Taking Stock / How Much Is Tenure Worth? The World

Ask Israelis who work for government what it would take to make them forgo tenure and they snort. It's the elephant in the room nobody's mentioning.

Guy Rolnik
Guy Rolnik
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Guy Rolnik
Guy Rolnik

For the first 10 seconds, silence reigned.

The question had been a leading one and the people in the room, all working for one of Israel's biggest companies, didn't want to sound stupid in front of their colleagues.

The question was: For what salary would you consider switching to another company? The imaginary company was young, dynamic and well-funded, but there was a catch – no job security. No tenure. You're not good at your job? Sayonara.

There isn't much discussion of tenure in the press. Some things don't need spelling out and nobody wants to elaborate on it anyway.

Not long ago the same was true of the distinction between the businessmen who create value and the ones who take existing value and milk it: Nobody wanted to discuss it. But it has to be said. There are two kinds of workers, too: tenured ones, with job security to retirement, and all the rest, who can be fired easily.

Some companies start out as small, value-creating innovators and get exploitative as they beef up. In the labor market as well it can be hard to make clear distinctions between workers who create value for the company and for society and ones who create value mainly for themselves.

The discussion usually gets politically incorrect, and workers who feel threatened by it know how to delegitimize the very debate (just as tycoons pooh-poohed discussion of economic concentration in the recent past).

Hundreds of thousands of Israelis have tenure. Most work for the government, the cities, the banks and for monopolies. There is no question that tenure affects enterprise culture, management and sometimes the enterprise's very effectivity.

Workers like tenure, especially since job security has been evaporating everywhere, and in Israel too. They wish all workers had tenure. But asked if they would be prepared to pay the price of universal job security, as taxpayer or as service consumer (or as owners of a company that has to provide tenure), and the story changes.

It seems the attraction of tenure depends on somebody else paying the price.

By the nature of things, it’s hard to pin down that price. Add to that the fact that tenure is usually a privilege confined to organized interest groups, against which stands a silent public, and we understand why there is no political or public debate on it. That's how it goes.

Last week I asked readers how much the workers of a given large company I visited demanded in order to forgo tenure. I received a lot of answers. Before elaborating the reader answers, I will divulge that some of the workers answered on the spot that they would agree in exchange for a raise, ranging from 20% to 50%. One said that he's middle-aged and wouldn't forgo tenure for anything – maybe if he got ten times his pay, and maybe not even then.

What readers thought

Yael revealed that she'd worked at a "connected" company. Tenure means a steady salary until retirement and then a pension, she pointed out. Forgoing tenure is a statistical calculation, factoring in the probability of dismissal, which has increased; the probability of remaining unemployed over time, which increases with age; and the wage at a new job – and again the chance of improvement is slim. Also, pension provisions would likely shrink. The damage one might suffer from losing tenure – to pension savings as well – could be huge and compensation should be commensurate.

Itzik from Kfar Sava built an Excel model and decided that for a 50-year old (who hates risk) to forgo tenure, he'd need to be offered NIS 50,380 a month.

Arie thought the question was ridiculous because the people didn’t have the information they needed in order to make an informed decision.

Itzik said no sane person would exchange a tenured position paying NIS 20,000 a month for pay that still made sense, such as NIS 60,000 a month – he'd have to be a complete moron, or independently wealthy to take that risk. In other words, tenure is worth millions. "It is the best thing in the world," he concludes.

A., a registered nurse, says that tenure is not only financial but is also a state of mind, and that it protects employees from the vagaries of management. The bottom line is that it's priceless, and he begs to point out that tenured civil servants can be fired, though it takes some effort by management, with solid evidence.

"So if things are so great (for people with connections), why are things so bad?" A. writes. "If the employment terms are so great, why don't kids want to study nursing and work at the monopolies? Why would they rather study law, business administration and suchlike professions? I don't know. Apparently there are all sorts of connected people and monopolies and apparently the conditions in mind aren't that attractive."

Yair relates that two decades ago he worked in the Defense Ministry for six years, in the course of which his pay rose 500%. "We used to joke that our secretaries earn more than surgeons," he writes. Both his parents were also tenured government employees and he decided to quit and go into the private sector. He has held good managerial jobs but feels all too keenly that there could be many years of unemployment ahead of him, and his regret rings through his words.

Asaf suggests that tenure at a monopoly is like winning the lottery and one would have to be an utter idiot to forgo it.

And here we have the start of a public discourse on tenure. It's just a small part of the story of Israel's distorted labor market. What's sure is that tenure affects not only the market, the culture of labor in Israel and productivity, but also tremendous economic value. What's also sure is that Israelis have to stop pretending it isn't there. It's an elephant in the room and it's a big one.

The elephant in the room. Did Daddy just tell the family he'll never be fired from his government job? Credit: Photos by Getty Images and David Bachar

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