Social Justice: Israel's economic 'growth'
November 27, 2006. Jerusalem Post: Ron WagnerHere's a statement from the Bank of Israel's latest economic developments report which should make one wonder: "The moderate rise in real wages characterizes the past three years, as does the rapid growth in the economy, coming after two years of considerable erosion of real wages."
In plain English: The economy is growing fast, but wages are rising very, very slowly.
The report said that despite the small recent rise in minimum wage, salaries are rising so slowly that we are experiencing "a faster rise in output per hour of labor than the rise in costs per hour of labor."
Or, in plain English: The gap between what workers produce and the money they make is growing steadily.
The government states that a steady growth of 4% annually will close the gap in individual income between Israel and developed countries, and reduce social gaps. But an analysis by Adva, the center for equality and social justice in Israel, indicates that the workers' share in total income is significantly down, while the employers' share is up.
In today's Israel, growth serves only the rich. The poor remain further and further behind. There is no trickle-down. No wonder, then, that some economic indicators place Israel as a world leader (among developed countries) in social gaps.
THE BANK of Israel says that "the rise in real wages… reflects a considerable increase in real wages in the banking, insurance and finances industry and in the electricity and water industries, as well as a more modest rise in business services and public administration, and a drop in wages in most other industries. The most significant drop in wages took place in those industries that saw an increase in the number of employee posts."
How can we explain a reality of lower wages at a time of increasing demand for labor? The Bank of Israel dismisses this development by referring to transition between industries and the recruitment of young, entry-level, low wage earners. I believe this analysis is glossing over a much more troublesome reality.
The recent worker struggle at Ben-Gurion Airport should have been a genuine eye-opener for those who insist, like Bank of Israel analysts, on keeping their heads in the clouds. At Ben-Gurion workers are regularly dismissed so that other workers can be hired in their place. This practice prevents workers from reaching tenure and accumulating various rights under collective bargaining agreements. Since the workers keep getting fired and rehired, they are destined to remain entry-level workers for as long as they are employed.
The airport workers' struggle ended with a very partial success. The number of workers slated for dismissal was reduced, and no more workers will be dismissed until the collective bargaining agreement expires in December 2007.
What will happen in December 2007? Recent developments at the airport and the plans to privatize and outsource its labor-intensive units paint a clear picture. Airport workers who used to work on and off handling luggage or cleaning airplanes will keep working on and off doing the same jobs, but for subcontractors rather than the Israel Airport Authority.
Instead of making NIS 7,000 per month as airport workers, they will be lucky to make minimum wage as subcontracted workers. The subcontractors will bank the difference, and the Bank of Israel will report again how wages are eroding while production rates keep climbing.
THIS SITUATION is not unique to airport workers. It's the reality of workers in Israel. Growth is a synonym for outsourcing and the breaking down of organized labor. Growth means that more people get to do more work for a smaller share of the pie.
THE 2007 budget bill would continue the erosion of local investments, R&D, social security, health and education. It would cut also down on taxes, mostly those paid by high-earners. This means more for the rich, less for the poor. The holy grail is "growth," but a highly restrictive and selective form of growth.
Some realities concerning the labor market are indeed changing. I don't think that job mobility is necessarily a bad thing. But if we wish to accommodate such a reality, we must solve systemic issues of pension, unemployment insurance, protection of worker rights and access to training. Otherwise workers will eventually find themselves out of the labor market, with no pension or other economic back-up, and no chance to reintegrate.
Actually, this is will not happen "eventually." It's already happening. The depth of unemployment (rate of long-term unemployed) is peaking, and the rate of people who have something to live on when they're old or out of work keeps going down.
BUT WHY are all these unemployed people with no pensions your problem?
Because you may become one of them much more quickly than you imagine. And even if you don't become one of them, you will either run into them panhandling in the streets, or end up paying what it costs to keep them off the streets with your own hard-earned tax money.
The current budget bill and arrangements law cut down on unemployment benefits and social security, and make no effort to improve job training, enforcement of labor laws, or investments in pensions.
Slowing down the rate of income tax reduction can generate enough free income to invest in all of the above. But the government insists on the kind of "growth" that drives workers into poverty for the benefit of the rich and privileged few.
The writer is a board member for worker rights NGO Kav LaOved and lectures at the Academic College of Tel Aviv-Jaffa
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