Analysis / A Tactical Victory for Peretz, a Strategic Win for Netanyahu

On a tactical level, the winner of the 100-day labor dispute in the public sector was Histadrut labor federation chief Amir Peretz MK (One Nation).

On a tactical level, the winner of the 100-day labor dispute in the public sector was Histadrut labor federation chief Amir Peretz MK (One Nation). As a result of the prolonged strike, he managed to prevent the dismissal of workers in 2004, which is expected to be a year of high unemployment.

On a strategic level, however, the big winner was Finance Minister Benjamin Netanyahu. While worker lay-offs have been deferred to 2005, a number of structural changes in the economy are soon to be implemented. Should they be carried, they will change the character of Israel's economy.

On the one hand, the Histadrut's threat about the staging of a "mega-strike" is what led the Finance Ministry to accept a few concessions.

On the other hand, the Histadrut's perception that Netanyahu would never budge from his demand for structural changes led the labor federation to abandon its one major demand about these reforms: When the Histadrut dropped its demand that any proposed structural change has to win the approval of the labor federation, the path was cleared for the resolution of the 100-day dispute.

The strike actions erupted as a result of the "Plan for Economic Recovery in Israel" that the government approved in September. Responding to the plan, the Histadrut launched strike actions directly after the Rosh Hashanah holiday. Three main issues led to the strike:

l The decision to implement around 20 structural changes in government ministries and the economy (these include the closure of state hospitals, the conversion of the Public Works Department into a government company, and the closure of various departments in government ministries).

l The busting-up of large monopolies such as the Ports Authority and the Israel Electric Corporation, and the privatization of the banks.

l Adjustments in pension plans, including the removal of several well-established plans from the Histadrut's authority.

The Histadrut opposed all three facets of the plan. It claimed that it had agreed in May 2003 to the dismissal of some 2,000 workers (700 in government ministries, 250 in the security system, and 1,000 at local authorities) in the months ahead. This being the case, the Histadrut argued, the government had no right to come back in the fall and demand "structural changes" in the 2004 budget plan, given that such "changes" really meant the dismissal of more workers, beyond the figure that had been agreed upon (after a dispute) in May.

In this respect, the Histadrut won its fight. The new agreement holds that no unilateral dismissals of government workers will be carried out in 2004; any reduction in the public work force will be achieved via voluntary resignations and early retirement.

The Histadrut, however, failed to uphold its main demand, abandoning its position that any structural change proposed by the Finance Ministry be approved by it in advance. Had Netanyahu agreed to this demand, all of his plans to change the nature of Israel's economy would have gone up in smoke.