Defense budget aims at retaining junior officers

The main news in the agreements between the Ministry of Defense and the Ministry of Finance is stability. They provide for an average annual budget of NIS 68 billion for five years, a multi-year plan resting on firm budgetary foundations, and solutions for the manpower problems, pay and pensions, and agreement on shortening the period of compulsory service. The IDF has signed a pay and service conditions agreement with the Ministry of Finance that it can present as an achievement that will enable it to deal with the problem of junior officers leaving.

The budget of the defense establishment, most of which is the budget of the IDF, will average NIS 68 billion annually over the next five years, which is about NIS 10 billion more than in the last two years. Most of the additional sum is earmarked for the confrontation with Iran, both for current operations and to prepare for an operation that will prevent Iran from achieving a nuclear weapon. It also reflects adjustments to cope with globally rising prices. The supplement is also meant to cover changes in pay and pension terms for IDF personnel in the regular and career service.

Substantial pay rises for young officers and NCOs

According to the details known to “Globes”, the main response to the problem of the severe shortage of hundreds of junior officers and NCOs will be a substantial pay rise for these ranks. Those on the lowest pay will receive increases of nearly 20%, and the increases for the others will not be much smaller.

It was also decided that the automatic linkage of pay in the IDF to that of civil servants under pay agreements with the Histadrut (General Federation of Labor in Israel) will continue, without the Ministry of Finance being able to reduce it. It was also agreed that the model for the solution to the problem of excess non-funded pensions for those retiring from the career army, the controversial issue that even reached the High Court of Justice, will be the understandings reached between former minister of defense Benny Gantz and former minister of finance Avigdor Liberman. Full details of the arrangement have not been finalized, but the annual cost to the state budget should remain at NIS 1.5-1.7 billion.

In return for this, the IDF has foregone one of the main advantages of those retiring from the career army with funded pensions. They will receive a bridging pension only until age 60, and not until 67 as hitherto. From 60, they will transfer to a model of an early pension on the basis of their accumulated pension savings up to that age. The actuarial saving from this change is substantial. Another concession by the IDF is its agreement try a new pay model. From next year, in a pilot scheme, career army personnel will be able to choose an alternative to the early pension in the form of higher pay and a grant, calculated by capitalizing the pension they would have received under the old model.

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The IDF was not enthusiastic about this model, but the manpower problem is such that it had to examine further ways of dealing with the drain of young officers and NCOs.

There was a fierce dispute in the discussions about placing a financial controller on behalf of the Ministry of Finance in the Ministry of Defense to oversee expenditure and the distribution of budgets. In the end, it was agreed that a joint administration would be formed on pay and pensions to be headed by an IDF officer with representatives of the Ministry of Defense and the Ministry of Finance. In other words, the Ministry of Finance will gain a foothold in the IDF’s financial system, even if without clear powers at this stage.

Back to shorter compulsory service

It was agreed at the meeting that there would be a return to a 28-month period of compulsory service within three years. The IDF will be able to retain soldiers in combat and technological roles for a further eight months, but the additional period will be on career army terms. Soldiers in non-vital administrative roles could be released after 24 months. The justification is that the training period for people in combat and technological roles is longer, and the IDF wants to get the most out of the skills it has given the soldiers. Even today, some personnel, such as submarine crew, serve a little longer. Pay for compulsory service will also rise, especially for combat service.

Ministry of Defense director general Eyal Zamir said of the agreement that it would advance the IDF’s technological prowess. “The defense establishment will become stronger in artificial intelligence, robotics, automation, energy, and promising technologies in general. The Defense Research and Development Directorate and the defense companies will be a growth engine for the State of Israel and the entire Israeli economy will benefit from the incentives.,” Zamir said.

Chief of Staff Herzi Halevi said, “The budget that has been agreed will enable the IDF to plan and implement a multi-year plan geared to the defense challenges of the coming years, and will also enable it to keep high-quality manpower, especially in combat units and among young career personnel.”

Minister of Defense Yoav Galant welcomed the multi-year agreement, saying that it would make it possible to advance Israel’s defense in a period fraught with challenges and risks.

Published by Globes, Israel business news – en.globes.co.il – on February 26, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.