In the framework agreement reached last week between the Histadrut (General Federation of Labor in Israel) and the Ministry of Finance there was a section that attracted little attention but which could change the rules of the game as far as organized labor in the public sector is concerned. Alongside the pay rises and across-the-board grants to all public sector workers, it was agreed that a special fund would be set up "to solve specific problems". Petty cash, if you will.
The Histadrut and the Ministry of Finance have not mentioned precise sums, but it is estimated that the amount is high, of the order of NIS 2.5-3 billion, about a quarter of the total cost of the framework agreement. This money will be allocated over the next five years for pay rises for certain sectors, such as nurses and social workers.
The declared aim of the special fund is to provide certainty over the period of the new agreement, which will expire at the end of 2027. As far as the Ministry of Finance is concerned, however, the real benefit lies in the mechanism for determining the distribution of money from the fund.
This mechanism is formulated in such a way that, in the Ministry of Finance’s view, it greatly reduces the power of the unions in the public sector to call a strike. In plain terms, this fund is a mandatory arbitration mechanism.
From now on, any workers’ organization that demands a pay increase, will have to go via the arbitration track of the fund. Under the procedure, workers’ demands that are not part of the framework agreement will first go to Histadrut chairperson Arnon Bar-David for his approval, and then for approval by the Wages Division at the Ministry of Finance. There will then be detailed negotiations, during which the workers will not be allowed to strike.
What if no agreement is reached? The agreement is drafted laconically and does not stipulate a clear decision-making mechanism. According to the wording, the decision is made jointly by the Commissioner of Wages at the Ministry of Finance and the chairperson of the Histadrut. Neither side is given the last word. In some cases, this could be a recipe for endless negotiations during which, even if they reach boiling point, the workers will be prevented from striking.
This does not rule out strikes completely. First of all, the fund is intended to resolve problems of wage demands, but it cannot prevent crises arising from, for example, privatization of government companies or other structural changes that affect workers. In such cases, the possibility of strike action remains.
Adam Bloomberg, deputy CEO for economics and policy at the Histadrut, denies the Ministry of Finance’s claim that the agreement will limit the right to strike, but explains that the need to exercise that right will be lessened thanks to the fund. "The main basis of the framework agreement is money in return for industrial peace," Bloomberg says. "The money has been expanded in relation to previous agreements, and so the industrial peace ahs also been expanded. But there’s an exception to every rule, and the peace is not absolute. If now they want to privatize Ashdod Port or to dismantle the Standards Institution of Israel, we will still be able to act, regardless of the fund."
There is logic in the idea. In recent years, fruitful dialogue has taken place between the Ministry of Finance and the Histadrut, as evidenced by the speed with which the framework agreement was signed, without any real fights. But there is no guarantee that positive relations will continue throughout the period of the agreement.
Published by Globes, Israel business news - en.globes.co.il - on March 6, 2023.
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