The Trajtenberg Report’s gaping lacuna: public-sector union

These unions exploit their control over vital industries to extort outrageous benefits while offering lousy service. Unless their power is curbed, any reform will at best be only partially effective.

PM Netanyahu with Prof. Manuel Trajtenberg 311 (R) (photo credit: Marc Israel Sellem)
PM Netanyahu with Prof. Manuel Trajtenberg 311 (R)
(photo credit: Marc Israel Sellem)
The Trajtenberg Committee’s report, which was submitted to the government last week, offered some valuable ideas for lowering prices and improving service. These include several proposals to increase competition, from eliminating protective tariffs to allowing private terminals to operate at the ports, plus sensible suggestions like having the government release more land for residential construction, expanding a program to let grade-school students borrow textbooks rather than buy them, and raising taxes on vacant apartments to encourage owners to sell or rent them.
Nevertheless, the report has one gaping lacuna: It ignores the powerful public-sector unions. Currently, these unions control many of the economy’s most vital products and services, including banks, ports, airports, railroads, electricity and water. And they exploit this control to extort outrageous salaries and benefits, which the public must finance through higher tariffs and fees, while also providing service that is poor at best and downright abusive at worst.
Sunday’s Jerusalem Post editorial detailed one salient example: Last month, railroad workers protesting a plan to outsource the maintenance of railway cars simply stopped their trains in the middle of the track, locked the windows and turned off the air conditioning, thereby imprisoning the passengers in airless boxes on a burning summer’s day. Eventually, passengers escaped by breaking the windows, climbing out and embarking on a dangerous hike down the tracks. And all this occurred in defiance of a court order barring the workers from striking
Moreover, the government had already tendered a written guarantee that existing maintenance workers’ jobs would be safe for at least 20 years, while their salaries and benefits would be safe until they retired. In other words, workers weren’t striking to protect their jobs or benefits; they were striking out of pure pique that management had made a decision (outsourcing the work) without first securing their approval. Because as far as they are concerned, they are Israel Railways’ true owners; the fact that the company is formally owned by the government is unimportant.
Nor is this behavior exceptional. Just last week, the airport union staged a two-hour “New Year’s toast” – aka strike – with no warning, meaning illegally. Passengers were stranded inside one plane for two hours because it had just finished boarding but wasn’t allowed to take off; another plane was being towed to the takeoff point when the tractor driver simply abandoned his vehicle, and the plane, in the middle of the tarmac. And this abusive strike took place even as management was convening to approve a new collective agreement that gave employees an average raise of 11.25% – the kind of raise most private-sector employees can only dream of.
Similarly, Haifa Port called two illegal strikes in three days last month over such weighty issues as – no joke – the job title given to one particular worker. And Ashdod Port closed for an entire evening that same month so the whole staff could attend a union official’s wedding. Indeed, the ports routinely shut down while staffers attend private parties hosted by union officials. A private-sector company would insist that some people stay at work to keep essential services running, because each such closure causes hundreds of thousands of shekels worth of damage. But the unions don’t care, because they aren’t docked a penny of their pay: Instead, the cost is borne by the ports’ clients and the taxpayers.
Moreover, public-sector unions perpetrate these abuses despite being among the country’s best-paid workers. Indeed, according to the Finance Ministry’s most recent report on public-sector wages (which was released last October and covers 2009), these unions’ members earn almost three times the average Israeli wage. The average Israeli salary that year was NIS 7,974 a month; this compared to average salaries of, for example, NIS 23,000 at Haifa Port, NIS 22,500 at Ashdod Port and NIS 20,200 at the Israel Electric Corporation.
The best solution to the problem would be to pass legislation banning or severely limiting public-sector strikes. This is hardly an unreasonable trade-off for the lifelong job security these workers receive (a benefit private-sector workers can only dream of), and many democracies have enacted such laws. Some, like the United States, bar public-sector strikes entirely; others limit them such that certain workers designated as providing essential services must keeping working even during a strike. In Canada, for instance, police, firefighters and hospital employees are barred from striking entirely, while railways, ports, banks and telecommunications are deemed essential services that must keep operating even if their unions strike.
At the very least, however, unions and their members must be made to pay a stiff price for illegal, abusive acts like those described above. Currently, unions have no incentive to refrain from such actions, because they know they can get away with it: Public-sector companies rarely even dock workers’ pay for an illegal strike, lest they spark another; and when they do, the pay is almost always returned as part of whatever agreement ends the strike.
Israel Railways is a laudable exception in this regard. It started disciplinary proceedings against union leaders over last month’s illegal strike and is suing them personally for damages over another illegal strike in May.
Incredibly, however, it isn’t getting support from the courts: Even though both strikes violated an explicit court order, National Labor Court President Nili Arad proposed last week that the company freeze both the disciplinary proceedings and the lawsuit in exchange for the union deigning to begin negotiations over the outsourcing contract. In effect, she wanted to reward the union for breaking the law and violating court orders.
To their credit, Israel Railways and the Finance Ministry both flatly refused, and Arad backed down. But the fact that they had to face down the National Labor Court president to take the elementary step of punishing an illegal strike shows just how broken the system is.
It’s a pity the Trajtenberg Committee was silent on this issue. But if the government is serious about lowering prices and improving service to the public, it cannot afford to hide behind the panel’s silence. It must finally tackle the problem of power-mad public-sector unions.
The writer is a journalist and commentator.