Taking Stock / 5 Comments on the Gov't Plan

1. It's hard to believe how the strike came to an end, and how there was finally an agreement between the Finance Ministry and the Histadrut labor federation early Sunday morning.

Amir Peretz, chairman of the Histadrut, delivered an ultimatum before negotiations started Saturday: If there is no agreement by morning, then the strike is back on. Saturday night, all the senior officials of the treasury and Histadrut started to negotiate.

About 2 A.M., Finance Minister Benjamin Netanyahu received a message that his mother-in-law had died and he had to leave the negotiations. The treasury officials realized that Peretz couldn't strike now. Their assessment was that Peretz would announce a time-out in negotiations and postpone the strike. Around 3 A.M., everyone went home.

But Peretz and Meir Sheetrit, minister in the Finance Ministry, continued to sit and talk. When treasury officials woke up on Sunday morning, they couldn't believe what they heard: There is an agreement, there is no strike. When the officials asked Sheetrit for the agreement, they discovered it didn't exist; there was only an oral agreement. Sheetrit and Peretz shook hands, agreed on a general framework for cuts and ended the strike.

2. The Finance Ministry hurried to announce victory in large wage cuts for the public sector, but the celebration was premature. As with all things, the devil is in the details: the exact, detailed agreements that now need to be signed between the treasury and the workers. At the moment, it is almost impossible to say if the wage cuts in the public sector are a significant structural change or not.

What is certain is that there is a large gap between the treasury's original plan and the final agreement. If you want to use one of Netanyahu's favorite phrases, the thin man is going to have to continue carrying the fat man. In the meantime, no real diet is on the horizon.

The Finance Ministry is being ambiguous about the compromise and its budgetary implications, and this is not a good sign. In the past weeks, they have stopped talking about a deficit target in treasury, and fears that the deficit will reach 5 percent this year are growing. If it weren't for the U.S. loan guarantees, we would have gone back to the situation at the beginning of the year, when the treasury had difficulties rolling over internal debt.

3. The Finance Ministry's big achievement - and the only one so far - is that the negotiations were on the issue of how much to cut wages, and not how much to raise them. This is a major change in public sector norms, the holy of holies, where for decades wages could only go up and the only question was how much?

The treasury's achievement was in convincing the other side that the public sector also had to contribute its part in healing the economy, and the entire burden couldn't fall on the business sector.

4. The big winner from the entire affair is without doubt Amir Peretz. He has never received more media exposure than in the past months. Anyone who meets Peretz can see he is glowing, radiating strength and power as never before.

Of all the speakers at Monday's TheMarker forum, Peretz was the only one to receive rousing applause from the crowd, and most of the attendees were businessmen who do not exactly identify themselves with Peretz. They were not enthralled with his economic theories, but with his marketing and rhetorical talents. Just two months ago, everyone was sure that Netanyahu wanted to return to the Prime Minister's Office through success in the economic arena. Today, it seems there is another politician, who is no less ambitious, who also plans to rise to the top on the economic ticket.

5. Peretz spoke a lot about the workers in the Of Kor poultry slaughterhouse in the south during his speech. He knows how to sell the heart-rending story of the frozen production line workers, how he struck with them and how he fought with them to save the factory.

Without a doubt, this is a great story. But it's not really the important one. The economic plan is focused on the public sector, and in particular the rich, satisfied part: workers in the ports, the railroad, the electric company and the airport. The thousands of rich public employees.

Peretz doesn't speak about them; he doesn't mention them in his speeches, even though they are always in the background. He is always careful to show respect for them, since they are his power base; they pay him their dues, but they are the exact opposite from the poultry workers in Of Kor. In their bubble of a greenhouse there are no firings, no crises and they haven't even heard about the recession.