The government and Histadrut signed a three-month package deal last night freezing wages, prices, taxes and divi- dend payments for a three-month period, ending June 30, well after Israel’s general elections. The measure was promptly denounced by the Israel Manufacturers Association which refused to go along with the freeze, and by various labor groups engaged in negotiations for higher wages.
The economic package must be approved by the Knesset where the government no longer commands a majority. Should the Knesset balk, however, the government said it would promulgate emergency regulations with the force of law.
The package deal was worked out during a night of intense negotiations between Histadrut and government representatives. It is intended to forestall a new wave of strikes by public employees which could paralyze the nation and throw the economy into chaos. It is also aimed at stabilizing prices before the elections.
The price freeze would be general, excluding fruits and vegetables. The government agreed not to raise taxes or tariffs during the freeze period and to limit the use of creeping devaluation of the Pound. Histadrut agreed to postpone wage demands and refer uncompleted negotiations to arbitration.
RELAXED ATMOSPHERE INTENDED
A government communique released after last night’s meeting said the freeze was intended “to create a more relaxed atmosphere in the economy.” But the business and industrial community was anything but relaxed today. Avraham Shavit, president of the Manufacturers Association, claimed the government and Histadrut did not have the power to implement the freeze, especially to keep dividends at last year’s level. “We have enough labor laws but we have seen the government circumvent the laws and the Histadrut avoid agreements.” Shavit declared.
There are a number of weaknesses in the agreement. For one thing, it does not prevent workers from staging crippling slowdowns. If Histadrut is unable to control the various trade unions, the package may be worthless. Several local unions have threatened to strike if their wage demands are not met promptly.
It was also pointed out that the price freeze cannot be implemented unless the public makes sure that vendors are observing it. Except for a limited number of basic commodities, price controls have failed since the austerity days of the early 1950s. In fact, only hours before the agreement was signed, cigarette prices were raised 20 percent. And the government hastily approved a decision to raise the wages of career soldiers by an average of IL 600 per month.
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