Bloated Wages: Who’s the Boss at Israel Chemicals?

A tale of entitlement, nepotism, world-record salaries - and a management that caved in to union demands for far to long.

Eyal Toueg

Being fired is the worst thing there is, with the exception of a health crisis, of course. It is a serious blow to self-respect, status and the ability to support one’s family. A person who has been fired feels as if his entire world has come crashing down. He is anxious about the future, worried about meeting his mortgage payments. It takes a strong character not to collapse.

That bitter truth having been said, however, the blanket rejection by the unions at Bromine Compounds and the Dead Sea Works of any and all layoffs at the plants are unacceptable, and that is the heart of the dispute at Israel Chemicals: Who’s running the company, labor or management?

Bromine Compounds has been operating at a loss for eight years. Its products have set international prices, and when its costs are too high it simply loses money. If the losses continue the owners could stop putting in money, eventually resulting in the plant’s closure and the dismissal of all 850 employees.

ICL has a comparable plant in the Netherlands that buys its bromine abroad. Due to shipping costs, the Dutch plant starts out with a handicap but is nevertheless profitable. The reason is simple: Unlike its Israeli counterpart, the Dutch factory has no hidden unemployment and wages are lower than at Bromine Compounds, whose salaries are the highest in the world for a bromine plant. Bromine Compounds’ monthly per-worker labor costs are 35,000 shekels ($9,200), up there with the banks, the ports and Israel Electric Corporation. That of Bromine Compounds’ shop steward, Avner Ben-Senior, is 76,000 shekels, and in a classic example of nepotism, nine members of his family also work at the plant. Over the past four years, members of the plant’s union committee spent 300 days abroad “checking out vacation sites for employees,” who are entitled to two flights abroad a year at company expense.

ICL also has exceptional severance benefits. The Histadrut labor federation didn’t offer anything close when it fired thousands from the union-owned companies Hasneh, Koor and Solel Boneh. Bromine Compounds is offering early pensions of 17,000 shekels a month on average to employees over 55 (90 people), and severance pay of 250 percent of the employee’s monthly salary for each year of service (with no pension) to 20 younger workers. At Dead Sea Works, 100 employees will receive early pensions and 20 will receive the increased severance package without pensions.

Why this, and why now? Actually, it was long overdue. Management woke up too late. For years, ICL caved completely to the unions due to the company’s high profits, low taxes and lack of desire to take on the union. In recent years, however, all that changed. ICL suffered a series of blows, in part due to its excessive executive salaries, and these too must be cut as part of a recovery plan.

ICL was excluded from the tax breaks of the Encouragement of Capital Investment Law, forced to pay for salt removal in the Dead Sea area, subjected to a windfall profits tax as a result of the Sheshinski 2 recommendations and after arbitration will have to double its royalties to the state. As a result, its taxes will double, to 2 billion shekels a year — and that’s what woke up the executives who were asleep at the switch. In a side note, it shows that when corporate taxes are raised, the workers may end up paying part of the price.

Meanwhile, what about the layoffs? It’s in the hands of the state. The new Economy Minister, Arye Dery, must get into the thick of it. He must attract advanced industry to the south, aid small businesses, offer vocational training to the unemployed and subsidize transportation to and from distant workplaces. Everyone agrees that being fired is the biggest blow of all, and every person who has been laid off is a world unto himself. Dery must, therefore, alleviate the employment crisis in the eastern Negev and address, on an individual basis, the needs of each ICL worker who is dismissed.