"The Wee Hours Law" worked this time too. The law says that a wage agreement between the government and the Histadrut labor federation must be signed in the wee hours after a long night's vigil.
Only thus can the Histadrut chairman hit the radio waves at 5:30 A.M. and tell us that the negotiations went on all night and almost blew up, but at the last minute a memorandum was signed. Only thus will it be clear that the chairman put his life on the line in the talks while the listeners were sound asleep. Only thus will it be clear that he has achieved the maximum possible. For if this were not the case, how would it be possible to know whether a raise of 5 percent is "a great achievement" or "a humiliating failure?"
The second law of labor disputes was also implemented properly: There has to be a strike. Here too the aim is to prove that the chairman has stretched the rope to the limit, and what he has achieved is the maximum possible. "Breaking the rope" means closing the airport at the height of summer, and this was prevented 30 minutes before zero hour. The strike was justified. It was in fact a "lite" strike that did not shut down the economy. Sanctions and not a general strike. The economy is growing, the capitalists are enjoying profits and private-sector employees are enjoying salary increases; it is appropriate that public-sector employees enjoy the party too. All that was necessary was to reach a reasonable agreement like this one that will not impose too much of a burden on the growth train.
Each side got what it wanted: Histadrut Chairman Ofer Eini can talk about the fine achievement of a 5 percent wage hike, more than what the finance minister had intended to give. This is a lot more than two servings of falafel. On the other side, Finance Minister Roni Bar-On can claim that he has achieved calm in the public sector until 2009, and the payments will be spread over two years, which is easier on the budget.
The negotiations on the wage agreement were conducted with the 2008 budget restrictions in the background. On Sunday the finance minister will present to the government the budget's main points, the need for a deep cut and the reforms intended to continue growth. The cabinet will discover that a NIS 6.5 billion cut is needed in their ministries' budgets to attain the main goal of maintaining a restrained budget. They all know there is a commitment to increase the defense budget and there is an agreement to implement education reforms (raising teachers' salaries), and that the prime minister's social agenda must not be forgotten. Then the battle over the "decrees" will begin; for example, over the postponement of the polio law, which costs hundreds of millions of shekels a year.
In recent weeks Prime Minster Ehud Olmert has been subjected to a long campaign to persuade him to increase the 2008 budget by only 1.7 percent. At the outset he said it should be raised by 2.5 percent as the Brodet Committee (with a total lack of understanding) had recommended. But then Bank of Israel Governor Stanley Fischer entered the fray and explained to Olmert in long conversations that he mustn't harm the government's trustworthiness, which had promised an increase of only 1.7 percent. Fischer also talked about a Bank of Israel study that found that foreign investors are continuing to invest here despite the security threat because the government is keeping to a restrained budget, which fosters stability and growth.
Kobi Hever, in charge of budgets at the Finance Ministry, also talked with the prime minister about not abandoning the 1.7 percent, with Bar-On's full backing. And then the treasury recruited the Standard & Poor's rating agency, which issued a threatening report yesterday: If the government does not maintain budget discipline, S&P will lower its credit rating for Israel. This would mean an increase in interest rates and a decrease in investments. It is clear to Bar-On that if he surrenders to the pressure from the ministers and increases the budget by 2.5 percent, he will be perceived as a weak finance minister who has no backbone. He also knows that if he surrenders to the ministers' demands, the demands of the MKs and lobbyists will only increase.
So the coming days will be a test for Bar-On. The wage dispute is already behind him, but the main test still lies ahead. He knows that only a restrained and trimmed budget, accompanied by reforms, can maintain the economy's stability, continued growth, the improvement in employment and the narrowing of the gaps. And these, after all, are the most important aims of any finance minister.
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