The Battle Over the Strawberry on Top of the Icing on the Cake

In all the excitement over the retirement ploy used by the governor of the Bank of Israel, the important point has almost been forgotten: the corrupt salary conditions at the central bank.

In all the excitement over the retirement ploy used by the governor of the Bank of Israel, the important point has almost been forgotten: the corrupt salary conditions at the central bank. Because in Israel, what is important is not the substance, but the maneuvering: who managed to impose his will on whom.

Therefore, it is worth getting back to substance and quoting the brief letter sent on Tuesday by Rehovot Mayor Shuki Forer to the prime and finance ministers. Forer wrote that in Rehovot and other cities, excess wages were also paid for years "in the understanding and belief that they were paid legally." But it turned out that this was not the case, and the Finance Ministry's wage director demanded their repayment. A battle was waged over this issue, but in the end, municipal workers "were wise enough to rise above themselves" and return these substantial sums to the treasury. And Forer continued: "The rule applied to Bank of Israel workers should not differ from the rule applied to local authority workers ... For the sake of our future here, you must not give in to the threats by Bank of Israel employees."

Forer is right. For years, the wage director's department pursued local authority employees over their excess wages. And who were these employees? A clerk in a municipal education department, or a ritual bath attendant in a religious council. These workers earn from a quarter to a half of what Bank of Israel employees do. But against them, the Finance Ministry knew how to be a big hero. From them, it demanded repayment, and it won. So how is it possible to concede on this very same issue to the highest earners in the civil service?

Capitulating would also have macroeconomic ramifications - because once having done so, how could wage director Eli Cohen conduct negotiations with the teachers and university lecturers? How could he prevent excessive raises at Ashdod Port? How would he manage to fight the Histadrut over a general public-sector wage agreement? It is clear that his capitulation now would destroy the treasury's entire enforcement mechanism. Everyone would want to be "like the Bank of Israel."

Bank of Israel workers succeeded in obtaining their scandalous pay conditions through deception. Moreover, the bank's management allegedly filed false reports with the treasury (this matter is now under police investigation). The union would sit with management, and the latter would "give in" to the former's demands - knowing full well that every raise received by the workers would also be granted the managers. That alone would be enough to disqualify all those "agreements" in any court, on the grounds of illegality, immorality and corruption.

How is it possible to defend reimbursing someone for car expenses when he not only has no car, but does not even have a driver's license? How is it possible to justify a work day shorter than the norm? How is it possible to approve special vacation days on top of the regular vacation days? How is it possible to sign off on three different types of advanced training pay, on higher than usual rest-and-relaxation pay, on write-offs of subsidized loans, on higher than normal seniority pay, on jubilee grants to those who have not worked the requisite number of years, or on pension right accumulations of 4 percent a year for managers, when the norm for the entire rest of the economy is 2 percent? These are only a few examples.

Unfortunately, Cohen has already conceded too much. He did not manage to cancel most of the illegal and immoral benefits given to veteran workers, or the illegal and immoral agreements that were made with them. He achieved more with regard to new workers, but not enough - because even under the new agreement, the salary and benefits paid to new workers will be double or even triple the norm in the civil service. They will even be higher than those paid to employees of statutory corporations such as the Israel Securities Authority.

Cohen must know that he is standing alone - completely isolated - in this struggle. If he signs a bad agreement that constitutes complete capitulation, he alone will be blamed. He will be blamed for the collapse of the public-sector wage system and the budget excesses - just as was Shalom Granit, the wage director in the mid-1990s. No one will remember all the pressure that Ehud Olmert, Abraham Hirchson and Stanley Fischer are putting on him now.

Therefore, if Israel's economy is important to Fischer (and it is), he must stand up to the workers and explain to them that the wage director is right. That the bank needs a housecleaning. Fischer should also have gone to court immediately, on the first day of the strike, to apply for restraining orders against the strikers. After all, he also knows that the current battle is over the strawberry on top of the icing on the cake.