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Government Firm on Wage Policy

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The labor relations outlook darkened yesterday after the Cabinet resolved to stand firm in its policy of a 15 percent wage ceiling for civil servants. Ministers explained after the Cabinet session that this was the only way to fight inflation. But Histadrut warned that there could be no further negotiations on the basis of the Cabinet’s decision. Histadrut Secretary General Yeruham Meshel said of the Finance Minister, “If (Simcha) Ehrlich wants strikes he’ll get them.”

Teachers, doctors, engineers and many other government employes are threatening to strike in support of wage claims which, an the average, are in the region of 30-40 percent. Immigration Minister David Levy and Health Minister Eliezer Shostak are understood to have urged the Cabinet to soften its stand and agree to up the 15 percent ceiling by 5-6 percent. But Ehrlich recommended a tough and unyielding stand and was firmly backed by Premier Menachem Begin and a majority of the ministers. A determined-sounding Ehrlich assured reporters after the Cabinet meeting that he was prepared to face a wave of strikes if that was the only way to “make the economy healthy again.”

Meanwhile, the head of the Manufactures Association, industrialist Avraham Shavit, called on the government and the Knesset yesterday to revoke their decision declaring Nov. 7, municipal election day, a national holiday. In huge advertisements in the press Shavit argued that the day off work would cost the economy IL 750 million, as much as it costs, he noted, to build a highway from Beersheba to Mitzpe Ramon deep in the Negev.

A top Labor Party economist, MK Gad Yaacobi, announced immediately that he supported Shavit’s appeal and would press his party to endorse it in the Knesset.

Accentuating the country’s economic troubles has been the effect — and the predicted further effects — of last weekend’s hike in fuel prices. Economists predicted yesterday that the fuel price rise of between 18 and 25 percent would trigger an eventual rise of some 3.5 percent in the overall cost of living rate. Electricity prices were also raised by 14 percent.

At the same time, the government plans to slash subsidies on a string of basic commodities, starting shortly and continuing in a pattern of one commodity each few weeks. This policy, too, will have an immediate impact on the cost of living index as will the likely imminent rises in the prices of cigarettes, alcohol and coffee.

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