It nosedived at takeoff. The airlines strike that initially threatened to
disrupt life here indefinitely, ended abruptly with hardly any gains, and made
plain what many had previously doubted: Lapid and Netanyahu are going to war,
and they intend to win.
With the aviation industry’s strike behind them
and an austere budget’s mayhem ahead of them, Prime Minister Binyamin Netanyahu
and Finance Minister Yair Lapid seem ready, maybe even eager, for a wholesale
showdown with the trade unions.
The aviation strike seemed for a moment
to be catching the government off-guard. With thousands already stranded at
Ben-Gurion Airport and in dozens of terminals overseas, Histadrut chairman Ofer
Eini joined the fray, announcing he would order ground workers to bring the Tel
Aviv airport to a standstill 48 hours later.
At stake was a deregulation
agreement with the European Union that would open previously restricted air
routes to competition, thus increasing the number of carriers and the frequency
of flights to and from assorted European destinations. Consequently, Israelis’
travel costs would shrink and incoming tourism would grow.
On the other
hand, the three Israeli operators – El Al, Arkia and Israir – said competition
would result in mass layoffs among their combined 25,000
However, halfway into that 48-hour ultimatum, with radio, TV
and Internet reports spotlighting and amplifying passengers’ woes and outcries –
the strike was called off abruptly. Officially, the airlines and the Histadrut
explained that the government had given in to their demands. Unofficially, they
had raised a white flag.
Yes, the government agreed to foot 97 percent of
the aviation industry’s security costs, but the Histadrut’s central demand, that
the reform be suspended for 30 days during which it would be renegotiated with
the government – was sheepishly abandoned.
Netanyahu then appeared in the
Knesset, declared “strikes do no scare me,” and promised to announce next week a
big reform in the ports and another unspecified reform that would cut car
“Monopolies,” he explained, “benefit at the expense of the
public.” Lapid said similar things during the aviation strike. Evidently, both
men are determined to reduce consumer prices through deregulation, each for his
Netanyahu’s passionate speech echoed the mercantilist zeal
that characterized his stint as finance minister a decade ago. Clearly, the
prime minister’s conclusion from what transpired here between the social protest
of 2011 and Lapid’s electoral success in 2013 is that Israel’s monopolies and
cartels have become for him a strategic enemy.
Lapid, for his part, knows
that he was elected by people who were fed up with vested interests’ impact on
the middle class’s income, and within those vested interest cartels and
monopolies loom tall.
Politically, this positions the prime minister and
his treasurer like a pair of reality show competitors, compelled to jointly
navigate their way through stormy waters checkered with boulders and cascades –
only to ultimately emerge from the canoe into which they have been inserted and
sprint separately to the finishing line.
Even in Israel’s stormy
politics, this is a unique situation, indeed one not seen here since the 1980s,
when the unity governments’ finance ministers and prime ministers represented
rival parties. Otherwise, all Israeli prime ministers were careful to appoint
finance ministers from their own parties.
Then again, the first time this
principle was abandoned, Yitzhak Modai’s stint during Shimon Peres’s
premiership, was economically remarkable, though politically it ended with the
former’s removal to another ministry after he repeatedly attacked the prime
Chances are we are witnessing the beginning of a similar
relationship of economic cooperation animated by political suspicion, much the
way things worked between Netanyahu when he was Ariel Sharon’s finance
In any event, before they emerge from their canoe in order to
reach the political part of their journey, Netanyahu and Lapid have the economic
part, where fate now leads them to jointly battle organized labor.
labor unions that tried to flex their muscles this week are not the political
Tarzans they were a generation ago. While still a force to contend with, they
have since lost the ability, and the will, to reshape reality – and focus
instead on preserving it.
Ironically, the Histadrut’s historic
disempowerment, which came in two installments, was the doing of Labor leaders.
First, as part of the 1985 stabilization program, then prime minister Peres
stopped the indexation deals with which the Histadrut used to force employers to
automatically adjust salaries to inflation. The result was a sharp loss of the
Histadrut’s leverage on corporate management.
Then, in 1994, prime
minister Yitzhak Rabin abolished previous arrangements that forced public sector
employees to be members of the Histadrut’s Clalit Health Services.
result was a general flight from Clalit, and with it, a massive exodus from the
Histadrut itself – whose membership plunged from 80% of the workforce in the
1980s to about 30% today.
Meanwhile, the Histadrut also found itself
marginalized by the unions themselves, as those representing the 13 most
politically powerful employees, in the utilities, banks and defense industries,
began coordinating labor policy independently – as they do to this day, shedding
the Histadrut’s social solidarity ideals for a more prosaic what’s-in-it-for-us
The structural reforms Netanyahu and Lapid are about to launch
will challenge these powerful unions.
The first in line will be the
ports, where the plan is to privatize the existing ports of Haifa and Ashdod and
build a new one alongside one of them. The Eilat port’s operation was already
privatized recently, through a 15-year franchise that was won by the Nakash
Brothers for NIS 120 million.
This week’s announcements by Lapid and
Netanyahu, which were then followed by Economy and Trade Minister Naftali
Bennett’s equal enthusiasm, quickly drew threats from the unions. Yet here, too,
the unions’ prospects are no better than they were in the face of the Open Skies
Reports over the years by the Treasury’s public sector pay
commissioner, about salaries in a notoriously nepotistic Ashdod Port averaging a
monthly NIS 38,900 – are the kind of public theft fueling the social wrath that
has been tilting Israeli politics since 2011.
It was this sentiment that
decided the outcome of the aviation strike, where the strikers soon learned the
public was not on their side. This will be doubly so when it comes to the ports,
whose workers’ abuse of power and scorn for the public’s interest are far more
glaring than anything that went on in El Al and its two competitors – all of
which, unlike the ports, are privately held.
True, a ports strike will
hurt the economy, as well as the public.
Anyone awaiting a seaborne cargo
of any size and shape, from an oven to a truck, might suffer for a while. But
the disruption of routine will be less acute than this week’s abortive airline
strike, when parents with babies in their arms were stuck in distant cities with
no place to spend the night.
THEN THERE is the threat of a general
strike, which the Histadrut can always call.
However, Chairman Eini knows
that a real general strike, one that lasts more than a symbolic 24 hours and
spans everything, from schools to public transportation to passport issuance to
garbage collection – is a weapon of last resort.
Using it might backfire
in ways he can neither predict nor afford.
Eini is a calculated man.
During his eight years as chairman of the umbrella union, he has emerged as a
shrewd negotiator, an able conflict manager and a cautious warrior.
instance, in 2010 he threatened a general strike while demanding a 10.5% pay
raise across the public sector, but soon settled for an incremental 6.5%, which
effectively meant less than an annual 2% increase for 3.5 years. For him, it was
a modest but solid feat with which he could return to the wage-earners he
represents, and for the government it was an affordable price for industrial
Before that, in 2007, he mediated between the teachers’ unions and
the Treasury, ultimately producing the deal that ended that year’s protracted
school strike. Unlike what one might expect from a union leader, his role there
was to end rather than cause a strike. The following year he played a similar
role during a professors’ strike.
Eini, in short, is a practical man with
a very sensitive ear for the public mood. He knows there is no defending the
Israel Electric Corporation employees’ average monthly salary of NIS 20,000,
more than twice that of the average teacher.
That is why Eini’s conduct
in the unfolding circumstances will likely be the same as it was during previous
labor disputes: constructive mediation.
His strategy will be to fight for
what is publicly defendable and fiscally obtainable, namely workers’ pay and
rights, but it will not include, at the end of the day, a jihadist defense of
In short, if they are consistent and resolute, Netanyahu,
Lapid and Bennett will win the war they have chosen to wage. Their quest to
break down monopolies and reduce consumer prices is not a whim; it reflects
political predicaments, social pressures, economic convictions and a historic
When facing strikes, the public will be told that its
hardship is the price of a war waged on its behalf against vested-interest
groups that have been feasting at its expense. It will be a convincing argument,
because it is the truth.
Apparently, Netanyahu and Lapid are planning to
proceed gradually, one monopoly at a time, and from the lighter to the
Aviation was the easiest, because its owners are private. The
ports will be more difficult, and the IEC will be the toughest, as all
governments have traditionally feared its workers’ ability to shut down power
throughout the country.
Time will tell how far the alliance at the heart
of this government is prepared to go in this war, but judging by this week’s
events and rhetoric – the battle has been engaged. “No strike will deter us,”
said Lapid in the Knesset this week.
“It is impossible to build a strong
economy without competition.”
Telling the lawmakers that they all know
what this will mean, Lapid summed up his attitude: “Let there be war.”