Why have strikes suddenly broken out throughout the Israeli economy? Do the country's civil servants not realize the grave situation in which the economy now finds itself? Have they not heard about the rise in layoffs and unemployment in the private business sector?
Of course, they have heard about the soaring figures. However, they also know that Israel has a new government with populistic cabinet ministers, with a prime minister who loves to hand out cash and with a finance minister who does not like to have showdowns with workers' committees (such showdowns will not boost his popularity and will not add many points when he has to have his showdown with the Likud's central committee). The civil servants are well aware that, if Prime Minister Ariel Sharon and Finance Minister Silvan Shalom put their mind to it, a lot of money will suddenly be discovered for distribution of all sorts of political and coalition causes. Thus, the question, as far as Israel's government employees are concerned, is merely who will receive the money and who will not. In such an atmosphere, no one should be surprised at the outbreak of strikes.
Shalom made a cardinal error at the first cabinet session of Sharon's government in March. He should have stood up and declared then and there that Israel was in a state of emergency, that the state budget was in terrible shape, that the economy was on the verge of a recession, that the defense establishment was demanding billions of shekels and that - in short - "I just don't have the money to meet your demands."
Unfortunately, Shalom did not come out with such a pronouncement. Instead, he supported the Negev Law, which provides tax reductions for all of the residents of southern Israel, including the affluent inhabitants of the Beersheba suburb of Omer. The reason why he backed this law was his assumption that such a move would look very good in the eyes of Likud central committee members. The ultra-Orthodox Jewish community in Israel has recently received a promise that coalition funds will be channeled into the base of the state budget and that the Knesset will pass a law that would increase the amount of child allowance payments for families with five children or more.
Thus, NIS 1.2 billion has been channeled toward populistic goals that will neither increase economic growth nor create new jobs, while Israel's taxpayers have come to understand that their government has an itchy checkbook-finger.
Nor did Shalom show any hesitation in announcing that an increase in the state budget deficit would lower the unemployment rate. However, if that statement is true, why should the government not raise the state budget deficit by ten percent of the Gross National Product? In any case, the increase in government spending and in the state budget deficit have proven that the government does have money. If that is the case, why should the civil servants not demand a piece of the action?
There is another reason for the recent spate of strikes and work-to-rule sanctions. In July, the cooling-off period of the previous collective wage agreement ended. Thus, Histadrut chief and MK Amir Peretz (One Nation) was faced with two options - to declare a labor dispute and initiate a nationwide strike, or to allow each of the workers' committees in the public sector to fight its own battle. Peretz realized that a nationwide strike would look very bad in light of the current security and economic situation. He therefore decided to give the green light to "local" labor disputes.
The workers' committees in the public sector have been cloaking the real reason for their strikes (a wage increase) with all sorts of fairy tales that sound very good in the media. The dockworkers have begun talking about a restructuring plan, the customs officials have begun talking about preventing contraband and about security dangers, Land Registry employees are claiming that all they really want is to block attempts to privatize some of that agency's services, National Insurance Institute workers are protesting that the national office is discriminated against in comparison with the branch offices, Ministry of Labor and Social Affairs employees are claiming a serious personnel shortage in the ministry's services for the cognitively disabled and the university professors are arguing that the Finance Ministry's offers are simply ludicrous.
However, the truth is that all these workers understand that, when the annual inflation rate is only two percent, you cannot make serious wage demands. The only recourse, therefore, is to call your demands for a hefty wage increase something else - like "ranks on the salary ladder," or "job slots," or a "car allowance," or "stand-by time," or "global overtime" or some other increment.
The major question that should be asked is how much of a fight will Shalom put up in the face of these strikes. He must realize that his job is not to be a "goody two-shoes" who willingly increases government spending. Instead, his job is to present the limitations of the government's resources, to be a "villain" who reminds all Israelis what could happen if the state budget deficit continues to mushroom. ("Just remember what happened in the early 1980s, my friends...")
It would be a good thing for all concerned if the Likud primaries were to be held tomorrow. Then the finance minister and the prime minister would be liberated from very short-term political considerations and they could give the economy the sort of treatment it really needs.
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