Steinitz's Test

The agreement between the Histadrut and the treasury will not be judged only based on what it costs, but by how the money is divided and by what streamlining accompanies it.

The finance minister and the Histadrut chairman are in their element. The media is filled with interviews and statements by the two at a time when headlines last barely more than a few hours.

Yuval Steinitz and Ofer Eini appear to be wrestling with each other, but they are also showering praise on one another. They know disputes between the labor federation and the treasury have rules of their own. They play out in keeping with a fixed ritual every three years or so, starting with high demands, strike threats, a "nerve-racking" nocturnal meeting under TV spotlights and the prime minister's redeeming intervention at the very last moment.

The last round took place in the summer of 2007. The Histadrut demanded a 10-percent raise and the treasury offered zero. In the end they closed on 5 percent, after a day-long strike that shut down the airport. This time, the Histadrut is again demanding a 10.5 percent raise for three years and the treasury is ready to pay only 1.5 percent. The gaps are similar, so the end result will be similar too.

Both sides are very experienced. They know the limits. The Histadrut knows the most it can achieve is preserving the real value of wages, plus a small increase on top of that. Both sides also know that the automatic wage drift in the public sector is about 2 percent a year. So if the Histadrut achieves a 1.5 percent annual raise, that will preserve the workers' real wages and give them a small raise in real terms to boot.

Hence, the negotiations will end with about a 5 percent raise for the three-year period.

But this does not mean every public sector worker should get 5 percent more. This time the treasury wants to break the years-long tradition of equal raises in order to narrow the salary gaps. Because a 5 percent raise on NIS 30,000 a month means NIS 1,500, while a 5 percent raise on NIS 5,000 a month is only NIS 250.

So this time Steinitz wants the lower earners to get a larger raise in percentage terms, and the higher earners to get a smaller raise. This is the right social attitude, which should be self-evident to Eini. But wonder of wonders, the Histadrut chairman strongly objects to the change.

Because Eini, who seems so strong and confident, is actually dependent on the 11 large labor unions. He is dependent on them because they have voter camps in the Histadrut elections. He is dependent on them because they are the ones who provide the funding for the labor federation. The tens of thousands of workers they represent pay a monthly fee to the Histadrut. Without them it cannot exist.

These are the unions of the Electric Corporation, the Airports Authority, the ports, the Israel Military Industries and the like. The workers in these places are paid extremely high wages - NIS 30,000 a month, not NIS 5,000. So they are interested in keeping the current system of equal raises - in percentage terms - for all. Moreover, these organizations' union members make especially high wages, so they have an even greater vested interest in the current system.

This is why Eini objects to Steinitz's proposal. Because when it comes to one's personal pocket, Histadrut officials forget the passionate cries for social justice and mutual help.

Cynical reality reveals another annoying spectacle - the scandalous alliance between Eini and Shraga Brosh, the president of the Manufacturers' Association. Until Brosh's day, the manufacturers used to fight tooth and nail against public sector raises. Because the minute an engineer, economist or clerk in the public sector is getting paid more, private sector employees will demand more, too.

Raises harm the industrialists in another way as well. When workers at the Electric Corporation, Mekorot and the ports get raises, the prices of electricity, water and port fees also increase. But Brosh is more concerned about his personal alliance with Eini.

So the agreement between the Histadrut and the treasury will not be judged only based on what it costs, but by how the money is divided and by what streamlining accompanies it. This is Steinitz's test, after the euphoric days in the media.