Netanyahu Sets a Trap for His Own Finance Minister

If the prime minister really wants Israel’s economy to advance, he should be using his alliance with the Histadrut's chairman to back something that he’s also urging Kahlon to push: a mandatory arbitration law.

Histadrut members raise their hands to show support for a general strike.
Oren Cohen / Histadrut

The bizarre alliance forged between Prime Minister Benjamin Netanyahu and Histadrut labor federation Chairman Avi Nissenkorn, to delay the launch of the new public broadcasting company until 2018, suffered a setback this week.

Finance Minister Moshe Kahlon and his budget officials managed to stymie that effort, in part. The Israel Public Broadcasting Corporation (replacing the Israel Broadcasting Authority) will be rising to its feet in April 2017, at the latest (and not 2018 as Netanyahu had hoped). By then, we can assume that the prime minister will have tried to stick some more spokes into its wheels – just to show who’s boss.

But if Netanyahu really wants Israel’s economy to advance, he should be using his alliance with Nissenkorn – and the similarity between their concepts – to back something that he’s also urging Kahlon to push: a mandatory arbitration law.

That is a very unfrightening term – unless, of course, you’re Nissenkorn, who seems to find it utterly terrifying.

What would the law say? That the big labor unions in Israel, which control essentials like the power supply, water supply and airports, etc., would have to enter arbitration procedures before exercising their right to strike.

The unions in question can severely disrupt life in Israel with the flick of a switch. It’s patently obvious why all possibilities of dialogue should be exhausted before they’re allowed to mess up our lives. But over the years, the Histadrut and its leaders have firmly rejected any such initiatives – on the grounds that their power would be weakened. Indeed, the Histadrut’s power stems entirely from its ability to shut down the economy at will. Without that power, it’s toothless.

So if Netanyahu and Nissenkorn managed to find common ground for a moment, shouldn’t they take advantage of that bliss to discuss mandatory arbitration? Didn’t Netanyahu say to the treasury chieftains, not so long ago, that a mandatory arbitration mechanism could boost Israeli economic growth by 5%? Why not utilize the relations with his new ideological twin to move this idea forward?

Well, let’s not overdo it. Netanyahu knows perfectly well that merely opening a discussion on this topic could shut down the economy. And he doesn’t want that to happen.

So why did he raise the idea? Because he wanted to set a trap for his finance minister, Kahlon, that’s all: Get Kahlon to push the idea and get into trouble with the Histadrut – a battle that Kahlon has been resolutely avoiding (his predecessor at the treasury, Yair Lapid, did likewise).

So, how could mandatory arbitration be advanced here, despite all concerned? Only by Netanyahu deciding to throw his full weight and that of the coalition behind the issue.

That probably wouldn’t suffice, because Netanyahu himself is captive to Social Affairs Minister Haim Katz, the biggest strong-armer in Likud and the closest to the Histadrut.

Throwing Katz a bone

Now may be to time to remind you that Katz arrived in Likud after a long career as chairman of the Israel Aerospace Industries union. He has the power to embitter life for Netanyahu in the Likud Central Committee (the party’s power hub), which he has headed since being elected to the post last December – much to Netanyahu’s dismay. He has enormous power to extort; there’s a good reason he just got the labor portfolio (which used to be part of the Economy and Industry Ministry).

Don’t think that his appointment by Netanyahu was designed to advance the labor market. All we have here is the premier bending to Katz’s pressures and throwing him a bone so he wouldn’t make Netanyahu’s life miserable in the party.

How could Katz make Netanyahu’s life a misery? The most effective way is to sponsor a Likud party resolution limiting the term of the party chairman (Benjamin Netanyahu) to two terms.

None of this political soup has a thing to do with the real challenges facing Israel’s labor market. Certainly, Netanyahu’s praiseworthy initiative to advance the mandatory arbitration law doesn’t, because his motives are political; nor does giving the labor portfolio as candy to Katz. The problems of the labor market require politicians who are rather less deceptive and belligerent, and rather more strategic; who understand that Israel’s gloriously low unemployment rate won’t last forever.

If they took the challenges of the market seriously, Netanyahu, Katz and Nissenkorn would be meeting at this very moment, mapping out the problems and building a platform for the future.

What are the labor market’s issues? Average life expectancy in Israel has been increasing, which has pension implications. Then there’s the technological revolution. Plus the huge gaps in job security between the public sector (rigid) and private sector (flexible), and wage gaps. And, of course, don’t forget Israel’s low productivity rates. The country needs a long-term plan that can adapt to changes in circumstances and needs in the decades to come.

We could list more issues, but why bother if none of the relevant players has any motivation to tackle them? Not Nissenkorn, who’s preoccupied with elections in the Histadrut; nor Netanyahu, who’s in survival mode; nor Kahlon, who isn’t about to take on the Histadrut all by his lonesome and get pounded into dust.

Thus, the labor portfolio and challenges of the workforce fall victim to petty politics – which has absolutely nothing to do with the needs of the young people entering the labor market. It’s true that unemployment is low. But it can only get worse.

Defending unions, not the public

Incidentally, Knesset members Shelly Yacimovich and Yossi Yonah (both Zionist Union) jumped all over the idea of legislating a mandatory arbitration law. They called it antidemocratic and competed to insult it the most. Why are MKs so adamant about defending powerful unions that control vital resources, rather than defending the public? Why is the power of the unions to set profligate pay and pension terms more important than the consumer?

Why do MKs who otherwise successfully identify places in the economy where the powerful do wrong – from politicians to tycoons – find themselves unable to identify unions driven mad by power and serving only their own interests? It’s true that attacking a tycoon costs exactly one vote, while attacking a union potentially costs thousands, but what about the greater good?

Yet Yacimovich and Yonah systematically stand by these people who could shut down the nation, which is proof that the “social democrats” in the Labor Party are that only until it reaches labor relations. Doing something about the labor force and its basis in major job security gaps is fundamental to true social-democratic policy.