Israeli Finance Minister Israel Katz backtracked on his plans to slash public sector wages after the Histadrut labor union threatened to enact a general strike in response to the planned cuts. Katz announced the cuts early last month as part of an effort to balance the budget in the wake of COVID-19-related spending. In the end, the sweeping wage cuts were mostly scrapped, save for a ten-percent cut to Knesset members' salaries.

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The Histadrut labor union’s central committee voted unanimously in early September to declare a labor dispute in response to the government's plans to slash public sector salaries.

The declared labor dispute would have allowed the Histadrut to legally enact punitive measures (industrial action) against the government within 14 days. This would have enabled unions in Israel to proceed with a general strike, which they threatened to do unless the Ministry of Finance renounced its intention to cut public sector wages and pensions for Israel's 700,000 public sector workers.

Israel's Ministed of Finance Israel Katz has since flip-flopped on the issue, stressing his intention to enact the cuts at some point in the future – but not now. In his most recent announcement Katz declared his intention to slash public sector wages only for the highest earners, such as judges and mayors. However, the only wage cut to be implemented so far was a 10% slash to Knesset members' salaries last week.

“The public sector has been responsible for handling the coronavirus crisis, saving lives,” said Arnon Bar David, Chairman of the Histadrut. “Governments around the world have saluted their workers, while the Israeli government has attacked its own employees.”

“If the Ministry of Finance goes ahead with these plans, we will be certain to act against them. We will not allow the government to make cuts to wages or pension plans,” Bar David said. “If the government decides to return to negotiations, we will be sure to cooperate. But we will not allow the public sector to pay the price for government incompetence.”