Executive Summary

The Challenge Facing the Next Histadrut Labor Federation Chief

Needed: A chairman to lead labor market into 21st century.

Here's a forecast of how things will look under Ofer Eini's successor as chairman of the Histadrut labor federation: labor disputes galore, the shuttering of factories in outlying regions creating a big stir, layoffs by some of the country's largest companies leading to direct confrontation with workers and mounting wage pressures on social workers, teachers, police, nurses and others. There will also be plenty of talk about reforming Israel Electric Corporation and the ports, but it will be as easy as ever to squelch any progress there. Everything will land on the new chairman's doorstep and he'll be called on to mediate, bridge differences, cool things down or heat things up. By the end of the next chairman's term in office some sectors will come out unscathed and with higher pay, while much of the population pays the price.

This is no wild guess; it describes how Histadrut chairmen have operated over the past two decades. But is this how it must turn out? Is this what the next chairman wants to accomplish – putting out fires and assuming the role of national mediator, squeezing out a few gains for one sector or another before leaving the scene hardly changed?

This kind of agenda can't be denied the Histadrut chairman. It's his bread and butter, his natural habitat. But the question is whether it's possible to insert into the next chairman's agenda something with a bit greater importance and significance than settling sporadic disputes and mediation work.

Can the chairman become a leader of the Israeli labor market, the leader of the labor force in its entirety, and not just the unions? Not only in terms of pay hikes achieved by any particular pressure group or reducing the number of employees laid off by a company needing to cut expenses, but also by building a modern, dynamic and fairer labor market that provides a wealth of equal, high-quality opportunities, a market that can provide a solution to a wave of layoffs and deal with frequent change and crises?

Urgent need for egalitarian market

Is it too much to expect from the next Histadrut chairman that he devote part of his time to building the labor market of the future and making it worthwhile for entrepreneurs and investors to create new jobs, provide hope for the younger generation and career paths in the labor market, and enable older workers to develop professionally and contribute rather than becoming a burden on their organizations?

The need to build a modern, more egalitarian labor market is much more urgent that it may seem for at least three reasons: global competition, Israel's high cost of living and the excessive inequality in Israeli society. After five years of battering by the global economic crisis, labor markets are badly in need of the elixir job creation. The International Monetary Fund estimates that the world economy needs to create 600 million jobs over the next 15 years. This will require very heavy investment, particularly cross-border investment, which will in turn stimulate intense competition to attract it. Israel will need to create the right conditions for this. In facing such competition the entire economy must identify its relative strengths and weaknesses, and provide solutions for the latter.

The Israeli sector best prepared for this competition is high-tech, thanks to its competitive edge in innovation and entrepreneurship, the fact that is geared toward global rather than domestic markets, and its flexible use of human resources. Perhaps it is even too flexible, but as long as it's growing it will provide employment opportunities.

As for the other sectors, especially those operating in the domestic market, the situation is much more problematic. If it doesn't develop competitive muscles, human resource inputs are too inflexible and the gaps between tenured employees, temporary workers and those employed through manpower agencies will be too wide. Flexibility is vital due to the dramatic changes in the global economy over the last two decades, as manifested in the high pace of technological development and the increased frequency of major economic crises.

Job offering no added value

The Israeli economy has demonstrated some impressive durability over the past few years, and the labor market can boast of low unemployment and a rising rate of labor force participation. But a deeper look into the labor market reveals many jobs contributing little added value or any competitive advantage to the economy whatsoever – and these are jobs that can disappear overnight. The Manufacturers Association estimates that of the 400,000 jobs in industry, 100,000 to 150,000 contribute no added value. These are found in plants with marginal profitability, some held up artificially by means of quota protection or other long-entrenched arrangements. If the decision were to be taken today whether to build these plants at all, the answer would be no. There are other workplaces that, due to their monopolistic position, employ many more people than they need, which consumers pay for through an necessarily high cost of living.

It shouldn't be forgotten that every reform generates a large range of opportunities, not just threats. It's no coincidence that the mayors of Ashdod and Haifa are fighting for the right to build a new port. They know this will generate additional jobs for their cities. The railroad also created many opportunities because right now we have a prime minister with a strong penchant for the train system and he intends pouring billions into it.

The next Histadrut chairman will be called on to deal with these questions. He could push them aside, squelch them, or roll them over to his own successor when the time comes – but then the cost to the economy from the delay will be much higher. The dilly-dallying will push the cost of living even further, raise the unemployment rate and weigh on everyone's standard of living.

Avi Nissenkorn, the attorney who is Ofer Eini's candidate for next Histadrut chairman, was a sprint champion in his youth and still holds a distinguished place among Israeli runners in races up to 400 meters. Until now, he remained under Eini's shadow despite having led all the major, complex negotiations in recent years. If chosen for the job, he'll bring plenty of experience in labor relations, complete identification with the working class, professionalism and a reputation for stubbornness in negotiations - all qualifications for a modern labor leader. The question is: Does he have the vision the role also requires?

David Bachar