How Israel Is Following Greece's Ruinous Path

A corrupt public sector has led Greece to the edge of the abyss. Two proposals from opposite ends of the political spectrum are dragging us down, too.

AP

The European Parliament is a rather formal and boring institution. It’s not the type of place where rock stars are born, people who attract millions of hits on YouTube and arouse open jealousy on the part of other legislators. Only, that’s exactly what happened at this fusty institution last week after a captivating speech by Guy Verhofstadt, the former prime minister of Belgium – and now the most talked-about politician in Europe.

So much that the European media rushed to crown him the continent’s newest star and the candidate to inherit the crown of Yanis Varoufakis, Greece’s former finance minister, as the most prominent politician to emerge from the Greek crisis.

All this was the result of a short, seven-minute speech, delivered in eloquent English, during which Verhofstadt criticized Greek Prime Minister Alexis Tsipras, accusing him of sending his country down toward the abandonment of the Euro bloc (in a word play on “Grexit”) without any reason, and giving him the status of a political accident and false prophet. It’s the ordinary Greek citizens who are going to be footing the Grexit bill, warned Verhofstadt. He noted that, while many Greeks have already paid a very heavy price because of the economic crisis, the Greek upper class has emerged unscathed.

In his brief speech, Verhofstadt listed the ills that have yet to be tackled by the Greek government, despite the huge crisis. He focused on five key problems.

First, political appointments that are destroying the government. Verhofstadt mentioned just-made appointments in the Greek Education Ministry, in which, miraculously, 12 of the 13 appointees were members of Tsipras’ ruling Syriza party. This cronyism has characterized corrupt Greek governments over the years, and now Tsipras’ own party is also using it to bring its own people into power.

Another problem is the outrageous lack of efficiency in the Greek public sector, which has no fewer than 800,000 employees.

The third problem is the inefficiency of the Greek banking system. A fourth is the Greek labor market, which is static and doesn’t allow young people in to access desirable jobs.

Finally, Verhofstadt directly attacked the Greek system of power and money: the privileges that the shipping magnates, military, Greek Orthodox Church, Greek islands and also the political parties themselves enjoy. He noted that the parties have continued to receive money from the banks, including last week, even though the banks are suffering a terrible cash shortage.

A country going backward

The huge acclaim for Verhofstadt’s speech, which was viewed a record 7 million times in various languages on YouTube, shows that Verhofstadt scored a direct hit on Greece’s real problems.


What’s equally worrying is that his list isn’t just relevant for Athens. Substitute the name Israel for Greece, and see how closely that same list hits the mark here, too: Political appointments; an inefficient public sector; banking sector in dire need of competitive reforms; fossilized labor market in which ambitious youngsters lose out to elders with tenure; and also privileges that only those close to power enjoy.

True, there are no shipping magnates here in Israel. In their place, though, we have “untouchable” unions; banking and natural gas barons – who we fervently hope will be dealt with properly soon; and the Chief Rabbinate, currently trying to advance legislation to make its monopoly over kashrut certification permanent, while destroying any remaining chance for introducing competition and lowering the cost of food in Israel.

Even more worrying in the Belgian’s speech is that at least for his first two points – political appointments and the public sector’s lack of efficiency – it’s not just that Israel isn’t making progress: it’s actually regressing. There are two processes occurring simultaneously, and both are passing beneath the radar of the public – even though they endanger Israel’s future.

One is the clause in the coalition agreements which states that deputy director generals in ministries will now be “positions of trust” – in other words, political appointments made by ministers, according to their own personal wishes. In practice, this means increasing the number of political ministerial appointments by some 850 jobs, basically all the most senior and important positions in the civil service.

If Greece is teetering on the edge of the abyss because of its system of political appointments, then Israel is knowingly marching on the exact same path: Making all senior civil service positions political appointments creates a public service completely dependent on the ministers’ desires. The professional backbone of the Israeli civil service will be wiped out.

It’s not clear who the political father of this extreme clause in the coalition agreements is. According to the accepted version, the ultra-Orthodox parties – for whom the standards of proper governance are not exactly a guiding light – demanded the change. In any case, it’s also clear that Moshe Kahlon’s Kulanu party, which supposedly came into politics with clean hands, approved the inclusion of the clause.

This is how, under the cover of political and public apathy, one of the most dangerous proposals for the future of Israel is slowly inching forward. Without a shadow of a doubt, this proposal will place Israel on a similar path to that of Greece as far as quality of governance is concerned.

It’s also clear that senior Likud ministers jumped at the chance. Rumor has it that Yariv Levin and Haim Katz, who has already fired two deputy-director generals and one director general this week in the Social Affairs Ministry, are pushing hard for the proposal to become law. Katz, by the way, denied all involvement, but Tourism Minister Levin confirmed his agreement.

Levin told Haaretz, “I support the step intended to prevent stagnation in the public service, and in order to bring about a situation in which senior positions in the government will be filled by those who have a commitment to the policy of the minister. This compares to the situation today in which deputy-director generals spend decades in their positions, without any commitment to the government’s policy – while they run an independent policy of their own, or possibly without any policy at all, simply because their status is guaranteed.

“This proposal balances the excesses of a lack of change among senior ranks today, and the extreme situation in the United States, where all officials resign with the change of the president,” added Levin.

The true injustice

Political maneuvering accompanies another problematic plan: the government’s negotiations with the Histadrut labor federation concerning contract workers. The Histadrut is demanding the state end its practice of employing such subcontractors, claiming that it is exploitation. The federation is right, but it’s also ignoring the reason for the contractors’ presence: An outrageous lack of efficiency in the public sector, whose outmoded contracts make it unmanageable. Because it is unable to deal with the Histadrut’s veto over necessary changes in the collective bargaining agreements, the government’s weakness gave birth to the wave of contractors as a work-around solution.

Instead of promoting modern collective bargaining agreements, which allow for performance measurement, providing incentives for success and penalizing failure, increasing productivity, improving service and promoting outstanding employees and firing the worst, the government has surrendered and moved to employ outside contractors. Hence, the injustice of hiring subcontractors is just a symptom of the real problem, and not the true problem itself.

The real problem – inefficiency and low productivity – doesn’t even make it to the table as part of the present negotiations with the Histadrut.

The Histadrut is demanding the removal of contract workers without offering any solutions to the problems that led to their hiring. Again, this is the rule of cronyism. This time, though, the powers are the unions, those with permanent jobs in the public sector who look after themselves at the expense of young workers, who will never advance because of the tenure older employees have. This is also at the public’s expense, since we’ll never receive better governance while workers don’t see themselves as partners in the efforts to make the government more efficient.

The Histadrut approach – “We’re only concerned about ourselves and our power as an organization” – is the exact same approach that for years has left the Greek government paralyzed and fossilized, one that never managed to get the country to move forward.

So, cronyism rules in Israel, too. The politicians on one side, and the unions on the other – each taking care of their own interests, and along the way destroying the effectiveness and professionalism of the Israeli government. That’s why the day when we become Greece is not far away.