In a joint press conference Wednesday with Histadrut labor federation chairman Ofer Eini, Finance Minister Yair Lapid defended the budgets cuts his ministry has proposed, insisting that they are necessary to prevent Israel from going down the same path as Greece.
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“I won’t distribute money the state doesn’t have, like in Greece. What happened there could happen here, but not on my watch," Lapid said.
All sectors would be hit by the budget cuts, including ones that were not touched in the past, without succumbed to popular sentiments, the finance minister said.
“We cut the salaries of MKs and ministers, and the cuts include sectors that until now were considered immune,” he said, referring primarily to the ultra-Orthodox. “It’s important to note that for the first time in years, the working man isn’t the principal victim. I’m not a socialist; this government isn’t socialist. Socialism nearly destroyed the country. But the wealthy who pay tax will pay more, and they won’t get child allowances.”
Lapid said that he and Eini had reached an agreement on the state budget, scheduled to be brought before the government for approval on Monday.
"The working public understands it has to bear the burden,” said Lapid, adding that there were people who wanted to sabotage his talks with Eini and that a one-day general strike would cost the state NIS 2 billion. Lapid said the Histadrut had agreed to putting off the third stage of a 1 percent hike in collective wage agreements in the public sector.
Lapid also said that the next discussion on collective wage agreements would be in July 2014, and that the state would meanwhile be working to implement the wage agreement signed by the previous government for employment agency workers.
The finance minister added that there were still points of contention, mentioning “reform in the Electric Company and the ports,” but that talks would continue.
At the last minute, Eini withdrew his agreement to cancel the vacation pay known as havra’a for the summer of 2013 and 2014 – a perk which costs the government NIS 1 billion a year. In order to make up the lost revenue, Lapid imposed a National Insurance and health insurance payment on housewives of NIS 162 per month.
Eini recently agreed to the treasury’s plan to slash the previously agreed-on addition to public sector wages, and Lapid for his part agreed that the professional training fund payments (known as keren hishtalmut) not be cancelled as a part of the Economic Arrangements Law.
Contrary to what was reported yesterday, the details of the Lapid-Eini agreement will not become part of the Economic Arrangements Law or the 2013/2014 budget. Lapid and Eini have apparently agreed that the 1 percent wage hike promised to all public workers, which was to have been paid on July 1, 2013, would be put off at least until 2015. The sole exceptions are contract workers, janitors and security guards, whose monthly salary will rise to NIS 4,646.25 on July 1 as planned.
This, along with an increase in workers’ contributions to budgetary pensions from 2 percent a month to 5 percent, will save the government about NIS 3 billion a year.
The freeze or cancellation of the 1 percent hike is worth about a billion shekels to the treasury. However, only about NIS 65 million would go to employees of organizations who are represented by the Histadrut. The rest of the public sector employees are represented by organizations that are not part of the Histadrut, like physicians, high school teachers and social workers. It is unclear whether these workers will agree to put off the wage hike.