Israel’s Austerity Program Imperiled by Worker Protests, Strike Calls

A government austerity program, deemed essential to avert Israel’s economic collapse, hung in the balance here Tuesday as thousands of Israeli workers intensified their protests against the eight-day-old emergency measures.

An estimated 80,000 Israelis walked off their jobs for at least part of the day, and the strike committee of the powerful Histadrut trade union federation called for a nationwide general strike starting Sunday.

Leaders of the federation, to which about 85% of all Israeli workers belong, are expected to endorse the strike call at a meeting Thursday, barring a breakthrough in stalled negotiations with the government. Several Histadrut-affiliated unions, meanwhile, voted to jump the gun, beginning strike action this week.

Prime Minister Shimon Peres, Finance Minister Yitzhak Modai and Histadrut chief Yisrael Kessar held an emergency 2 1/2-hour meeting in the prime minister’s office Tuesday morning as several thousand government workers demonstrated nearby against the threatened cut of 10,000 civil service jobs.

A spokesman for Peres refused to comment on the negotiations, but Israel radio reported that no progress was made. The three men are to meet again this morning.

About 60,000 government employees staged a three-hour warning strike Tuesday and are expected to begin an open-ended walkout Thursday.

Workers at the state-owned electric and telephone companies walked out Tuesday morning. The strikes disrupted repair services, and although direct-dialed long-distance calls were possible, operator-assisted calls were not. The head of the electric company said there was no disruption in regular electricity service.

Gas and oil company employees, bank clerks and water workers, among others, voted to begin open-ended strikes on Thursday.

Asked at a press conference how the strikes will affect the government austerity plan, one of its architects responded Tuesday, “Let’s wait a few days, because these strikes are part of the negotiations game.”

However, Mikhail Bruno, a Hebrew University economist and government adviser, added that if the Histadrut is unable to control its members, “then there are problems.”

The rash of strikes was triggered by the government’s declaration on July 1 of a three-month state of economic emergency. In announcing the unprecedented steps, Peres acknowledged that Israelis were in for “a very difficult period” but added that if the government had not acted, “there would have been a risk of total collapse” from runaway inflation and disappearing foreign currency reserves.

Emergency measures included:

--An immediate 24% average increase in the prices of goods and services, followed by a three-month wage-price freeze.

--An 18.8% devaluation of the Israeli shekel.

--A 3% cut in public sector employment.

--A combination of government budget cuts and new taxes intended to reduce the budget deficit by an additional $750 million.

The day after the plan was approved by government ministers at an around-the-clock Cabinet session, the Histadrut called a 24-hour general strike that virtually shut down the country on July 2.

The labor federation contends that the plan unfairly burdens workers, who it said will suffer a 30% erosion of their real incomes because of suspension of normal cost-of-living protection. It also objected to the cut in civil service jobs.

Peres responded by postponing implementation of the most controversial elements in the emergency economic plan pending negotiations with the Histadrut. The talks have made little apparent progress, however, and government officials contend that if there is no agreement by this coming Monday, they will have to revert to their emergency decrees.

The government contends that the program will cause only a 14% erosion in real wages during the three-month emergency period and that 9% of that will be repaid next October by tax cuts. However, Bruno conceded at the press conference Tuesday that the new sacrifices will be on top of a 15% erosion in real wages since the first of this year.

“This program is a gamble,” Bruno said, but “it’s certainly less risky than the alternative, which would be to let things go and wait for the big crisis.”

The Hebrew University economist suggested that implementation of the austerity program could speed a $1.5-billion U.S. emergency aid package to Israel. The United States, which has kept Israel afloat with massive aid, had urged the Peres government to take sterner steps to bring its economy under control.

“My belief is that this program goes considerably beyond what the U.S. government expected,” Bruno said Monday.