New Economic Package Accord Signed
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New Economic Package Accord Signed

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A new economic package agreement, to remain in effect until March 1988, was signed by the government, labor and management Tuesday. It is intended to maintain economic stability in face of price increases triggered by the recent devaluation of the Shekel and government moves to cut public spending.

The principal signatories were Finance Minister Moshe Nissim; Yisrael Kessar, Secretary General of Histadrut; and Dov Lautman, head of the Association of Manufacturers and Employers. Vice Premier and Foreign Minister Shimon Peres, a key figure in negotiations that led to the accord, will add his signature when he returns from his current trip to Europe.

The package deal was approved by the Cabinet more than two weeks ago and was to have been signed then. But a dispute with Histadrut over government funding for its sick-fund, Kupat Holim, delayed the labor federation’s endorsement until Tuesday.

It was made possible after the Treasury agreed to contribute 47 million Shekels to Kupat Holim for higher pay to nurses and to keep abreast of its needs. Kupat Holim provides health insurance and medical care for about 85 percent of the population.


A main feature of the new economic package is withholding 2.7 percent of the next cost-of-living increment to wage earners in order to prevent a new inflationary spiral resulting from the reduced value of the Shekel. The full increment will be added to national insurance payments.

Other features of the package are: price controls on many consumer goods to remain in force until March 1988; no rise in the prices of subsidized good and services, apart from public transportation; income tax reform, mainly lowering the top bracket to 48 percent from 60 percent; capital market reform, with reduced government involvement in the market effective April 1; and government efforts to lower interest rates.

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