‘Gov’t pays transportation, port workers 34% too much’

Calcalist report demonstrates the immense sway public unions continue to hold over the government.

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February 25, 2013 01:55
4 minute read.
TRAJTENBERG,members of C'tee on Socioeconomic Change

TRAJTENBERG,members of C'tee on Socioeconomic Change 370. (photo credit: Moshe Milner/GPO)

Among the intriguing parts of Sunday’s Calcalist report on the politicization of the Trajtenberg Committee for Socioeconomic Change, which drew on transcripts obtained from the committee’s discussions, is a demonstration of the immense sway public unions continue to hold over the government.

“Members of the committee were nearly unanimous that the opportunity must be taken to weaken the power of the big unions,” but ultimately failed to act, according to Calcalist.

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Antitrust Authority chief economist Shlomi Frizet led the charge.

“We analyzed the issue of excess wages, and we see an example of what happens when we don’t really succeed as a government against the interest group like the labor unions. There’s a government decision to reform this or that in the ports that is unable to pass. Somewhere it gets stuck along the way, and nobody owns it,” he said.

“There are issues that the government is somehow unable to pass, not the sea ports, not the airports, also housing, at the end of the day, because the government holds the majority of the land.”

According to Frizet, the study on wages for workers at Israel Railways, the Israel Port Authority, the sea ports, the airports, the Israel Electric Corporation and the Mekorot national water company, based on an accepted hourly wage formula, found that the state paid the workers a premium of 34 percent, adding up to NIS 1.3 billion gross annually. “That means that in the end, we pay the monopolies wages that are higher than the [private] market pays a worker with similar characteristics,” he said.

Shahar Cohen, director of strategic planning for HP Indigo and one of the public representatives to the Trajtenberg Committee, proposed steps to restrain the unions’ power, but those recommendations never made it to the final report.



National Economic Council Chairman Eugene Kandel agreed with the need for restriction.

“What they’re doing today at the ports – when they didn’t let them go to lunch at the restaurant they wanted and they put the port on strike – it’s totally crazy,” he said. “I think that actually putting in conditions, suggesting to legislators to make labor laws tougher... is very important,” he said.

Eyal Gabai, a representative from the Prime Minister’s Office, said state-run monopolies were “dramatic.”

“These are monopolies for which we cannot create any kind of competition – no, nothing,” he said.

In a previous political scuffle with the unions, Gabai said, “They held us by the throat, and for the year and a half I went on with this issue, everyone crawled on the floor. I think Shachar’s suggestion deserves a discussion.”

Gal Hershkovitz, the Finance Ministry’s budget director, lamented that a five-year argument with the Histadrut national labor federation had prevented the government from properly putting together a firefighting authority. Ask Deputy Attorney-General Avi Licht about confronting the issues of labor rights, he said, and “he’ll tell you now that you can’t do that.”

Licht, indeed, said that the suggestion “surprised” him. “The right to strike is currently considered a basic right by Israeli law,” he said, warning the committee not to “shoot from the hip.”

“I just want to remind you that there are tools for dealing with strikes. That is to say there is what’s called an injunction and the state uses them frequently, and nobody’s really done this yet, but the moment that someone wants to strike at the Electric Corporation or Mekorot, or even the train or education system, they can go to the National Labor Court. And if there’s a vital need, then the strike will not be approved.

“I’m not sure it’s correct not to go down this path,” Licht concluded.

Dr. Adi Brander, from the Bank of Israel, added, “I think that it’s worth putting it in perspective, at least on the electricity issues, that labor costs are 10% of the total cost of electricity. Even if you would cut 20% of their salary, we would be talking about 2% of the price of electricity.”

Far from just targeting labor unions, Frizet also had strong words for business lobbyists.

“When the business sector runs lobbyists it does so in a very focused way. They come and put the papers, the facts, the requests in a very strong way,” he said. “That’s how they raised the excise tax on gasoline, but that on coke [a coal-derived chemical used in cement making] did not rise. There is one person in Israel that uses coke, and that is [at] the Nesher cement factory,” which at the time was owned by businessman Nochi Dankner.

“Only on him did they not raise the excise tax,” Frizet said.


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