.5 percent.

According to an agreement reached between Tefahot management and the workers committee, headed by Shaul Shauli, and the Histadrut labor federation's banking chief Zion Shema, most of the bank's staff will receive a 2 percent raise, while about one third of the workers will receive an additional 1.5 percent increase.

The pay deal has lessened tension at the bank prior to the Mizrahi merger, which is scheduled to take place on January 1.

One issue that still hangs over the merger is job layoffs. It was decided that the two sides will begin marathon talks on the matter to determine how many Tefahot workers will be dismissed after the consolidation. In earlier Tefahot and Mizrahi management talks, the banks decided that about 200 jobs would be eliminated after the merger in order to avoid duplication. The two have already drawn up a list of the 200 candidates. Most of the proposed dismissals are to involve computing and administrative jobs, which are not specifically banking related.

Progress was evident yesterday when the Tefahot workers committee said the bank's management had agreed to publish its enhanced voluntary redundancy offer, which therefore, could help avoid forced layoffs.

However, the Histadrut disagreed, and said that if there is a need to eliminate 200 jobs, voluntary redundancy would not be sufficient, and the bank would have to resort to forced layoffs.

Meanwhile widespread protest action is expected at Israel Discount Bank branches throughout the country today. Branches outside the Dan Region will not offer any public services, while those in the Dan Region and Tel Aviv will offer partial service only.

The bank workers are to hold a general meeting at midday to plan upcoming action in protest of the bank's impending privatization. "The bank is about to be privatized, but no one is holding serious talks with us on the status of the workers under new management," said Ricki Bachar, chairman of the Discount Bank workers committee, yesterday.

Bank management decided yesterday not to turn to the court for an injunction to avoid service disruption, but may do so if the staff launches strike action tomorrow or Sunday.

A meeting is scheduled tomorrow between Discount bank staff representatives and M.I.Holdings, which manages the government's privatization program.