Smotrich asks Histadrut to save him billions, but offers gesture

Finance Minister Bezalel Smotrich and Histadrut (Israel Labor Union) Chairman Arnon Ba’David met today to discuss the Ministry of Finance’s proposed 2025 budget, some parts of which go against the interests of labor organizations and require their consent. The main point of contention is the Ministry’s intention to save 8 billion shekels by freezing the salary increases that civil servants are due to receive in the coming months. In addition, the Ministry of Finance is seeking to freeze the minimum wage included in civil servants’ salaries and suspend the revision of tax brackets that affect all workers.

Smotric came to today’s meeting prepared with confidence-building measures to try to appease the opposition. At the meeting, Bar David was told that the official budget proposal that the Ministry of Finance will submit to the government includes plans to close unnecessary government ministries. These measures would not prevent workers’ salaries from being cut, but they echo the comments of the Histadrut chairman.

During the first months of the war, the Histadrut agreed to accept a program in which all workers would “contribute” one day’s vacation pay, amounting to a few hundred shekels per worker, to cover the budget for conscription into the reserves. The organization then made it clear that it would no longer accept such measures unless the government drastically cut spending on coalition programs and closed non-essential ministries. Smotrich’s idea was to close five ministries, one for each coalition party.

Putting out the fire

Smotrych’s resolve and ability to secure the consent of his coalition partners to close ministries remains to be proven. But it is a clear example of a change in policy from the finance minister, who has so far rejected expert suggestions to close ministries. Dissolving the ministerial and deputy ministerial bureaus will not result in significant savings in terms of the state budget, but it would at least demonstrate the leadership’s sense of responsibility, especially now that Smotrych is calling on workers to cooperate and share in paying for the huge costs of the war through tax measures and cost cuts.

During the meeting with the Histadrut, Smotric and his aides presented the plan, but discussions did not go into details. It was agreed that dialogue between the two sides would continue and that all aspects of the budget would be considered.

Tensions rose between Smotric and Bar-David two weeks ago after the Histadrut declared a general strike to demand the release of Israeli hostages being held by Hamas in the Gaza Strip. Smotric obtained a court order to halt the strike, accusing Bar-David of “fulfilling Sinwar’s dream.”

Now Smotrich is trying to put out the fires and help Bar David save billions of shekels in public spending. “The meeting took place in a good atmosphere, with both sides recognizing the challenges facing the State of Israel and agreeing to work together responsibly for the good of the Israeli economy, the interests of workers and all Israeli citizens. The meeting was held in light of the progress being made in the preparation of the 2025 budget and was part of a series of consultations that the Minister of Finance is conducting with all business stakeholders,” said a statement issued on Smotrich’s behalf after the meeting.

Published by Globes (en.globes.co.il), an Israeli business news site, on September 12, 2024.

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