Wage-price Stabilization Pact on Verge of Collapse; Prices on Most Commodities Soar

The shaky wage-price stabilization agreement engineered by Finance Minister Pinhas Sapir earlier this year appeared to be on the verge of collapse as the result of an increase in excise taxes and customs duties that has just gone into effect. Prices soared on almost all commodities, especially dairy products, eggs and cigarettes. Workers are demanding wage hikes and businessmen say price increases are inevitable. It was in order to avert an inflationary situation that Mr. Sapir worked out an agreement with labor and management whereby each agreed to hold its demands in abeyance in the interest of a stable cost of living. But the government, burdened by the demands of a growing defense establishment, reneged on its part of the deal which was to avoid substantial tax increases. Sharp words have been exchanged between Mr. Sapir and Histadrut leaders. “The package deal is dead,” said Yehoshua Peretz, secretary of the militant Ashdod longshoremen’s union. He said port workers will demand wage increases now. Marc Moshewitz, president of the Israel Manufacturers Association said there was no way to avoid a general price increase in view of the increased tariffs on imported raw materials and other items. He said manufacturers would not be able to absorb the increase and would have to pass it on to the consumer.