Bloomberg News

Israel Strike Ends After Government, Histadrut Reach Accord

February 12, 2012

(Updates with comment from finance minister in third paragraph.)

Feb. 12 (Bloomberg) -- The Israeli government and the country’s largest labor union reached an agreement ending a general strike that has shut banks, government offices and the stock exchange since Feb. 8.

Under the accord, crafted during all-night negotiations, employment conditions for contract workers will be “significantly improved,” the Finance Ministry said in an e- mailed statement. The cost of the agreement is estimated at an annual 800 million ($215 million) shekels, Gal Hershkovitz, director of the state budget division, said in an interview on Army Radio today.

“The correction was made possible by the high growth and low unemployment in the economy,” Finance Minister Yuval Steinitz said at a press conference today. “This is a day in which we are strengthening the weak.”

The strike was called to demand better conditions and pay for contract employees. The Histadrut labor federation estimates that they receive on average about 30 percent less pay than comparable workers who are hired directly. The ministry estimates that there are about 250,000 contract workers.

“This is a very important achievement that corrects injustices of many years,” Prime Minister Benjamin Netanyahu said at the start of the weekly cabinet meeting in remarks broadcast on Army Radio.

Economic Demands

As part of the accord, the labor federation agreed not to strike over economic demands for the next three years, the ministry said.

“The agreement represents the necessary balance between the need to improve the rights of cleaners and guards and the responsibility of the government to protect the Israeli economy,” the Finance Ministry said in the statement.

The strike, which involved an estimated 500,000 workers, affected banks, the Bank of Israel, the stock exchange, ports, airports and most government offices. Employees were ordered back to work and the stock exchange opened at 10:45.

The benchmark TA-25 Index, which opened for the first time since Feb. 7, dropped 0.7 percent to 1,109.74 at 10:48 a.m. in Tel Aviv led by declines in Hot Telecommunication System Ltd., Perrigo Co. and Elbit Systems Ltd.

While both the central bank and the Finance Ministry have reduced their growth forecasts for this year, citing the impact of the European debt crisis, the expected expansion is still more than double the 1.2 percent average rate for advanced economies forecast by the International Monetary Fund on January 24.

The Finance Ministry cut its growth forecast for 2012 to 3.2 percent from 4 percent, Steinitz said on Jan. 18. The Bank of Israel lowered its prediction on Dec. 26 to 2.8 percent from September’s estimate of 3.2 percent.

--With assistance from Gwen Ackerman in Jerusalem. Editors: Louis Meixler, Jonas Bergman, Andrew J. Barden.

To contact the reporters on this story: Alisa Odenheimer in Jerusalem at aodenheimer@bloomberg.net; Gwen Ackerman in Jerusalem at gackerman@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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