First Budget 'Package Deal' in 25 Years Signed Amid Mutual Concessions

For the first time in 25 years the government, labor and employers' representatives have signed a "package deal" agreement. Finance Minister Yuval Steinitz, Histadrut labor federation chairman Ofer Eini and the chairman of the Federation of Israeli Economic Organizations, Shraga Brosh, signed a joint agreement for 2009-2010 yesterday at a modest ceremony held in Jerusalem. Prime Minister Benjamin Netanyahu will sign the agreement upon return from his trip to Europe.

"The importance of the deal lies in its very existence, the joining of hands, bridging of differences and moving forward together," Steinitz said.

The deal is central to the government's plan to restore growth, Steinitz added. He predicted the economy will see strong growth by 2010 and called on employers to refrain from layoffs.

Histadrut chairman Ofer Eini urged the government to keep its end of the deal scrupulously through legislation. "I hope that the signatories will make sure that it gets through the Knesset intact," Eini said.

During the signing ceremony Brosh commented that some of the concessions were difficult, but everyone involved understood this is the cost of a joint agreement. The aim of the package deal, he said, was to revive economic growth, minimize unemployment and renew employment. Brosh said that since his return from a visit to Northern Ireland two years ago, together with the Histadrut's chairman, he has been preaching a "round table" approach and cooperation between the government, employers and the labor federation.

Only such cooperation can pull the economy out of the crisis, he added.

Brosh related that during the long weeks of negotiations over the economic plan, the parties had been taught a useful lesson on mutual understanding. Employers and workers understood the Finance Ministry's financing difficulties, and agreed to participate in financing the operation of economic growth engines.

The Finance Ministry, for its part, understood the huge difficulties facing the business sector and agreed to concede on regulatory changes and increase of input costs, and also agreed to greatly increase incentives for investment and employment, Brosh said.

"The central players in the economy are signing today on a cultural change, from a state of dissent and confrontation to one of understanding and cooperation," Brosh said. "All countries that have adopted a model of cooperation have experienced a leap forward. Israel must not remain satisfied with the current package deal," he said.

"The package deal is good for the economy, growth, lowering unemployment, but its true test is in implementation, Brosh added.

Referring to criticism that has been leveled at the deal by the Federation of Israeli Chambers of Commerce, and various umbrella organizations including high-tech industrialists and venture capital funds over changes in labor laws, Brosh said there was no change to these laws, that all of these things, such as the workers' right to organize and the right of Histadrut representatives to enter company premises were legislated in 2001.