First nationwide strike in four years looms in Israel as unions demand 11 pct pay hike

A truck removes a shipping container during the unloading of a cargo vessel at the Port of Haifa in Haifa, Israel.
A truck removes a shipping container during the unloading of a cargo vessel at the Port of Haifa in Haifa, Israel. PHOTO: BLOOMBERG

JERUSALEM (Reuters) - Israel is bracing for its first nationwide strike in four years on Wednesday in a battle over public sector wages that could damage the economy as it is starting to bounce back from a weak first half of the year.

Officials from the finance ministry and the Histadrut - the umbrella organisation for 700,000 public sector workers - were meeting to try to avert a strike, with negotiations likely to run well into the evening.

If a strike goes ahead, Israel's main airport, seaports, trains, the Tel Aviv Stock Exchange, government offices, hospitals and schools will probably be closed. Flag carrier El Al moved up 18 flights to New York and Europe scheduled for Wednesday morning by as much as 4 hours.

Business leaders estimate direct economic damage at about 300 million shekels (S$108 million) a day while the government sees total damage at 1 billion to 3 billion shekels daily.

Israel's economy grew slower than expected in the first half of 2015 before posting an annualised 2.5 per cent growth rate in the third quarter.

The Histadrut is demanding an 11 per cent pay raise for civil workers, saying many Israelis have trouble making ends meet. That would cost the state about 11 billion shekels and likely require budget cuts elsewhere.

Negotiations have gone nowhere to date due to a government insistence that lower salaried workers receive more while those earning higher wages get less of a raise.

Israel's Manufacturers' Association and Federation of Israeli Chambers of Commerce have asked the labour court to prevent any strike.

The finance ministry has asked the court to prevent teachers from striking since their union earlier signed a contract that forbids them from walking out until August 2017.

Uriel Lynn, president of the chambers of commerce, noted that the public sector has grown sharply in the last decade to 1.26 million workers from 722,000.

The last strike, which lasted three days in early 2012, cost the economy some 6 billion shekels and ended with a new wage package for low-earning contract workers.

A strike was averted last December when the Histadrut signed a deal with private sector employers to raise Israel's minimum wage.