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Tuesday, 25 February 2020

General strike could harm Israel's already struggling economy

Reuters , Tuesday 2 Dec 2014
Views: 1092
Views: 1092

Israel faces its first nationwide strike in nearly three years next week in a dispute over the minimum wage, action that would put the economy at renewed risk after it took a big hit from the July-August war in Gaza.

Officials from the finance ministry and Histadrut -- the umbrella organisation for 700,000 public sector workers -- have been meeting to avert a strike scheduled to begin on Dec. 7.

If it goes ahead it is likely to shut down the airport, seaports, trains, the stock exchange and dozens of government services, at a cost of up to $500 million a day.

The Histadrut is demanding the minimum wage be increased to 5,300 shekels ($1,355) a month from 4,300. The finance ministry has said it is prepared to raise it, but indications are it will not go beyond 5,000 shekels.

A spokesman for Histadrut, which has plastered the country with billboards, said some progress had been made in talks but that the walkout would go ahead. Negotiations are being held as a split in the ruling coalition ushers Israel towards new elections.

The last strike, a three-day stoppage in early 2012, cost the economy some 6 billion shekels ($1.5 billion) and ended with a new wage package for low-earning contract workers.

Israel's economy contracted an annualised 0.4 percent in the third quarter following the 50-day war between Israel and Hamas militants in Gaza. It is forecast to grow 2.2 percent this year, sharply down from 3.2 percent in 2013.

A strike "certainly can knock something off of growth, especially if it drags on," said Barclays economist Daniel Hewitt, although he said a two-day stoppage would not derail the economy.

While Israeli media have reported that the finance ministry is willing to raise the minimum wage to 5,000 shekels a month, a ministry spokeswoman said nothing was final.

She said the ministry was willing to give raises to those truly making the minimum wage but that only a small percentage of civil servants actually earn the minimum.

According to the Organisation for Economic Co-Operation and Development, Israel's real minimum wage was the 12th highest among 25 countries in 2013.

In dollar terms, it was $14,291 a year in 2013, just behind the United States' $15,080. Israel's cost of living is high, however, and has lead to widespread protests in recent years.

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