The Egged bus cooperative will have to streamline, including retirement of 1,800of its 6,000 members, according to an agreement last night between Egged representatives and Ministry of Finance officials. Under the agreement, the regular subsidy for Egged will be eliminated within ten years, making it necessary for Egged to cut its yearly expenses by NIS 415 million.
Eliminating the subsidy means laying off veteran Egged workers cooperative members whose salary cost is higher than for low-paid hired workers. One third of Egged’s workers are veteran cooperative members. The Ministry of Finance estimates that 1,800 workers will retire, and only 1,000 low-paid hired workers, whose salary costs are substantially lower, will be hired to replace them.
Eliminating the subsidy will save the state NIS 2 billion a year. The state will continue paying Egged a special subsidy for discounts for pensioners, the disabled, and other special groups. The special subsidy totals NIS 200 million annually.
Last night, Ministry of Finance Accountant General Dr. Yaron Zalika and Egged chairman Arik Feldman signed a subsidy agreement for the next ten years. The state demanded that the current subsidy be canceled, staying that it was unwilling to support Egged’s inefficiency.
Published by Globes [online] - www.globes.co.il - on December 19, 2005