Ofer Eini – On The Way To Another Pyrrhic Victory!

Definition: A Pyrrhic victory is a victory with such a devastating cost to the victor that it carries the implication that another such victory will ultimately cause defeat…

Part of the price we all pay for this futile battle

Of course, Mr Eini and his cohorts in the Histadrut are not personally affected financially by the outcome of this pointless strike, nor will they be in the future. The same cannot be said for the poor unfortunates whose interests he claims to represent.

English: Israeli Finance Minister Yuval Steini...

Yuval Steinitz - a dick measuring contest?

Whilst he continues to be engaged in this ridiculous dick measuring contest with Yuval Steinitz and the Finance Ministry, the country suffers. Steinitz said: “The strike is costing the Israeli economy 2.5 billion shekels a day”. The Israeli Chamber of Commerce estimated the cost at $100 million a day. Whatever the true figure, the result is a disaster for the country and its financial reputation. (1)

Why do I say the victory will be “Pyrrhic”? Because in the long term, as a direct result of Mr Eini’s valiant efforts, hundreds – if not thousands – of the workers he claims to represent will be out of a job. The reason is very simple. It’s REALLY Economics 101; every increase in the minimum wage, or improvement in working condition resulting in higher costs, reduces the demand for labour. It’s a pure profit and loss, or supply and demand equation.

Either the reduced workforce will have to work harder for their meagre gains, or the services they provide to the customer will be of a lower standard. There is no other option. There is never any other option.

“The impact of raising the minimum wage has been studied since its inception. All credible research has come to the same conclusion: raising the minimum wage hurts the poor. It takes away jobs, keeps people on welfare, and encourages high-school students to drop out. Policy makers should be clear on the consequence of higher minimum wages.”(2)

Average estimate by labor economists is that for a 10 percent increase in the minimum wage, employment among those affected drops by 5 percent. If the minimum wage is increased …. demand for unskilled labor could drop by as much as 15 percent in jobs that earn the minimum wage, resulting in the loss of hundreds of thousands of jobs and making it more difficult for poor families to take this escape route out of poverty. (3)

A 10 percent increase in the minimum wage is associated with a 4.6 to 9.0 percent decline in teenage employment in small businesses and a 4.8 to 8.8 percent reduction in hours worked by teens in the retail sector. (4)

סמל הסתדרות העובדים הלאומית יצרתי אותו בעצמי Y...

the power to destroy the economy - oy vavoy!

The conclusion of many studies is incontrovertible: higher wages = fewer jobs. The Histadrut leadership knows that as well as anyone. They may be opportunists, but they are not stupid. So why do they do what they do?

It’s the power, stupid! It’s all about power. The workers are simply the pawns in the game. Of course, Israel didn’t invent the game; we just learned very quickly from others. Italy,France,the UK and Spain, amongst others, are noted for the number of working days lost through strike action. In the UK they call it “the Italian disease.” This is strange, because in Italy they call it “the English disease.”

Former British Prime Minister Margaret Thatcher

Margaret Thatcher - truly the"Iron Lady

In the UK, during a period from the end of the Second World War until the 1980’s, the trade unions, through their incessant strikes, succeeded in decimating much of British industry. The major industries of coal mining, steel making, motor manufacturing and shipbuilding were effectively destroyed. Only when the country finally elected a Prime Minister with balls was the situation confronted, dealt with and solved. The Prime Minister was, of course, Margaret Thatcher. Her determination finally broke the stranglehold of the unions, and set the UK on a path of recovery which sustained it for decades after.

In a similar action, President Ronald Reagan took on the air traffic controllers, would not accede to their demands and fired them. All of them. Air traffic controllers! I guess his balls were only sightly smaller than Thatcher’s. Oh for such leaders today!

But we don’t have them. As one who lived through the “winter of discontent”in the UK in the late 1970’s when virtually ALL public sector workers went on strike I can attest that it’s not a pleasant experience. Never mind the uncollected garbage; think about no ambulance drivers, doctors, nurses and firemen. Yes – firemen! Buildings simply burned down, and people died, despite the best efforts of the military to bridge the gaps. But it was price worth paying because the subsequent result was stronger economy, once it was outside the grasp of the unions.

Will that ever happen in Israel?

I’m not holding my breath!

Andyboy – Telling it as it is!

References

1. http://www.israelhayom.com/site/newsletter_article.php?id=3043
2. http://www.house.gov/jec/cost-gov/regs/minimum/against/against.htm
3. http://www.heritage.org/research/testimony/the-economic-effects-of-the-minimum-wage
4. http://epionline.org/study_detail.cfm?sid=98

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