Israeli Workers to Get Cost-of-living Increase; No Inflation Feared

Levi Eshkol, Israel’s Finance Minister, disclosed today he had approved an agreement with the Histadrut, Israel’s Labor Federation, for an increase in cost-of-living allowances to workers.

His action evoked surprise because the increase in the consumer price index, to which such allowances are linked, is currently two-tenths of a point short of the minimum required for increases in the allowance.

The increase involves an estimated five to 15 pounds per month for wage and salary earners. It was estimated that the increase would inject into Israel’s economy an additional flow of purchasing power of some 40, 000, 000 pounds (about $22, 000, 000) annually.

The Finance Minister expressed confidence that if the Histadrut implemented some “promised measures” the nature of which he declined to disclose, Israel’s economy would be able to absorb the increase without serious inflationary effects.

The Histadrut’s “promised measures,” it was reported, provide that only half of the allowance increase will be payable during the next six months, with the full increase to be paid only in the second six months. The unpaid portion of the increase would then be paid to employes in monthly installments.

The Histadrut also reportedly promised to put pressure on Histadrut pension fund managers to make considerable additional investments in Government bonds, a step which would be considered anti-inflationary.

The speed with which Mr. Eshkol abandoned his expressed opposition to the living allowance increase gave rise to speculation that he had received from the Histadrut a secret commitment that no wage increases would be asked by the Histadrut’s constituent unions at least until next year.