PA STRIKE ENDS; FAYYAD PLEASED WITH OUTCOME

C O N F I D E N T I A L JERUSALEM 000657 SIPDIS SIPDIS NEA FOR FRONT OFFICE; NEA/IPA FOR GOLDBERGER/SHAMPAINE/SACHAR; NSC FOR ABRAMS/PASCUAL; TREASURY FOR CONNOLLY; DEPT PLEASE PASS TO USAID FOR ANE/MEA:MCCLOUD/BORODIN E.O. 12958: DECL: 4/15/2013 TAGS: PGOV ECON ELAB KPAL KWBG SUBJECT: PA STRIKE ENDS; FAYYAD PLEASED WITH OUTCOME REF: JERUSALEM 628 Classified By: Consul General Jake Walles, Reasons 1.4 (b) and (d) ¶1. (C) Summary: The Palestinian Authority (PA) came to an agreement with its employees' unions on April 14 to end months of labor disputes that had resulted in intermittent public sector strikes. The two sides agreed that the strikes would end in exchange for a promise to pay salary arrears within six months and increase other benefits. PA employees were back to work on April 14 and are reportedly satisfied with the agreement. PM Salam Fayyad told the Consul General on April 15 that he was pleased with agreement, as the PA's salary and benefit "concessions" were nothing more than what the Government already planned to do. End summary. Fatah-led Labor Ordeal Ends...For Now -------------- ¶2. (SBU) Following months of intermittent employee strikes and agitation against the PA by Fatah-led employee unions, an oral agreement was reached on April 14 between Prime Minister Salam Fayyad and labor union leaders to end the strikes. According to a summary of the agreement produced by the Council of Ministers, the PA made the following oral commitments: - to pay all PA employee salary arrears by October 1; - to increase by 50 percent employee travel allowances; - to convene a group to study rising living costs of PA employees; - to improve certain administrative practices for new hires; - and to continue to pay salaries to PA employees in Jerusalem. Employees Back At Work -------------- ¶3. (SBU) Deputy Minister of Health Anan Masri told Econoff on April 16 that his ministry's employees were back at work on April 14, and that both the PA union leadership and the employees seemed content with the result of the strike-ending agreement. Fayyad Pleased With Outcome -------------- ¶4. (C) Fayyad told the Consul General on April 15 that he was pleased with the outcome, as the PA did not sign any agreement with the unions. In addition, the PA's "concessions" to the unions on wage arrears and other benefits were consistent with the Government's plan before the strike. According to Fayyad, the PA did not agree to a COLA or any other measure regarding hiring and firing of employees. (Note: The local IMF Representative believes the fiscal impact of the increased travel allowances will be minor. He noted that Fayyad was already using every available dollar to pay wage arrears to employees - at the rate of 1,000 NIS/month - more aggressively than forecast in the PA's 2008 budget. End Note.) WALLES