The Bottom Line

The newly signed wage agreement is an admission of injustice against retirees

The newly signed wage agreement for the public sector is the first such collective bargaining agreement since 2001, when the sides agreed to give workers a 3.5% raise.

In 2003, an agreement was reached between then-finance minister Benjamin Netanyahu and former Histadrut chairman Amir Peretz - but that agreement dealt only with wage reductions of 4% to 17% for 700,000 public employees over two years. Peretz, despite being a political opponent of Netanyahu, agreed to the deal to help improve the economy. But the workers actually gave up on part of their salary - not only future increases.

The agreement to cut wages, an extremely rare occurrence in the public sector, gave the treasury an excuse to take its time in reaching a new wage agreement for public sector employees, which obviously would have meant raising wages.

The treasury claimed such raises would wipe out any previous savings. In the meantime, the relations between the Histadrut and the Finance Ministry have taken a turn for the worse, after Netanyahu's pension reforms, and opportunities for a new agreement fell by the wayside.

The new deal does provide a 5% increase over three years. This is much less than the 13% the Histadrut originally demanded. Nevertheless, it is different: This is the first agreement to include hundreds of thousands of retirees, those who receive state-funded pensions. By signing the agreement, the treasury for all practical purposes has admitted that these retirees were mistreated.

The change in how pensions will now be adjusted for inflation, by linking them to annual cost of living increases, may on the face of it seem to be bad for retirees - and good for the public coffers. But in reality, the pensioners are happy. They receive annual adjustments, instead of an unknown quantity at unknown intervals. And the best thing for a retiree is to know when and by how much her pension will change.