The Bottom Line / Only Egged
The well-known slogan about the Egged bus cooperative - describing the transportation monopoly as the only place in the country where the workers really own the business - represented Israeli reality until very recently. The cooperative has held a monopoly on inter-city bus routes since the 1930s.
The well-known slogan about the Egged bus cooperative - describing the transportation monopoly as the only place in the country where the workers really own the business - represented Israeli reality until very recently. The cooperative has held a monopoly on inter-city bus routes since the 1930s. It has provided its members - those who bought a share - with pride, professional stability and a nice amount of money. This was made possible partly by Egged's government subsidy, which has now reached NIS 1.1 billion a year.
But in the last few months a storm has been brewing among the members as a result of the salary cuts and other changes in work conditions over the last year. Egged's management claims that the new situation in the last few years - increased competition and a drop in business - has forced them to make changes to increase efficiency. The management says these are legitimate steps that prove that they are dealing with the changes in the transportation sector correctly.
On the other hand, Egged members accuse management of making changes without consulting veteran members of the cooperative, even though these steps have severely harmed their wages and working conditions. This is one of the reasons that so many members have retired recently.
The dispute between members and management reached new heights last week, after the management decided to distribute NIS 10 million in dividends to members. A group of members opposing the management - led by Arik Feldman - assumed that the dividend was being paid now because elections will be held for Egged's governing bodies in February 2004.
According to opposition members, management chose to distribute a dividend instead of giving out salary increases, because this benefits active members over retirees - who do not have a vote. Salary increases would have also required raising pensions - which are linked to salaries - but dividends go only to active members, who also happen to have the right to vote.
Management's response was that the dividend was a result of Egged's positive financial results for 2002.
On the face of it, the dispute between the cooperative's management and its members is a legitimate business disagreement over how to run the cooperative in light of the changes in the past few years. Nevertheless, how the cooperative is run is a source of public interest, especially because of the government subsidy the cooperative receives. The subsidy requires Egged to spend funds for the public benefit, and not for internal wars.
The dividend is particularly outrageous in light of the fact that Egged announced at the beginning of 2003 that it was unable to pay its half of the plan for public transportation security - half of NIS 35 million.
In August Egged raised the price of a ticket for public transport in Tel Aviv to NIS 5.20, only a month after lowering the price. For these reasons, we need to encourage the Transportation Ministry's reforms of public transportation. These reforms will combine the entry of new players into the business, with a lowering of Egged's subsidy. And we should also expect the ministry to increase its supervision of Egged and how it uses the public's subsidy.
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