Bethel Finance: Israeli Union General Strike Shuts Banks, Ports, Exchange

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A strike by Israel’s largest labor federation shut banks, ports, the stock exchange and most government offices today, as talks between the government and Histadrut to end the work stoppage stretched into the evening.

The Finance Ministry and the Histadrut labor federation will report on their progress to National Labor Court President Nili Arad at 1 a.m., the ministry said in an e-mailed statement from Jerusalem. Arad will then decide whether the strike can continue and, if so, under what conditions, the ministry said.

The work stoppage is in protest over conditions for contract employees. Histadrut estimates that 250,000 Israelis employed through contractors receive on average about 30 percent less pay than comparable workers directly employed. The labor federation wants the government to take stronger steps to have them hired directly so they receive higher wages and benefits.

Ben-Gurion International Airport was shut for the first six hours of the strike, which involves 500,000 workers. The Tel Aviv Stock Exchange and the Bank of Israel were closed.

“It is difficult to quantify the damage to the economy, which I think is biggest for importers, exporters and tourism,” Jonathan Katz, a Jerusalem-based economist at HSBC Holdings Plc, said by telephone today. “If it is just a strike for one day it is not that detrimental to Israel’s image. If it will be a prolonged strike, it will have investors worried.”

Stocks Slip

Israeli stocks traded in New York fell, with the Bloomberg Israel-US 25 Index dropping to the lowest in a week, on concern the strike’s shutdown of the Tel Aviv Stock Exchange will prevent arbitrage trading. The gauge of the largest Israeli companies traded in the U.S. fell 0.8 percent to 92.29 yesterday, while the Standard & Poor’s 500 Index added 0.2 percent.

Histadrut said today it reached an accord with private industry groups to ensure that contract workers will get equivalent conditions to salaried employees. The strike’s end will depend on the government accepting those terms, it said.

“Private employers have agreed to equalize the conditions of contract workers and absorb them into their workforce, and the government, which is a public employer and has double the responsibility toward these workers, is not willing to do so,” Histadrut chief Ofer Eini said today in an e-mailed statement.

“A strike will not solve the problem of contract workers,” Prime Minister Benjamin Netanyahu said yesterday. “The Israeli economy is in a delicate situation and now is not the time to risk the stability that we have achieved at great effort and through cooperation between the government and the Histadrut in the face of the collapse of some of the world’s leading economies.”

The Finance Ministry cut its growth forecast for 2012 to 3.2 percent from 4 percent, Finance Minister Yuval Steinitz said on Jan. 18. The Bank of Israel lowered its prediction on Dec. 26 to 2.8 percent from September’s estimate of 3.2 percent.

--With assistance from Tal Barak Harif in New York and Shoshanna Solomon in Tel Aviv. Editors: Jennifer M. Freedman, Louis Meixler