Sharon government on collision course with Israeli trade unions

On Sunday, March 30, 50,000 ministry employees started what amounts to a work-to-rule (a work ban) in Israel. The following day a further 100,000 municipal workers came out on strike, and have stayed out. They came out in protest against government plans to make drastic cuts of around $2.3 billion (11 billion shekels) in public spending. Civil servants will have to suffer a 10% pay cut if the government programme goes ahead. It could also mean 10,000 sackings and further attacks on public pensions.

According to Netanyahu, the Finance Minister, the amount of benefits paid to people with disabilities is "unreasonable". He also considers that benefits to the unemployed are unduly high! Already it has become more difficult to get unemployment benefits due to stricter regulations. Under the Treasury's emergency legislation, approved last July, the number of working months required for someone to be eligible for unemployment benefit rose, while the time period for receiving benefits was reduced - and this in a period of growing unemployment.

Now the retirement age is to be raised to 67 and union-managed pension funds are to be placed under government control. The government has already unilaterally cancelled the collective agreements it had with the unions. Its plans will also involve further widespread privatisation of public services.

The present strike affects such services as refuse collection and even some schools. It is also affecting public offices such as the postal services and social security offices. What is taking place here is a kind of work-to-rule, whereby the workers are in the offices but are not accepting phone calls or the public.

April 9 general strike

The Histadrut, as we reported in a previous article, has called a general strike over these issues (planned for tomorrow, April 9). The reply of the Israeli bosses has been to threaten to tear up previous agreements with the Histadrut, and together with the government they have been using the old trick of saying that this is not the right moment to raise these issues because of the war in Iraq! The workers of Israel are simply supposed to surrender, just as they had hoped the Iraqis would do!

The situation is becoming very tense. Last minute attempts are being  made to delay it by at least a week, and maybe longer, to enable negotiations to take place. Sharon has appealed to union leader Peretz to call off the strike, but the Histadrut said that it would only agree to this if the government withdraws its plans to change collective wage agreements. Netanyahu, Finance Minister, has made it clear that he will push ahead with his proposals whether the unions agree or not. As things stand it looks likely that the strike will go ahead.

The government is bracing itself for what could become a prolonged strike. Netanyahu has made it clear that he is prepared even for a long strike. He is behaving like Thatcher did towards the British miners. He hopes to wear down the workers and force them to accept a rotten deal. This could bring the whole economy to a halt, and "vital services" especially could be seriously affected. In these circumstances the Israeli government has emergency powers which enable it to order workers involved in these services to go to back to work. The bosses have already suggested that these powers be used.

Government authorities have said that in spite of the strike of government workers they will be able to pay unemployment benefits, but over a million pensioners, disabled and sick people would not be able to get their benefits this month before the strike is planed to start. This would seriously affect the poorer layer of society who survive on benefits. The government is using this to rally public opinion against the striking workers. The hypocrisy of the government is boundless! They are planning to cut pensions and benefits. They have made it more difficult for people to get benefits but then they present the government workers as those responsible for people's hardship!

Another proposal of the government was to cut the wages of staff working in education, including high school teachers, by 20 per cent. This was withdrawn after the unions appealed to the High Court. This is clearly an indication that militancy, and even the threat of determined strike action does pay. However, the government still intends to go ahead with its plans to get rid of 6,000 teachers (mainly through early retirement). Yesterday, April 7, there was a large demonstration outside Sharon's office in Jerusalem against the planned cuts in education. There was also a protest by pensioners against the government's plans that would cut pensions.

This package of cutbacks is also part of a deal with the US administration, which has promised an additional $10bn of aid. Of course the "aid" would not be for the workers of Israel. The Palestinian intifada has cost Israel about 3% of its GDP. The plan to build a wall around the whole of the Palestinian Territories is also going to cost a huge sum of money. And the continued financing of the settlements on Palestinian Territory is adding to the burden. According to the Americans for Peace Now movement, half the amount of annual U.S. economic aid to Israel goes on backing the settlements.

As Professor Spivak of the Bank of Israel has pointed out, "Israel is fighting to have its borders defined... in that context, economic reform comes second to political fundamentals." A large amount of Israeli resources are therefore being thrown into defence spending. More than 10% of its budget goes on security (in the UK it is only 2-3%). Although this had gone down in the past in the last two years or so defence spending has started to grow again. Thus we can see that US "aid" would go on "strengthening security", i.e. on military spending, not on social expenditure. The workers of Israel are quite clearly being asked to pay for all of this.

The growing protests of Israeli workers come at a time of economic decline. Israel has been in a recession for two years and it is the worst for more than 50 years. The situation is so bad that Benjamin Netanyahu, the Israeli Finance Minister has described it as one where, "We could fall into a precipice and never get out."

The recession has led to a collapse in government revenues and a sharp increase in the budget deficit, which now stands at 6% of gross domestic product. The ratio of the overall national debt to GDP has shot up from 92 percent to 107 percent since 1999! Thus we can see that the cuts they have announced will not be the last. According to the Bank of Israel the present package will only reduce the deficit to 4% of GDP. The government therefore will not stop here. Only a few months ago the Israeli Finance Ministry had come up with a plan for the privatisation of state-owned companies, possibly by selling them on the stock exchange.

Therefore it is clear what the future holds for Israeli workers. Netanyahu has also come up with a proposal to cut taxes; to stimulate the "private sector" of course. Israeli business circles have made it clear that they want a reduction of taxes and more privatisation. The proposal is to reduce the highest rate of taxation to 49 percent of incomes by July 2005. We can see who would benefit from such tax cuts! And also who will have to pay for them!

Tensions in the government coalition

The government's present proposals are to go to the Knesset (the Israeli parliament) on April 14. It looks unlikely that the government can offer anything to appease the unions. But opposition could even come from within Sharon's own ramshackle coalition. Two National Religious Party ministers have already come out in opposition to the plan. But they are opposed to specific items, such as cuts in child benefit, which are important to their own power base. This kind of squabbling amongst coalition members is what led to the fall of the previous Sharon government, and forced the calling of early elections. Sharon may now be facing a similar crisis.

The coming to power of the Sharon-led coalition government back in 2000 reflected a general concern over the increasing violence and especially the growing number of Israeli civilians that have been killed. It was this mood that created the conditions in which the Labour Party agreed to enter a coalition together with the Likud and a few smaller religious and nationalist parties in a so-called "government of national unity."

But that did not last long. After having accepted a series of cuts the Labour Party resigned from the government in protest at the cuts planned in the 2003 budget. This budget allocated millions of dollars for the Jewish settlements in the West Bank and Gaza, while at the same time cutting social and economic spending.

Now, even without the Labour Party in the coalition, the government could be heading towards a new crisis. Thus we can see how the elections solved nothing. They cannot hide the real and growing social polarisation which is taking place in Israeli society.

The impact on the Histadrut

However, apart from the conflicts that are opening up among the coalition partners, the most significant effect of the present crisis is the growing conflict between the government and the Histadrut. There is very little room for manoeuvre. In an ideal world, Sharon would no doubt like to avoid conflict with the unions, and thus hold together the old Zionist myth about the so-called common interests of Jewish workers and Jewish bosses. But the crisis of capitalism is forcing the bosses and their government to go on the offensive against the workers.

Although Israel is what is classed as a "technologically advanced market economy", the state plays a big role in the economy, and the Histadrut also has a role. The Histadrut is not like the unions in most European countries. The Histadrut as well as being a union also runs whole companies and so it is a kind of boss and union at the same time. In fact a few industrial enterprises are still partially owned by the Histadrut. In 1989 it had a membership of 1,630,000. Since the privatisation of the federations' healthcare system and its link to mandatory Histadrut membership, its ranks have dropped dramatically and now stand at around 700,000.

Because of its hybrid nature, and also because it was built as part of the Zionist project, the Histadrut has always actively supported the idea of cooperation with the bosses. It has always striven to promote productivity through such bodies as "labour management boards".

One of its most important spheres of activity is its running of pension funds. This is an important source of income for the Histadrut. Therefore the plans of the government to remove these pension funds from union control and place them under the control of the state are becoming a sore point. The leaders of the Histadrut are not only under pressure from their own ranks. They also have a vested interest in opposing some of the government's measures because it would mean them losing control of this lucrative sector.

Even a hybrid structure such as the Histadrut cannot avoid the hurricane of the class struggle which is about to unfold. In spite of everything it is being forced to place itself at the head of the workers' struggles in Israel.

Although it is still early days, what we are seeing unfolding in Israel is the beginning of a process that will unfold over a period of years. This is the beginning of the breakdown of the Zionist bloc. The crisis of capitalism is dividing Israeli society along class lines. This divide goes through the Histadrut, whose leaders are forced to give voice to the anger of the workers. Of course it is in the nature of these leaders to betray, as they will want to avoid conflict. But the crisis of the system itself is inexorable. It will push the class to the fore again and again. In this, the workers of Israel will learn that the solution to their problems is to be found in class politics, not "national" politics. If they want full employment, decent healthcare, good schools, good pensions, etc., then this can only be achieved in the struggle of the Israeli workers against their bosses, and this in the end can only lead to one conclusion: the need for a genuine workers' party that can unite the workers of Israel across ethnic barriers in the struggle for socialism.