Correspondents' Correspondence Israel's 'Reducing Diet'

...That, in turn, could undermine the tax reform for large parts of the private sector...

...In the case of the Aircraft Industries, the cutbacks simply reflected a lack of government funds—although, for all its marvelous technological achievements, the enterprise has been widely criticized as being overstaffed and tending to exceed its budget estimates...

...The government hopes that by tightening all economic screws progressively yet moderately, it will be able to solve its problems without major social upheavals: that wages will rise more slowly than prices, taxes will be collected more efficiently, and Israelis will thus be forced to increase their productivity while reducing their private consumption...

...Israel Aircraft Industries, the nation's largest industrial employer, planned to dismiss 1,500-3,000 workers after the Defense Ministry had to cut back its orders and its financing of facilities...

...And income tax collectors staged a work slowdown, charging that salary increases recently granted to other Finance Ministry officials had, in fact, erased their extra-pay privileges...

...Prime Minister Yitzhak Rabin has put his full prestige behind this economic program...

...Israel's 'Reducing Diet' Tel Aviv—Economic pressures have been multiplying here of late: El Al, Israel's national airline, was shut down for several weeks until early this month because a few score ground maintenance mechanics had struck...

...Several manufacturers of polished diamonds, the country's biggest export item, threatened to move their plants abroad if the government's new accounting regulations were not rescinded...

...But this time the government (the airline's largest shareholder), fearful of widespread demands to reopen unexpired labor contracts in other industries, instructed management to stand firm against the mechanics...

...Despite high pay scales, the airline has for years been a hotbed of brief wildcat actions...

...Israelis will have to get used to the idea that, in the near future, the economic pie will not grow and anyone who takes a bigger slice will be doing so at the expense of somebody else...

...El Al's management, meanwhile, eager to maintain the company's somewhat artificially profitable balance sheet, has given in to union demands even where they contradicted national wage policies...

...Confident of their ability to paralyze all passenger and cargo traffic, into and out of the country, the separate unions of the cabin crews, maintenance mechanics, pilots and ticket clerks have traditionally disregarded the rules concerning labor disputes...

...The strikes, production cutbacks and layoffs are only signs of the strain of adjusting to the lean years that must be faced before living standards can begin to rise again.—Eliahu Sal-peter...

...As for the tax collectors, it was felt that giving in to them would immediately create wage unrest in other parts of the civil service...

...With equal frankness, he now also uses every opportunity to stress the need for greater selectivity in social welfare expenditures and for more tight-fistedness in military spending...

...Ostensibly, each issue was different but they all indicated growing tensions between employers and employes, as well as between the private and the public sector...

...The government's handling of the El Al strike demonstrated how it plans to meet the new economic challenge...

...The crucial test, however, will probably come not over the military or the welfare budgets, but over the "reducing diet" being forced upon the average wage earner...

...Similarly, the government apparently recognized that if it continued to absolve the diamond industry from the obligations of normal accounting (as several other countries do), it would jeopardize the drive to extend accounting procedures to smaller businesses...

...In fact, they were an expression of the beginning of a painful adjustment to the harsh realities of the current world-wide recession...