Histadrut signals flexibility on austerity measures

Finance Minister Bezalel Smotrich and Histadrut (General Confederation of Labor in Israel) head Arnon Bar-David met last week in an attempt to advance negotiations on austerity measures in 2025 that will affect workers. During the meeting, Smotrich tried to convince Bar-David of the seriousness of his intention to commit to reducing spending and increasing taxes by NIS 40 billion in the next budget. The Ministry of Finance seeks to achieve about half of the amount, i.e. no less than 20 billion shekels, through agreements with the Histadrut. The Ministry of Finance introduced a tough package of measures targeting workers: cuts in tax benefits on advanced training and retirement funds; Freezing income tax brackets, the minimum wage, and National Insurance benefits; Postponing planned public sector salary increases for the coming years; The plan reported by “Globes” is to take vacation pay supplements from workers to the depleted coffers of the Ministry of Finance.

Being at the negotiating table allows the Histadrut to prioritize different actions. If they agree to some, they will be able to cancel others. As far as is known, the gap at this stage between the minimum that the Ministry of Finance wants to take and the maximum that the Histadrut is willing to provide is about 3-5 billion shekels for the 2025 budget. But beyond the numbers, there is a lack of trust between the government and the labor organization on the issue of equality. In imposing austerity measures on various sectors of the population.

Speaking to Globes, Adam Blumenberg, Vice President for Economics and Policy at the Histadrut, explains the Histadrut’s position on the issue and details the demands and conditions they set for the Finance Ministry. “The Histadrut president wants to see that we are not left to face this battle alone. His demand is that, first of all, everyone must share the burden. Everyone means the government itself, employers, the capital market, everyone. And he also means people who receive welfare payments.” social, religious school students, and people who currently contribute less to productivity.”

Taking into account the fair distribution of spending cuts, there is a willingness on the part of the labor organization to consider postponing some of the wage increases scheduled for hundreds of thousands of public sector workers. “We’re talking about postponing salary increase phases,” Blumenberg explains. “We haven’t finalized how to do that yet.” The first stage that can be postponed is the 2% wage increase scheduled for next December, according to the framework agreement signed between the Ministry of Finance and the Histadrut last year. Regarding the next stages, the Histadrut is still considering its position.

The Histadrut is also open to talking about taking holiday pay supplements from workers to help cover defense expenses in 2025, as happened this year. “If we say no to pensions and no to advanced training money, I think vacation pay is a more than adequate alternative,” Blumenberg says.

“Four long weekends equals 2% of salary.”

Unlike in the past, when the Finance Ministry agreed in exchange for a wage freeze and a higher wage increase in the future, this time the Histadrut is making a unique request: “We are specifically targeting long weekends or shortening the work week to 40 weeks.” hours in the private sector,” says Blumenberg. In the framework agreement, the Histadrut achieved a reduction in the working week in the public sector from 42 hours to 40 hours, and now the demand is to expand this through legislation to include the entire working population. This is an interesting approach on the part of the Histadrut, if Compensating for the public sector wage freeze would have actually benefited private sector workers.

Blumenberg explains the thinking behind the request: “Economically, four long weekends is roughly equivalent to 2% of salary. And if you look at four out of 220 work days, it’s roughly 2%. Economically it’s roughly equivalent.” The Israeli Industrialists Union is expected to oppose the Histadrut’s request to shorten the work week, which will come at the expense of employers. The employers’ organization explained that labor relations issues are dealt with in a room where employers sit around the table with the Histadrut and the Ministry of Finance, and that in the absence of this, the issue of shortening the workweek does not arise. On the agenda.

The basic requirement: closing non-essential ministries

The Histadrut also sets clear red lines: “I can tell you what we will not agree to in any way,” Blumenberg says. “There will be no harm to the minimum wage, there will be no harm to pensions, there will be no harm to advanced training funds.” He appreciates that some of these Finance Ministry proposals are bargaining chips, but he is convinced that unless there are agreements between the Finance Ministry and the Histadrut, the Finance Ministry will try to implement them.

In addition, the Histadrut requires special attention to disadvantaged populations. “We demand that even if we reach a freeze on benefits, we need to take care of the populations that depend on these benefits, such as the elderly and the disabled.”

One of the preconditions set by Bar-David is the closure of non-essential government ministries and the reduction of coalition funds. For his part, Smotrich proposed closing five ministries within the framework of the arrangements being formed. In the draft budget law for 2025, there is an intention to form a team led by the Director General of the Prime Minister’s Office, Yossi Sheli, to examine the closure of ministries. Blumenberg expresses his skepticism: “We see difficulty at the present time for the Ministry of Finance to dispense with unnecessary ministries. They are currently talking in drafts about closing five ministries. Since the proposal was published, another minister without a portfolio has been added to the government.” (Gideon Saar – OD)

The Ministry of Finance draft law stipulates a freeze on wages in the public sector for the years 2025-2028, amounting to about 3 billion shekels annually. On the other hand, Blumenberg stresses the importance of setting a time limit for economic measures: “We see the need to make adjustments for next year, at most within the next two years. This is the period when we really need to intensify our efforts.” To help the country recover, the cuts must be timed appropriately, and we insist on that.”

Describing the tight timetable for negotiations with the Ministry of Finance, Blumenberg says: “We have added time for injuries. On October 31, the budget proposal is scheduled to go to the government. We are trying to find common ground with the Ministry of Finance.” Alternatives by then.”

Published by Globes, Israel Business News – en.globes.co.il – on October 15, 2024.

© Copyright Globes Publisher Itonut (1983) Ltd., 2024.