Privatize the ports!

It is time for the ports to become privatized and open to competition.

Haifa port (photo credit: Creative Commons)
Haifa port
(photo credit: Creative Commons)
Last week’s mega-protest attracted citizens from all walks of life – after all, there is so much to complain about. From high housing costs, rent, fuel, day care, education, taxes and the general cost of living to demanding the return of Gilad Schalit, well, we could be protesting forever.
Realistically speaking, for all the demands the protesters have voiced, if tax cuts are made somewhere or if funding is provided elsewhere then, ultimately, the money must come from another source.
That source, I believe, at least in part, can be the ports. Ports Authority workers, under the Histadrut labor federation, are among the highest wage-earners in Israel, with many members making NIS 20,000 a month and others upward of NIS 60,000. The time is long overdue for the ports to become privatized and open to competition, which would lower port fees, significantly reduce workers’ strike power and, to some extent, relieve citizens of another financial burden.
A report published by the Institute for Advanced Strategic and Political Studies in July 1999, titled “Reforming Israel’s Sea Ports,” found that the workers exploited their ability to shut down the ports in order to achieve salaries that are among the highest in the country. According to the Central Bureau of Statistics, the average dock worker’s salary was three times the national average. The report, making the obvious conclusion, recommended the transfer of port management and operation to the private sector.
In 2004, after another port strike, Haaretz reported that the president of the Federation of Israeli Chambers of Commerce, Uriel Lynn, said, “Here is proof again of the urgent need for reforms that will weaken the influence of the strong committees and the monopolistic status of the sea ports.”
The Ports Reform Agreement of 2005 included the stipulations that Haifa, Ashdod and Eilat Ports would become separate companies, competing with each other in rates and services; the Ports Authority would cease to exist and would be replaced by an assets company; NIS 4 billion in pension funds held by the Ports Authority would be distributed among the port companies; 2,200 workers would each receive a NIS 100,000 payment; workers would receive a 20-percent wage increase; and, in return, the workers would guarantee five years of industrial peace.

Yet Ashdod Port operations workers broke this agreement in 2006 and initiated disruptions and sanctions, threatening to continue the strike until their outrageous financial demands were met. The disruptions and sanctions completely contradicted the Ashdod Port workers committee’s commitments to preserve industrial quiet under the agreement, costing the state millions of shekels in lost revenue.
According to Business Monitor International, the privatization initiative was not popular with dock workers, and in August 2008, they led a nine-day strike over concerns that the pending Economic Arrangement Bill would allow the use of private contractors at Israeli ports.
In April, the Finance Ministry announced the privatization of the Eilat Port after the Government Companies Authority issued a public announcement for the sale of the state’s holdings in the Eilat Port Company.
While this is certainly a step in the right direction, it is not enough, as the port of Eilat handles less than 7% of the country’s maritime trade. This means workers at ports on the Mediterranean coast still control most of Israel’s maritime trade.
The current situation is but a zero-sum game, with the port workers always on the side that gains. If they are working, they are milking the state for exorbitant salaries – money that comes from the public’s pockets – and if they are striking, they cost the state millions in lost revenue and end up receiving higher wages as a reward. Either way, they benefit only themselves. Over the years, their numerous strikes have caused unspeakable harm to this country.
The public wants, and needs, to see the privatization of the ports, and a loosening of the chokehold that port workers maintain on the private sector.
But for this to happen, our leaders need political will. If they are searching for inspiration, they need look no further than former US president Ronald Reagan, who fought striking air traffic controllers in 1981, and former British prime minister Margaret Thatcher, who fought striking coal miners in 1985. For each, it was a defining moment for their economic policy, and in both cases, they headed off a debilitating strike and created an important precedent for their respective countries for years to come.
Our leaders must demonstrate similar resolve and overpower the port workers who seek to empty the public’s pockets and fill their own out of greed and self-interest. The government can find a terrific source of funding at the ports, which will allow it, at least in part, to ease the heavy tax burden many average Israelis now carry, and avoid further economically debilitating strikes by greedy public-sector workers.