Ruling on Salaries for Teachers Endangers Efforts on Inflation

A labor court ruling supporting wage demands of the country’s teachers threatened today the government’s efforts to curb Israel’s galloping inflation. The Jerusalem Labor District Court ruled last night that the teachers were entitled to wage parity with the civil service engineers contrary to the stand of the Treasury.

If implemented, the ruling would give the country’s 65,000 teachers wage increases of 20 to 27 percent, costing the government some IL 3.5 billion. The court ruling came as a blow to the Treasury. Only recently has Finance Minister Yigal Hurwitz ended his battle over next year’s budget, in which he insisted on a ceiling of IL 405 billion. Asked where he would get the money from, Hurwitz, who was visibly shocked by the decision, replied: “From what I don’t have.”

The response was more accurate than it seems. Originally, such surprise needs would be met from the budget’s reserves. However, due to the disagreement among the ministers on the size of the budget, there was hardly any reserves left in the budget. A further danger would be that even if the teachers’ demands were met — other sectors in the economy might follow, totally upsetting the government’s declared policy to freeze wage rises until April next year.

By this morning, the government seemed to have two alternatives: one was to appeal the decision before the National Labor Court. This move was opposed by Education Minister Zevulun Hammer. Hammer claimed throughout the labor dispute with the teachers that their salaries should be raised considerably and he welcomed the court’s decision. The other alternative was to print the money — another boost to inflation which last month stood at 7.3 percent.