Due Diligence / David Rosenberg

What’s the Difference Between a Union and a Gang?

Not much. They both work according to the same principles, meaning organized labor contributes little to reducing inequality.

Eliyah Melnikov

“I have the power with the workers. The CEO is the manager, the employer, but he doesn’t concern himself with the conditions of the workers. The customer reaches terms with the CEO and then he sits with me. So what’s the problem if the workers committee exploits the power it has with the workers? If it helps the port, why should anyone be bothered by it?”

This is Avinoam Shushan speaking. He’s a right-hand man of Alon Hassan, the Ashdod Port union boss now under investigation with 15 or so others for a variety of crimes including extortion, corruption and conflicts of interest.

Shushan made these remarks in an interview with TheMarker about a year ago, when asked why companies doing business with the port had to negotiate terms with the union, not just with management – as would be the case in any normal business.

If you are sufficiently naïve, you could understand Shushan’s description of how business is conducted at the port to be an example of capital and labor working hand in hand, as equal partners for the common good, which is the smooth operation of the port.

But Shushan was saying nothing of the sort. The union at Ashdod and Haifa ports – or for that matter across wide swathes of the public sector – doesn’t work as the kind of collective labor organizations you might read about in a civics textbook.

They are not democratic groups fighting the good fight to ensure that workers aren’t exploited. They don’t represent the working class, and certainly not the most exploited segment of the labor market, which in Israel today would be foreign workers – those working under personal contracts and those working in the service sector like call centers, hotels and stores.

Labor unions in Israel are the source of power for a privileged segment of Israeli society, namely those with the good fortune to be working in a government or private sector monopoly or near-monopoly. They include the government-owned electric power and water sectors, the airports and the civil service itself, as well as the privately controlled banks.

If you think that in Startup Nation the best-paying jobs are working for a high-tech company, think again: Not counting the few people who work on offshore gas platforms, the highest monthly wage – 17,828 shekels ($5,120) a month in 2013, nearly double the national average – went to electrical, water, sewage and sanitation workers, according to the Central Bureau of Statistics.

Information technology came next at 16,503 shekels a month, but financial services were not far behind at 16,065 shekels, and people working in government after that with 14,281 shekels.

The ports are a classic example of a union-exploited monopoly. There are only three of them serving the entire country – the two facilities of any consequence (Haifa and Ashdod) owned by the government. In the absence of any significant cross-border truck or rail traffic, more than 90% of Israel’s foreign trade goes through them, which enhances the power of the ports. A few thousand port workers could shut down the economy if they chose to.

The government that ostensibly owns the ports is so weak that it has given up trying to reform the ports themselves from the inside; instead, it hopes that it can bring about change through outside competition, by creating two privately owned and operated ports.

They earn how much?

That’s why port workers earn on average 38,000 shekels a month in Haifa and those in Ashdod just 1,000 shekels less, according to the Government Companies Authority report for 2012.

But the exploitation of monopolies only captures one element of the dysfunction of Israeli labor unions. In their internal functioning, they resemble an inner-city gang or marauding tribe more than a modern organization.

Unions are dominated by a leader who exerts a high degree of personal power over the rank and file by employing a combination of fear and threats, as well as by excessive generosity. Thus, port workers get massive salaries, enjoy the benefits of no-show jobs, and their friends and family get the pick of new positions when they open up. But anyone who crosses their boss or challenges his authority will pay a heavy price.

To help ensure the power of the boss, he has to make sure there are enemies to battle. Thus, even though port workers enjoy pay and benefits that are the envy of the rest of Israel, they are constantly calling strikes and disrupting port operations over the flimsiest of pretexts.

Last year alone, Ashdod port workers staged 27 days of labor slowdowns, and 16 more in the first five months of this year. The union rank and file may fear their boss, but they know he is the one who will defend them to the last against the government or management who seeks to take what is rightfully theirs.

When Hassan himself spoke this week about the allegations against him, he didn’t proclaim his innocence, because that’s not the issue. Justice, like business, is not about values but about a struggle for power. Thus, he portrayed the police investigation as a frame-up meant to prevent him from pursuing his union activities. “The two ways to do that are either to kill me or try to incriminate me,” he said.

The Godfather

When Shushan talks about the “power” the workers committee has with workers, what he means is the kind of leadership style you might see in “The Godfather” or “The Sopranos.”

Much has been written about the organizing efforts of the Histadrut labor federation at such new frontiers as Pelephone and Ness – one a private sector cellphone company, the other an IT services concern. The labor federation has even come to the defense of contract workers, although one suspects this might be to ensure that the jobs of organized workers are not endangered.

No doubt these unionization drives reflect the growing anxiety of Israeli workers in an era of stagnant wages. But how does the Histadrut plan to help them? Its modus operandi is to exploit monopolies; it doesn’t have the skill set to represent workers in competitive industries that can’t tolerate the endless labor disputes, slowdowns and strikes, or the featherbedding the labor federation’s most powerful workers committees engage in.

This is a pity. As Israel and the rest of the developed world grapple with the problem of growing inequality in wealth and wages, there is no reason why unions shouldn’t be playing an important role in ensuring that labor gets its fair share. But that assumes the unions can act as a counterweight to the growing power of capital; what the Histradrut and its powerful workers committees do is exploit the economy at its weakest nodes. They are not only failing to defend ordinary workers, they are hurting them.