Government Clashes With Court Over Israel Electric's Right to Strike

Judges angrily side with utility’s workers striking over reform of the electricity sector and state is fighting back

Labor Court Judge Yigal Plitman.
Tomer Appelbaum

The government and labor courts clashed on Thursday as state attorneys sought to block a strike at Israel Electric Corporation aimed at thwarting reforms of the power sector.

The government incurred the wrath of National Labor Court Judge Yigal Plitman after the government said it was appealing to the High Court of Justice against his ruling that IEC workers had the right to fight the reforms by striking indefinitely.

“It is unacceptable that in today’s Israel, the right to strike will be denied in principle and in advance in a place of work whose workers face dismissal. These dismissals will be due to an employer’s decision, a government decision or the Knesset law,” Plitman said.

Later the same day the Haifa Labor Court also came out in favor of the workers, ruling that IEC employees can continue their three-week-old “strike” under which they are reducing payments to suppliers by 10% — despite the financial damage this has caused the state-owned utility.

The strike affects 9,400 suppliers, from small businesses to the partners in the Tamar natural gas field. They have also stopped billing for IEC, which has cost it some 60 million shekels ($17.2 million). On Thursday IEC Chief Financial Officer Avi Deutscherman said the utility has been forced to open an 800-million shekel emergency credit line to ensure it has enough cash on hand. IEC has 3.5 billion shekels of cash on hand, but that is only enough to last until the end of July.

The Haifa court said it allowed the union to continue its stoppage as a way of pressuring the government to allow IEC workers to strike.

“If in the past we held that it wasn’t proportionate for a significant halt by employees of payments to suppliers and other outsiders, the facts before us at this time, have convinced us that there is room for worker representatives to employ stronger force than in the past,” the three-judge panel ruled.

But Lahav, an umbrella group for small businesses and the self-employed, said the Haifa Labor Court wasn’t taking into account the impact of its decision on businesses and their employees. “Would the labor court allow 10% of the salaries of workers not involved in a labor dispute to be arbitrarily deducted?” said Roy Cohen, the organization’s president.

The issue is the government’s effort to break up IEC’s near monopoly on electric-power generation by giving more latitude for private sector companies to produce electricity. The unions are vociferously opposed and have taken action to block the changes, which they say will cost them 1,000 jobs.

The government’s position is that it has the right to determine policy about electricity, but Plitman took the view that IEC workers did have a say and ordered the government to negotiate with them.

Unfazed by last week’s setbacks, the government on Sunday presented its case to the High Court, which sought to portray IEC employees as powerful and overpaid. Among other things, it said that last year employees received 176 million shekels in bonuses, free electricity worth 121 million shekels and salaries deposited in their bank accounts early, among a long list of other privileges. Thousands were paid so-called “13th-month” salaries at a cost of 112 million shekels.

“IEC workers aren’t powerless – far from it. They are among the most powerful group of workers in the country backed by contracts that prevent any harm to their work conditions,” the State Attorney’s Office said.

The document was a rare admission by the government of something the public has long been aware of, namely that IEC employees are highly overpaid and enjoy conditions few in the public sector have. Among other things, the state attorneys admitted that the utility was paying as much as 150 million shekels annually in salaries that were above the maximum allowed in the public sector despite a crackdown.

State attorneys also noted that IEC’s financial condition has improved over the past three years as a result of early-retirement buyouts and an end to the worst abuses of excessive pay. As a result, labor costs at the company fell 10% to 4.5 billion shekels last year without any damage to employees’ rights. Collective labor agreements protect them from firings.

Among IEC’s 8,826 employees with seniority, the average gross pay was 27,000 shekels a month, compared with 15,500 on average for the public sector. Of those 350 earned more than 52,000 a month.