On Monday, a "warning strike" will shut down the country for three hours. The Histadrut's strike committee, which decided on the stoppage, expects 1.5 million workers to participate in it - employees of the central government, the local authorities, the banks, the ports and the railways.

According to Histadrut labor federation chairman Amir Peretz, this is only the opening shot in the war for a cost-of-living increase and a public-sector wage increase, with the main battle slated for after the Jewish High Holidays.

Peretz and his colleagues in the Histadrut leadership know that unemployment is steadily rising, economic activity is low, businesses are downsizing and even folding, and this trend is unlikely to change in 2003.

In light of the difficult economic situation, the government decided to enact an additional budget cut, which will include reductions in the defense and education budgets and in transfer payments.

Against this background, the Finance Ministry tried to reach an agreement with the Histadrut on a public-sector wage freeze - but to no avail. In the public sector, wages will thus continue to creep up this year as well through grade rises and seniority bonuses.

Data published by the Central Bureau of Statistics this week shows that the average wage in the economy dropped by 4.7% during the first five months of the year.

This is certainly unprecedented in Israel's economic life, but it did not affect every sector of the economy. Wages rose during this period at the Israel Electric Corporation and the Mekorot Water Company, and in the banks as well. Overall, one can conclude that the large monopolies and the protected public sector are raising wages even during these difficult times, while the private sector is reducing wages and firing workers.

It is true that inflation is eroding workers' salaries, and particularly salaries in the private sector. This reflects a situation in which the public is bearing the burden of the conflict with the Palestinians and the economic crisis it has generated. Gross national product is falling and taxes are rising, owners of businesses are hurting and in their wake, so are employees.

With economic activity contracting to the point that businesses are posting losses and shutting their doors, employees are also suffering. In a functioning economy, there are ways of compensating sectors in which salaries have been eroded, but in the present crisis - in which state expenditures have increased greatly while tax revenues have shrunk - the government has no money to invest in growth.

Amir Peretz understands the situation very well - and in his own "business," the Histadrut, he has fired hundreds and eroded wages. If he were a responsible leader, he would pay no heed to those who are fanning the flames in the Histadrut's executive committee, and would instead try to calm the hotheads.

At a time like this, a serious leader should explain to his constituents that every wage increase means another round of dismissals. It is true that sanctions and strikes can obtain a wage increase for the workers, but not for all of them: Some, most likely the weakest ones, will be dismissed in order to free up funds for the increase paid the others. And layoffs unaccompanied by lower wage costs will make life harder for businesses and impair their productivity.

At such a difficult time, a true labor leader would choose a wage freeze, maximum employment and maximum productivity.

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