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Public sector wage cut left off cabinet agenda, delaying its approval

Finance and higher education ministers blame each other for government’s failure to advance measure aimed at reducing expenses during virus outbreak

Illustrative: Parliament members vote on a bill to dissolve the parliament, at the Knesset in Jerusalem, on December 11, 2019. (Olivier Fitoussi/Flash90)
Illustrative: Parliament members vote on a bill to dissolve the parliament, at the Knesset in Jerusalem, on December 11, 2019. (Olivier Fitoussi/Flash90)

Approval of a belt-tightening proposal to cut salaries among senior officials in the public sector, including lawmakers, was dropped from the cabinet agenda Sunday, which caught the two ministers pushing the plan by surprise and left them blaming each other for the delay.

With the prospect of the Knesset disbanding itself due to the coalition crisis, the proposal may now not be passed before parliament is dissolved, putting it beyond the scope of a resulting transitional government.

The proposal was to cut 10 percent from the wages of ministers, members of Knesset, the state comptroller, the governor of the Bank of Israel, judges, the two chief rabbis, and senior municipal officials. It intended to cut expenses during the ongoing coronavirus outbreak, which has decimated the economy and caused runaway unemployment.

The plan, pushed by Finance Minister Israel Katz, was taken off the agenda due to an objection raised by Higher Education Minister Ze’ev Elkin, who is proposing that the scope of the wage-slash be expanded to include all public sector employees who earn more than NIS 40,000 ($12,200) a month, similar to the salaries of MKs.

Finance Minister Israel Katz holds a press conference at the Finance Ministry in Jerusalem on July 1, 2020. (Olivier Fitoussi/Flash90)

Katz’s limited plan, which would last for 15 months, would save the government around NIS 70 million ($21.4 million). Elkin says that under his proposal the savings would jump to NIS 700 million ($214 million), the Ynet news site reported.

Both Katz and Elkin told Ynet that they don’t know why the proposal was taken off the agenda, with each minister hinting that the other was responsible.

“This is the first time that I have heard that the treasury doesn’t want to take more money,” Elkin said. “It is very strange that the treasury doesn’t want to take more money.”

Katz said, “I am surprised at the delay caused by the objection of Minister Elkin, who is holding up the matter for various pretexts and immaterial reasons.”

The treasury opposes Elkin’s proposal because officials are worried that it will extend to senior public-sector workers, prompting the Histadrut labor federation to intervene to protect their rights, Ynet reported.

Prime Minister Benjamin Netanyahu will now ask the two ministers to put together a single proposal and resubmit, the report said.

Zeev Elkin, at the time leaving his position as environmental protection minister, speaks at a ceremony the Ministry of Environmental Protection in Jerusalem on May 18 2020. (Yonatan Sindel/Flash90)

Last week the Knesset approved a preliminary reading of a bill to disband parliament and call fresh elections. The bill must pass three more votes before elections are called, in what would be the fourth national vote within two years, amid the ongoing political crisis.

In November the Knesset unanimously passed legislation that effectively halted the raising of lawmakers’ salaries for the 2021 fiscal year.

According to current procedures, MKs’ salaries are linked to the average wage in the country. However, that has risen steeply in recent months, largely because so many low-income workers have become unemployed due to mass business closures caused by two national lockdowns and a raft of other virus restrictions.

MKs were thus due, before the cancellation, a massive projected monthly pay raise of NIS 6,500 ($1,930).

The monthly salary of all lawmakers is currently NIS 45,521 ($13,637), while ministers earn NIS 50,623 ($15,165) and the prime minister and alternate prime minister earn NIS 54,762 ($16,405).

As of October, 980,370 Israelis were out of work — almost a quarter of the workforce — of whom 628,344 were on unpaid leave.

During the first lockdown put in place to curb the initial outbreak of the virus in the spring, the unemployment figures spiked as 800,000 people quickly lost their jobs. As the outbreak subsided, some people were able to return to work, but later, with infections surging again, the government imposed fresh restrictions and the jobless rate again spiked.

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