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Government Moves to Counteract Opposition to New Economic Policy

November 2, 1977
See Original Daily Bulletin From This Date

The government moved today to counteract the growing worker opposition to its new economic plan that has sent the cost of virtually all goods and services soaring toward record highs. Finance Ministry sources said compensation was under consideration for some 215,000 families embracing not only social welfare cases but workers in the lower wage brackets. Meanwhile, work stoppages and on-the-job protest meetings which had the same effect continued today and the full force of labor discontent is yet to be felt.

Tel Aviv is bracing for a general strike Thursday when mass meetings of workers will be held under Histadrut auspices. Sick-fund clinics will go on strike countrywide on Thursday and bakeries plan to strike tomorrow night. El Al ground maintenance workers returned to their jobs today after a 24-hour stoppage but railroad service between Haifa and Tel Aviv was suspended this morning when workers walked off the job. Haifa port was paralyzed for four hours today by a work stoppage on the heels of yesterday’s four-hour walkout in the Haifa Bay industrial zone.

The fierce labor reaction to the new economic order initiated by Finance Minister Simcha Ehrlich has caused concern in the Likud government. The Likud faction in Histadrut, while supporting the government’s policy generally, has complained that compensation for higher living costs is much too limited. Absorption Minister David Levi, the only Cabinet minister to vote against the plan and Deputy Minister Yoram Aridor, have been pressing Ehrlich to clarify which groups are to be compensated for the higher prices.


In an interview published in Yediot Achronot today, the Finance Minister said there was no room for salary increases or changes in the composition of salary elements except for the semi-annua cost-of-living allowances. But he promised that workers in the lower income brackets will benefit from full compensation.

Israeli wage-earners will receive allowances this month for the c.o.l. rise of last September. But Histadrut leaders are demanding payment now of additional allowances based on the new price index. Normally that payment is not due until April.

The government also may be forced to reconsider its imposition of the higher value-added tax (VAT) on airline tickets. Leaders of the International Air Transport Association (IATA) have written to the Finance Ministry protesting the higher tax. Moreover, payment can be evaded easily by buying pre-paid tickets abroad or taking the short, inexpensive flight to Cyprus and buying tickets for the rest of the journey there tax-free.

The only source of satisfaction for the government so far has been the public’s restraint in buying dollars, legal under the new economic plan and the increase in locally held savings accounts. In the last two days the public has bought some 1L 460 million of government savings bonds linked to 80 percent of the cost-of-living index. Investments in all savings plans reached 1L 2 billion.

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