Labour9/30/2026

How the Budgetary “Fund” Helps Solve Wage Problems in the Public Sector

A study by Shai Weinblum of the Arlozorov Forum examines a special budgetary mechanism in collective agreements in Israel’s public sector. The mechanism allows the Histadrut and the state to direct some of the funds agreed upon in advance toward addressing the wage problems of specific groups of workers.

Key facts

•The mechanism was enshrined in the 2023 framework agreement
•The Israeli “fund” amounts to 3% of the cost of the agreement
•The total scope is estimated at more than one billion shekels
•A total of 200 million shekels was agreed upon for the reform of social workers’ wages
•In November 2021, 500 million shekels was allocated to certain groups

Why a New Mechanism Was Needed

The framework agreements between the Histadrut and the Ministry of Finance regulate wage increases for hundreds of thousands of workers through unified negotiations. However, the general increases do not always take into account the circumstances of certain professional groups and sectors. The parties therefore created a “problem-solving fund”—a budgetary framework for financing targeted measures without reopening the entire agreement.

How the Funds Are Allocated

In Israel, 3% of the total cost of the framework agreement was allocated to the mechanism—in five installments. Together with additional budgetary sources, its total scope is estimated at more than one billion shekels. The model, which took shape gradually through several agreements, was formally enshrined in the 2023 framework agreement for state employees.

Previous Agreements

The April 2016 framework agreement established sector-specific wage increases, including for social workers and workers in the paramedical professions. Following a 16-day strike by social workers during the COVID-19 pandemic, the parties agreed on 200 million shekels for negotiations over a reform of their wages. In November 2021, a framework of 500 million shekels was also established for groups whose wages required more urgent adjustment, including health profession workers, administrative and support staff in hospitals, radiographers, and microbiologists.

Advantages and Limitations

According to the study, the mechanism gives the state certainty regarding expenditures and may reduce the incentive to declare a labor dispute solely in order to begin negotiations. The workers’ organization gains the ability to devote attention to groups with less bargaining power as well, in a way that may reduce inequality in the public sector. The main problem is that allocating the funds does not in itself guarantee agreement on how to use them: in the event of a dispute, the budget may remain unused, and Israel has no separate mechanism for resolving disputes of this kind.

What this means for you

For a public-sector employee in Israel, the mechanism means that a wage problem unique to their profession can be discussed within the national agreement already in force. However, the mechanism does not create an automatic wage increase: actual funding depends on agreement between the state and workers’ representatives regarding the allocation of the funds.

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