and we are witness to important initiatives in the area of academic education, mainly among the ultraorthodox sector. the israeli education system ’ s achievements in the international pisa tests are below average. we have recently had better achievements in tims tests, and i hope that they will also be reflected in the other tests. we must improve the achievements of the education system in order to achieve higher economic success. the world bank conducts a survey of the ease of doing business in all countries each year. in 2013, we were in 38th place, a very unsatisfactory placing. we have fallen significantly in this ranking during the past decade, not because our situation has deteriorated, but because the bureaucratic burden in other countries has lessened. the bureaucracy affects not only the ease of doing business, but also the cost of living. for instance, we see its effect on the ability to adjust the supply of housing and on housing prices. the concentration committee made two important recommendations on the matter of breaking apart pyramids and separating financial and real holdings. in this context, i note that if we require the immediate complete separation of financial and real holdings, there would be no people who would be able to be controlling owners of banks, since they would not be able to obtain the required capital through their activities in the real industries. it is possible that in another few decades, we will reach the conclusion that controlling owners are not necessary for banks. but in the meantime, i suggest not to conduct such large experiments on the financial system. i usually don ’ t make comparisons to greece, but this time i will do so : for hundreds of years, we have seen the ramifications that an unstable financial system has on the market. we have a strong banking system, which was of tremendous assistance in our ability to withstand the crisis. we must not endanger its stability, so i suggest not to limit cross - holdings of financial and real entities for now beyond what the concentration committee recommended when it set a benchmark of nis 6 billion for holdings of a real company by someone who holds controlling interest in a financial entity. i understand the logic behind the other suggestions, but i think that we must first of all examine the ramifications of lowering the number of entities that can hold controlling interest before we continue advancing in this field. labor productivity in the israeli economy is 20 percent lower than the oecd average. while we are a wealthy economy, it is a mistake to compare ourselves to the us and

problems in the system, and will end with a very general description of some aspects of the reform required in this area. 1. the wage system and labor relations in the public sector in israel i will relate mainly to the public sector, which includes large companies some of which are on the way towards privatization and some of which have already been privatized. i will speak about the public sector for two reasons ( a ) it comprises a relatively large part of israel ’ s economy, with on average about 30 percent of all employees, while in the oecd the average is less than 20 percent. ( b ) it seems that labor relations in the public sector are particularly problematic, and most strikes, of which there are many by international comparison as i said, take place in that sector. in general terms it can be said that the wage of a public sector employee in israel is derived from a number of parameters, chief among them his seniority, i. e., years of service, the system of grades ( according to different wage scales : ahid, the basic or uniform scale ; mahar, the scale for university graduates ; teachers ; doctors etc. ), and the grade within the scale. this component of the wage is the basic wage, and to this many additional payments are added, giving the total wage. by the way, the total list of such additional payments and benefits contains over 1, 000 items, not only making it very difficult to understand a pay slip, but even worse, causing lack of transparency. instead of negotiating over wages in simple terms, negotiations take place in terms of benefits, with hardly anyone really understanding their true value, which may well be the reason for using them. wages are adjusted generally once every few years in wage agreements following negotiations on a collective basis. this contrasts with the situation in the business sector where, at least in principle, the wage is derived from the employee ’ s output. and if in the private sector it is difficult to make a precise assessment of an employee ’ s output, in the public sector it is far more difficult to do so. 2. the main problems in the wage system and labor relations in the public sector in israel • the basic wage described above, deriving from such factors as seniority, wage scale and grade, is only part of the gross wage, and in most cases does not constitute more than 50 percent of it. • it is worth noting that in the public sector wages are not necessarily based on employees