With Israel embroiled in the toughest election campaign of its history, the government bought peace on the labor front today but at a very high price. Agreements signed early this morning ended a five-day strike by some 35,000 publicly employed engineers and academicians by giving in to most of their demands. These and anticipated demands from other groups of public servants are expected to cost the Treasury at least IL 1 billion this year.
Treasury officials warned in Jerusalem today that the wage agreements could lead to a 50 percent inflation rate this year rather than the estimated 30-35 percent on which the new budget was based. According to the officials, the proposed budget will probably be about IL 4.5 billion higher than originally planned. Because the Knesset refused to act on the draft budget last month, Finance Minister Yehoshua Rabinowitz is expected to submit a four-month interim budget next week to tide the country over the elections.
The agreements signed today allow engineers special compensation of between IL 200-800 per month depending upon the level of their academic degrees. Similar compensation was awarded the academicians, adding a total of IL 300 million to the annual budget. The government took this action fully aware that it will precipitate demands from other sectors with which it will now have to comply if strikes are to be avoided before the elections.
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