The Ministerial Economic Committee, overriding vigorous objections by the Treasury, voted yesterday to approve an 18 percent pay hike for soldiers in the regular army. Finance Minister Yigal Cohen-Orgad warned that this might trigger a new spiral of wage demands which could only aggravate inflation now running at an annual rate of over 400 percent.
But Defense Minister Moshe Arens said he could not accept responsibility unless the erosion of soldiers’ wages was corrected. Cohen-Orgad maintained that the economy cannot support the increase which is in violation of the government’s economic policy. Treasury officials expressed concern that this will not be the final wage demand and that various ministers will push for increases before the July 23 elections, necessitating the printing of more money.
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