Taking Stock / What We Cannot See

The treasury's wages director Yuval Rachlevsky notes at the beginning of his annual report on salaries in the public sector that the scope of excesses dropped in 2001 to 17 percent of those covered by the report.

This is a dramatic drop from the 60 percent included in the 1995 report, the first year it was published.

But somehow, leafing through Rachlevsky's hefty book and looking at column after column of hundreds of thousands of workers with salaries that cost between NIS 40,000 and NIS 130,000 a month, it's hard to be impressed by the drop.

The annual report is called "Accounting of public bodies' salary expenses." But that is really something of a misnomer - because the report doesn't reveal everything that happens in the public sector, just the tip of the iceberg.

The report only opens a tiny aperture for us to peek into the goings-on in the public sector. That aperture has widened bit by tiny bit over the years.

For instance, this year, after a drawn-out legal battle, the wages director managed to force the health maintenance organizations to publish their senior officials' salaries.

The result was astounding: We discover nearly 1,000 senior HMO officials who earn NIS 40-80,000 per month; we discover that as opposed to the perception that most doctors make very little money and that only private clinical work allows them to make ends meet - in practice most have salaries of NIS 50,000 to NIS 100,00 per month.

The dog that didn't bark

But no less important is what we don't see in Rachlevsky's report:

l We don't see the payments to all staff in government ministries. Their wages are presumably set according to clear and incontrovertible keys and scales. But in practice, it is well-known that there are many many "exceptions."

For instance, it is known that the defense establishment has many senior officials with enormous salaries and that the cost of the non-contributory pensions for defense workers brings them in line with some of Rachlevsky's stars.

l The salaries at a slew of public bodies with "independent" financial systems are completely invisible, despite their reliance on contributions and government funding. Two prominent examples are the Jewish Agency and the Jewish National Fund. The latter, and few are aware of this fact, is predominantly funded by the Israel Lands Administration - the taxpayer's money.

The treasury wages director never published the number of workers at these two entities, the number of senior employees who receive "CEO status" - or their amazing pension arrangements. On the day they are made public, it will be clear that they can claim respectable places in Rachlevsky's report.

l We don't see a complete actuarial report presenting the scope of actuarial commitments to public sector workers for their non-contributory pensions. The numbers are amazing: actuarial liabilities grow every year by billions of dollars and have increased by about NIS 100 billion since the wages director started publishing his report.

This is not virtual money. This is not just an accounting technicality. This is the "payment" for the wage glut in the public sector - the brute force of which will be felt many years hence and will be submitted as bill for payment to the next generation. In the next decade, Israel will have tens of thousands of pensioners - millionaires from the public sector.

l A large portion of the public sector workers are insured by Histadrut labor federation pension funds. For years, the workers in the strong and well-connected unions got substantial benefits from the pension funds in accumulating rights that are far more expensive than those earned by a "regular" worker.

The result is a huge deficit of more than NIS 100 billion in the Histadrut pension funds. The first of those to present a bill to the taxpayer is the construction workers fund, into which the treasury will be forced to inject about NIS 250 million this year alone. By the end of the decade, another two pension funds will join those in which the taxpayer must finance their ongoing payments to retirees.

How to measure inefficiency

l What we don't see in the wage director's report is the scope of the waste, inefficiency, low output and decreasing productivity in large portions of the public sector. Rachlevsky doesn't publish the total number of wage earners at each public institution, the cost of their salaries and their jobs in a way that would allow the examination of their output according to any standard.

We see there are thousands of huge salary earners, but we don't know how many unnecessary workers there are in the public sector, how many duplicate mechanisms, how many employees are required to devote just a small portion of each day to their jobs, what is their training and how many of them are able to maintain private businesses outside of their public sector business hours.

l What the wage director's report does tell us about public sector pay is some indication that the answers to those questions would probably not make us into happier taxpayers.

And the only question left is how long Israeli and foreign investors will be willing to finance the deficits of the huge company that answers to the name State of Israel? When will the moment come when they demand from management a full and more accurate accounting of spending and the implementation of serious reforms in expenses - before agreeing to inject another shekel.