Shock to the system

Israelis are doomed to more of the same from pampered electric company employees unless Knesset shows legislative fearlessness and political resolve.

By
April 25, 2009 22:39
3 minute read.
electricity work 224.88

electricity work 248.88. (photo credit: Ariel Jerozolimski)

 
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For nearly seven weeks now, Israel Electric Corporation managers have been forced to operate the utility in what is akin to an organizational brownout. The problem is not mechanical - it's relentless labor sanctions on the part of company's employees who are battling a streamlining program called Matzpen which aims to increase efficiency and rationalize the monopoly's workings. At one point in mid-April, when the employees refused to make emergency repairs in power stations and auxiliary facilities, the country's electricity supply was so severely jeopardized that the company declared an "orange-level" alert, calling on the public to gear up for possible electricity failures and refrain from using energy-demanding heavy appliances. A court order obliging workers to maintain power production removed the blackout threat, but not all other hindrances to the company's routine functioning. For example, the IEC has been prevented from mailing out bills to all of its consumers. The company is thus denied income, while consumers could find themselves fined for not paying on time. Labor sanctions also mean that the IEC cannot pay its suppliers. Dozens of contracting firms are involved, and the IEC is a sole mainstay for some of them. They face collapse without IEC remittances. Without even tallying the damages the IEC continues to sustain because of stymied bookkeeping, at least NIS 200 million in losses have already been accrued due to sanctions, ongoing since March 12. Delayed repairs to production units have damaged the IEC to the tune of $9 million; delayed refurbishment to these production units lost it $13 million, and delayed conversions of some production facilities to gas fuel generated another $27 million in losses. All this is likely to be eventually defrayed by passing on the cost to consumers. THE UNDERLYING problem is structural. The Israel Electric Company, once a private corporation, was effectively nationalized less than 50 years ago, but has never properly functioned as a publicly-owned utility. IEC employees have maintained a stranglehold which expresses itself not only in extreme featherbedding, inordinately generous pay packages and outlandish perks, but also in veto power over any and all managerial decisions and top appointments. Protecting the status quo has become the employees' overriding interest. They have obstructed all privatization initiatives and even partial reforms - like Matzpen - aimed at freeing the IEC from the burden of superfluous employees earning exorbitant wages. This situation renders the IEC inefficient and diverts funds from vital development projects. THE new government's economic strategy clearly prefers an overall goal of privatization to the limited Matzpen initiative. Treasury strategists describe Matzpen as an embryo that failed to develop. But Matzpen was conceived just last year precisely because IEC employees undermined progress toward a broader reform. And if Matzpen has been stymied, a bigger privatization scheme certainly has little opportunity of getting off the ground. Put plainly, neither the IEC nor the government has a chance of bringing about reform so long as they restrict themselves to working within the parameters of a union-dominated environment where all change is fought and foiled. The one prospect to modernize and rationalize our electricity production and supply services is to break that vicious cycle. There will be no privatization until the IEC is returned to its nominal owner - the state. And this means wresting it from the employees who grabbed control of the corporation illegitimately. The only answer is legislation to stringently prohibit strikes that jeopardize power supplies at any point from production to delivery, and making the offence unambiguously a felony and offenders legally liable for their transgression. Reform is achievable. Restrictions on the right to strike already exist in some vital services, such as the police. They should be extended to other sectors including firefighting and rescue, medical services and certainly power-production. Similar strictures exist in countries no less socially aware than ours. Israelis are doomed to more of the same from pampered electric company employees unless the Knesset demonstrates legislative fearlessness and political resolve. For the last thing we want is to perpetuate a situation in which the IEC is neither privatized nor a truly publicly owned enterprise.

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