Does 21st-century Israel Need Labor Unions?

Widening income gaps show there is certainly a need for them, but the Histadrut's record as a bastion of privilege is not encouraging.

Are labor unions a relic of the 20th century, like LP records, cathode ray tubes, typewriters and totalitarianism?

The way the government gets a knot in its stomach at the thought of confronting the workers' committee at the ports or the Israel Electric Corporation, you would think unionism remains as powerful a force as ever.

Those kind of unions are indeed strong to a fault, but that has nothing to do with the power of class solidarity. It has everything to do with the stranglehold they have over the economy, by virtue of the fact that they effectively control state-sanctioned monopolies. Most of the rest of Israel's working public has never carried a union membership card, much less chanted slogans on a picket line.

Far from being the "vanguard of the working class" -- to use a quaint 20th century expression -- Israel's unions are an interest group for a privileged minority that work in a few parts of the economy that don't have to worry about competition (the civil service) or can quash it (the state-owned monopolies, the banks). The unions still employ the language of the workers' struggle and labor rights but that's not what they are about; they are about ensuring that their own workers' privileges are kept intact and expanded at the expense of the rest of the Israel's working population.

The transition now underway at the Histadrut, which is by far the biggest and most powerful union umbrella organization, illustrates this quite nicely.

Pointless changing of the guard

Ofer Eini, the outgoing chairman, made his career in organized labor not on the factory floor or at a construction site but in the union representing employees of the Income Tax Authority. His designated successor, Avi Nissenkorn, is a lawyer by profession and has spent nearly his entire career as a Histadrut functionary.

This all makes sense when you look at the Histadrut labor federation itself -- which is admittedly no easy task.

Reliable figures on membership and what percentage of Israel's working population belongs to a union are hard to come by, but the rate of unionization is almost certainly low by Western standards.

The Organization for Economic Cooperation and Development doesn't include Israel in its union-density statistics, which show the percentage of employees organized ranging from 80% for Iceland to 6% in Turkey, the average being 17.5% for all the countries surveyed in 2011. A survey done in 2006 found that 34% of Israelis said they belonged to the Histadrut, although a much smaller 15% said they actually belonged to a trade union.

Three-quarters of union members worked in the public sector. They were more likely to hold an academic degree and less likely to have a blue-collar job than the overall population. The younger the survey respondents were, the less likely they belonged to a union.

It is more likely than not that the Histadrut's numbers have declined since then. While it claims to have signed up tens of thousands of new members in recent years, many more members are retiring. A paper by Tel Aviv University's Guy Mundlak and three other academics estimates that the labor federation lost close to 7% of its members in 2006-2011 and is on its way to losing another 9% more in the 2011-2016.

Reduced to creating companies itself

It would be, of course, unfair to compare the Histadrut to the labor unions of American and Europe during the glory years of heavy industry. Union membership has been falling across the developed world with the decline of the industries that once formed the foundation of the labor movement.

In Israel, there wasn't much of industry to organize to begin with. Indeed, in lieu of a capitalist class, the Histadrut found itself in its earliest days having to create industrial companies itself so it would have a proletariat to fight for. Even then, Israel never had the classic Marxist distinction between workers and capitalists. The unions were an integral part of the establishment and its members were for the most part clerks using pens and adding machines rather than factory workers using lathes and wrenches.

But at least back the great majority of Israel's working population was organized, and pay and conditions were relatively equal. Then the decline of whatever traditional industry Israel had and the rise of high tech left the unions representing public sector employees.

The Histadrut starts to change, a bit

Under Ofer Eini, things changed a little at the Histadrut. Apart from organizing new sectors of the economy, the unions fought for universal pensions for employees, a higher minimum wage and the rights of workers on temporary contracts, among other things.

But the Histadrut's real strength and influence lies where it does the most damage to the economy, namely the powerful workers' committees in the public sector, not where it helps the weak, the unrepresented and the underprivileged.

Do we need the Histadrut or any unions at all? If so, what role should they play? And, is it realistic to expect them to play it?

The growing gaps in wealth and income in Israel, and for that matter throughout the West, call for a solution. One part of any solution could and should be unions.

Inequality is growing partly because labor is getting a smaller share of national income while capital retains more. The OECD estimates that labor captured just 62% of all income in the 2000s, down from over 66% in the early 1990s.

This is partly due to growing competition from low-cost economies like China, but it is mainly because the productivity gains from new technology accrue to shareholders rather than employees.

Reversing this will not be easy. In a small and globalized economy such as Israel's, blocking business from moving operations to low-cost countries is problematic. But helping labor to capture more of the gains from technology is a reasonable goal. Unionized workers stand a fighting chance of doing that better than non-unionized ones.

Unfortunately, the Histadrut – as the leading force in organized labor, the one slated to will lead the way to change -- has not demonstrated much ability in organizing and defending workers in industries where employers operate in a competitive market and unions needs to balance the interests of labor with the interests of management. Its trade unions operate more like protection rackets ("That's a nice port you have there. A pity if it got shut down") than like business partners ("Why don't we reduce featherbedding and split the incremental productivity gains 50-50?").

Having a lawyer like Nissenkorn at the helm might begin a move in a new direction, but breaking the power workers committees that are the core of the Histadrut and its values is even more important.

Albatross Aerial Photography