TEL AVIV (Jun. 18)
Histadrut and private sector employers signed an agreement last night for the payment of a 15.9 percent cost-of-living increment on June salaries, due July I. Agreements with private employers are authomatically accepted by public sector employers, including the government.
The June increase includes a 4.5 percent increase still due on May salaries plus 11.4 percent which represents 80 percent of the 14.3 percent rise which represents 80 percent of the 14.3 percent rise in the consumer price index last month.
Last month’s inflation rate, which exceeded the most pessimistic projections, has brought inflation to the fore as the most serious immediate problem facing Israel’s economy. Former Finance Minister Yigael Hurwitz, who is running for the Knesset, warned yesterday that “financial chaos will break out” unless run-away inflation is halted.
if the economic situation continues to deteriorate, inflation in September and October will hit 20-25 percent for an annual rate of about 1,000 percent, he said. It is presently at an annual rate of about 400 percent. Such a development would require the payment of wages and salaries on a weekly basis, resulting in “chaos”, Hurwitz warned.
Hurwitz was forced to resign as Finance Minister in 1982 when his Cabinet colleagues in the Likud government failed to support his efforts to reduce expenditures. His successor, Yoram Aridor, was replaced last year, by Yigal Cohen-Orgad, the fourth Finance Minister since the 1981 election.
Hurwitz has formed a new party, Ometz (Courage) which will seek Knesset representation in the July 23 elections. He said that if elected he would strive for the establishment of the broadest possible national government and institute drastic spending cutbacks to save the economy form collapse.