Agreement on Emergency Economic Program Averts a General Strike

The government and Histadrut reached an agreement early this morning that will soften the effects of the emergency economic program on wage-earners without appreciably altering the plan itself.

The agreement came shortly before dawn, only hours before a nationwide general strike would have, begun had no accord been reached. It was hailed by Premier Shimon Peres who told reporters that the emergency recovery plan for which he vigorously fought is now a fact.

Peres, weary from marathon negotiations which allowed him little sleep for the past two nights, was nevertheless happy and smiling. He said he was “full of satisfaction” that Histadrut “comprehended” the gravity of the economic problems facing the country. He cautioned, however, that the new program can succeed only if the public cooperates.

Histadrut Secretary General Yisrael Kessar was also pleased. The government will not impose its economic measures by administrative decree as planned. While wages and salaries will erode in the coming months, their fall will not be as steep as originally expected. Best of all, from the trade union point of view, concessions were won in the give-and-take of normal labor negotiations without resorting to a crippling general strike.

Talks are continuing on the government’s intention to dismiss about three percent of the civil service workforce. Prospects for an early agreement are good.

PROVISIONS IN THE AGREEMENT

The agreement reached this morning provides for the 14 percent cost-of-living increment for July salaries, payable in August. Public sector employes will receive an 11 percent increment. An additional one-time “festival bonus” will be paid before the High Holidays in September.

From October through March, 1986, workers will receive four percent cost-of-living increments per month, unless the inflation rate falls below four percent, as the government hopes. The government will pay full compensation to the poorest-paid workers and welfare recipients.

Trade union and Treasury experts agree that wages will decline in the late summer, pick up again next winter and will reach their present levels by March or April, 1986, if all goes well.

Leading economists cautioned, however, that the success of the program will depend on the diligence with which the government implements its budget-cutting in the next few months. The two economists credited with being the “brains” behind the government’s plan are Prof. Eitan Berglass of Tel Aviv University and Prof. Michael Bruno of Jerusalem.

They told reporters today that the plan was not substantially weakened by some additional compensation to workers which the government agreed to this morning.

PERES WINS HIGH POINTS FOR LEADERSHIP

According to political pundits, Peres won high points for leadership in the way he persevered to push the economic program through a divided Cabinet and his subsequent negotiations with Histadrut. His standing with the public rose considerably and will remain high if the economic program achieves the kind of success its authors hope for and predict, they said.

This has already led to speculation that, riding the crest of its leader’s new popularity, the Labor Party may contrive to break up its coalition with Likud later in the year and chance new elections to become the governing party of Israel.