Israeli unions under attack from Labour: A proposed health insurance scheme could strip the Histadrut of its power

ISRAEL is experiencing its biggest strike of government employees for 25 years, and the public is losing patience. But no- one is more worried about the implications of the trade union action, in pursuit of a 35 per cent pay increase, than the Minister of Health, Haim Ramon.

Mr Ramon, one of the ruling Labour Party's 'young Turks', is introducing reforms that threaten the existence of the powerful labour federation, the Histadrut. Some in the Labour Party believe the reforms are as important to the government as the peace process. Mr Ramon is doing more than simply challenging the power of the trade unions. He is spearheading a revolution.

For the Histadrut is a huge centralised bureaucracy of social and health services, with its own pension fund, bank and industrial sector. It was established in the early 1920s - well before the creation of the state of Israel - as a pillar of Zionist socialism. Nowadays however it is seen by many as an outdated, inefficient and corrupt vestige of 'Bolshevism' which has no place in modern Israel. It has fallen to the Labour Party, which created the Histradut, to see through the reforms.

Mr Ramon's legislation attacks the power of the Histadrut by attacking its control over health funding. Histadrut offers its members health insurance in a country where there is no state health system.

Every Israeli who pays the Histadrut membership fee become eligible for health care insurance. It is the cheapest on offer. Seventy per cent of Israelis are members - the majority solely because of the health insurance scheme. As the organisation's debts have mounted and as its value as an institution has been degraded, the attraction of cheap health insurance has kept it afloat. Up to 75 per cent of the membership subscription is spent on health insurance, but the rest supports Histadrut's bulging bureaucracy, including its trade unions.

Mr Ramon proposes to set up a national health insurance scheme for all, which would be cheaper and more efficient. The Histadrut would lose members and funding, and unions would have to finance themselves. Histadrut leaders have warned that the changes would 'kill' the organisation, and vested interests, including many Labour ministers, are protesting.

Mr Ramon believes he can see off the protests. 'He believes Labour must become the party of a modern Israeli middle class and rid itself of old baggage,' says Gidion Eshat, an economic journalist. Yitzhak Rabin, the Prime Minister, has given his young minister full support. But if the price to be paid for a settlement of the pay dispute is a compromise on Histadrut reform, the revolution may yet fail.