Bank of Israel Dodging Wage Caps via 'Consultants'

Dispute developing between central bank management, union over high fees to outsiders.

A new disagreement between the Bank of Israel's union and its management is gaining momentum, after union chairman Jacob Elimelech issued a circular to workers last week urging them to boycott external consultants hired by several of the bank's departments, including internal auditing and information technology.

In the circular, Elimelech claimed in the guise of hiring specialists for specific, short-term projects, the central bank was paying ordinary workers very high salaries, NIS 30,000-50,000, which came at the expense of promoting other employees.

The system of hiring outside consultants in order to get around Finance Ministry limits on salaries began three years ago. But after protests by the workers' committee, the bank's management promised to end the practice, which at the time involved mainly consultants in the computerization department.

In recent months, however, external consultants have been reappearing in larger numbers - more than 10. Moreover, they are no longer limited to the computerization department.

The employment of external consultants allows the central bank to circumvent the wage agreement it signed just recently with the treasury's wages supervisor. It makes a mockery of the bank's promises to reduce the number of workers, since external consultants are not counted as bank employees. Moreover, their wages are not reported to the treasury or included in the bank's published list of senior officials' salaries, but instead are recorded as "purchases."

Elimelech says that the issue had been raised in past discussions with the bank's management, and the union had stressed how unhappy it was with this custom. "This system of hiring is a severe blow to Bank of Israel workers and a waste of public funds," the circular said. "The cost of such a consultant reaches NIS 30,000-50,000 monthly, which is equal to and even exceeds the salary of a division head." The circular therefore demanded that all central bank employees refuse to attend meetings with the external consultants, provide them with information or engage in any other type of professional contact with them.