Campaign to ensure better conditions for security guards

Government is the worst offender, says Pegasus Capital’s Arik Arad.

April 2, 2010 06:12
4 minute read.
A security guard

security guard 311. (photo credit: Ariel Jerozolimski)


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Global security expert Arik Arad, an adviser to New York-based private equity firm Pegasus Capital Advisors, which invests in Israeli companies, is launching a campaign to improve minimum salary requirements and social conditions for Israel’s poorly paid security guards.

“The area of security services can be a growth engine for Israel. In as much as Israel is exporting technology and innovation to the global markets, it has the know-how and potential to export its security services,” Arad said in an interview with The Jerusalem Post in Tel Aviv.

“However, since the price set for salary and working conditions of security guards in a tender in most of the cases does not include a profit, it is economically not viable for large international companies or firms like Pegasus Capital Advisors to take part in tenders or investments, since they will not violate the workers’ rights [to make a profit], as they have a reputation to protect. Meanwhile, in the market in Israel, there are a lot of smaller companies and subcontractors who do not pay security personnel what they are entitled to in terms of social conditions and salaries.”

Arad said as a result of this situation, Pegasus Capital Advisors has had to freeze its investment in and purchases of security-related companies in Israel. The firm manages about $2 billion and has been around since 1995.

In recent years, Arad has led the firm’s investment of $100 million in Israeli security services companies, including HTS Hi-Tech Solutions in Rishon Lezion/Migdal Ha’emek, B Protect, ImageSat International in Tel Aviv and Rontal Applications in Modi’in, in an effort to export the knowledge of Israeli security-related services to the world.

“Currently we have 3,700 security personnel as a result of our investments in Israel, and the target was to expand to 15,000 employees through further investments into local companies, but we have stopped the process for the time being,” said Arad. “There is no reason why a security guard working in front of the Empire State Building should get paid more than an Israeli guard working in front of a shopping mall or a restaurant. Israeli security staff are highly qualified and have shown in the past that in real-time they turn into heroes and are willing to sacrifice their lives although they are poorly paid.”

In Israel there are currently 400 security-related companies providing services to businesses and government institutions.

To get government contracts, a tender process is followed, for which minimum employment conditions are set. The winner of the contract, however, is simply the company offering the cheapest deal. The problem arises after the tender process, since there is no supervision of the terms of employment, although it is clear that in the majority of the cases the winner will not be able to fully meet the commitments set out in the tender without losing money, according to Arad.

These commitments include social benefits, travel expenses and the costs of uniforms, equipment, administration and insurance.

“Security staff in Israel suffer from a slave salary and infringement of working conditions, which is against labor laws, and the government, the largest employer in the economy and a major recruiter of security services, is not doing anything to change the current situation,” said Arad. “For this reason, I am launching a campaign together with Knesset members, labor organizations and the private sector to introduce minimum requirements for the recruitment of security services companies that are legally binding. I am confident that I will succeed.”

Arad has sent a letter to State Comptroller Micha Lindenstrauss asking for him to intervene and to Likud MKs Tzion Pinyan and Haim Katz asking them to raise the issue at the Knesset Labor, Welfare and Health Committee. In the letter, Arad urged the regulators to set basic rules for the recruitment of security services companies, as well as criteria for fulfilling the tender conditions, and to set minimum prices for the work involved in the contracts.

Arad, who was a lieutenant-colonel in the IDF, has more than 25 years of experience in the security and defense sector, from being head of security for El Al Israel Airlines at Ben-Gurion Airport to head of security for the Shopping Centers Associations of Israel. He has been involved in creating and implementing new security guidelines, programs and concepts in the international, domestic and private sectors as well as with collaboration with governmental entities in Israel, the US and Canada.

“We are just in the process of finalizing a new financing round raising $1b.,” Arad said. “There are great companies in Israel, in particular in the area of renewable energy and water technology. For 2010, we are planning to invest $150m. and are looking for Israeli companies worth $25m.-$75m.”

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