The cabinet approved the 2005 state budget of NIS 266.9
billion by a 17-3 vote. Industry and Trade Minister Ehud
Olmert (Likud), Interior Minister Avraham Poraz (Shinui) and
Agriculture Minister Yisrael Katz (Likud) voted against the
budget.
In swift response, the Histadrut threatened labor unrest. A
strike of the religious council workers, many of whom have
not been paid for more than a year, is to begin on Wednesday,
and more general labor unrest is threatened for September 1,
the start of the school year.
A compromise between Finance Minister Benjamin Netanyahu and
Defense Minister Shaul Mofaz paved the way to the government
approving the budget for 2005. The defense budget will be NIS
34.35 billion, which includes a "loan" of NIS 650 million
from the 2006 state budget. This trick allows the treasury to
claim that the defense budget, which was NIS 35 billion in
2004, was cut to NIS 33.7 billion in 2005 even though NIS
34.35 billion will actually be spent.
The budget for educational reform was boosted from NIS 1
billion to NIS 1.7 billion. Planned university tuition hikes
were revoked, and the Health Ministry got an additional NIS
230 million.
Mofaz demanded a NIS 1.76 billion increase in the defense
budget, rejecting a NIS 1.5 billion planned cut. He said that
of the current year's 4,000 public-sector layoffs, 2,400 came
from defense.
In arguing for the budget, Netanyahu called the shrinking
public sector the direct result of courageous and responsible
economic policy which is "bringing Israel a large economy and
a small government." He praised Sharon and most of the
ministers' for rescuing the country from the economic crisis
of 2000-2003, saying they understood the need for difficult
and unpopular steps.
Mofaz claimed that some figures were never presented to the
ministers. This included a survey that found that 14 percent
of the population skips basic food purchases due to economic
straits. Another 30 percent opt not to heat their homes.
The treasury gave up most of the cuts it wrote into the
original budget as negotiating chips, including those for
retirement benefits, youth fares for public transportation,
and work-related disability subsidies.
The public response was not long in coming. The Histadrut
declared an unlimited Religious Councils strike from
Wednesday. No funerals will be conducted and no marriages
performed, among other functions. The government has not kept
its agreement to transfer NIS 300 million to the Religious
Councils to pay the workers.
Ever since the Religious Affairs Ministry was dismantled, the
funding of religious services and Religious councils has been
a political football. Most of the councils are bankrupt, and
workers have not been paid for a year or more.
In addition, many municipalities have not met salary
commitments for several months. In some cases workers have
not been paid for over a year. Local government workers plan
to go on strike on September 1 to protest the continued
nonpayment of salaries to some 15,000 employees. This strike
would severely impact the opening of the new school year,
perhaps even canceling it. Though teachers would not be
striking, all of the school's administrative workers, from
secretaries to janitors, are employees of the local
authorities.
A strike would also mean no garbage collection, no parking
tickets and no welfare services, as well as the closure of
all municipal offices.
The Clerks Union, which represents the local authority
workers, declared a work dispute on Monday, thereby allowing
it to begin a strike 15 days later. In Lod, the strike began
already this Tuesday.
A spokesman for the Clerks Union said that the local
authorities and his union are required to sign recovery
programs for the local authorities that involve substantial
layoffs through 2006 in order to obtain funding from the
Interior Ministry to pay workers' past salaries.
The mayors are equally upset, and they are pressing for an
additional NIS 3 billion for the local authorities in the
2005 budget. The mayors may also begin protest action, up to
and including a complete shutdown of municipal services, they
threatened.
"On Sunday, the cabinet approved the new state budget that
will be brought to the Knesset for approval. Instead of our
demand for a NIS 3 billion addition, or that of the interior
minister for a NIS 1.7 billion addition to our budgets, we
received an additional cut of NIS 272 million. We can't go on
this way," wrote Adi Eldar, chairman of the Union of Local
Authorities, to his fellow mayors.
Last winter, the local authorities struck for three weeks,
until the treasury agreed to give them an extra NIS 2.2
billion. They are currently gearing up for an even longer
strike, Eldar said.
The Histadrut also plans to declare work disputes in other
sectors of the economy. Thus the local authority strike is
expected to be followed by strikes in the civil service,
government companies, the Airports Authority and the
railroad.
The Histadrut said that the work disputes are over sections
of the budget that call for public-sector wage cuts,
dismissals of thousands of workers, the cancellation of tax
breaks for shift workers, and a plan to make public-sector
workers start contributing the same amount to their pensions
as private-sector workers -- 5.5 percent of their salary up
from 1 percent today -- by 2008.
The Histadrut will negotiate with the treasury over these
grievances, but it is not optimistic.
A spokesman added, "I hope we don't have to repeat the 100-
day strike of 2003, because the Ministry of Finance's tactics
are the same. If they haven't learned the lesson from that
unnecessary strike, then I'm afraid we'll have to go through
it again."
Minister of Finance Benjamin Netanyahu said that he preferred
an agreement with the Histadrut on a reduction in public
sector wages. If the Histadrut opposes the cut, however, he
said that the Ministry of Finance would take "other
measures."
"The Histadrut should help, and everything will be done with
its consent. The cabinet has authorized me to negotiate.
We're ready to negotiate with the Histadrut. It's not
something that we're going to pass in a law. We want public
sector salaries to rise 3 percent, instead of 6 percent. I
want to solve the problem through dialogue. If the Histadrut
remains opposed, we have other means," Netanyahu said.
Many local authorities have deep defecits of many years'
standing. The government is insisting that they formulate and
implement a plan that will allow them to return to a balanced
budget before it transfers funds to cover past deficits.
These plans often involved dismissal of workers and sometimes
salary reductions.
