High Court Strikes Blow Against Israel’s Most Powerful Labor Unions

Justices signal that workers at state-owned monopolies can no longer strike in order to block industry reforms being undertaken by the government

A protest in front of Histadrut headquarters, February 2017.
Ofer Vaknin

The power of labor unions in state-owned monopolies may finally be pared back after the High Court of Justice on Sunday issued a conditional order (order nisi) barring Israel Electric Corporation workers from striking to block government reforms, signaling it was dissatisfied with the way the labor courts had earlier given their backing to the union action..

In fact, the three-judge panel had made its views so clear during a lengthy hearing on Thursday that Avi Nissenkorn, chairman of the Histadrut labor federation, ordered the IEC workers committee to call off the action in order to forestall a ruling. The court gave unions 60 days to explain why the labor court decisions should not be rescinded.

At one point on Thursday, Nissenkorn became so concnerned about the proceedings that he asked Finance Minister Moshe Kahlon to intervene.

At issue was a slowdown called by the unions at IEC, the state-owned electric power monopoly, whereby union employees were deducting 10% of payments to the utility’s suppliers and refusing to issue electric bills.

The Haifa Labor Court and the National Labor Court both backed the workers in decisions two months ago, saying the action was within their right to strike. But unusually, the High Court panel, led by Justice Esther Hayut, not only sharply criticized the labor courts’ decision but took over part of its brief.

Moreover, the High Court signaled it was taking issue with a tendency to give labor law priority over antitrust and competition legislation. “After 20 years, the time has come to reexamine labor law,” said Hayut.

Workers committees at state-owned monopolies like the ports, the water sector and other key industries typically line up against government efforts to introduce competition to improve services, lower costs and give a boost to economic growth.

In the case of IEC, the labor action was aimed at blocking the government from instituting reforms that would strengthen the private power companies now competing with IEC. Michal Leiser of the State Attorney’s Office told the court that the finance and energy ministries had negotiated for two years with the union over reform, including terms for compensating IEC workers for job loss, only to meet with compete rejection.

The power of the unions is so strong on issues of reform, attorney Aharon Michaeli, representing the private power companies, told the court, “In the reality of today as I understand it, the real sovereign power with whom I need to consult before I build a power station isn’t the government of Israel but the IEC workers committee.”

Attorney Iris Vardi, representing the Histadrut, framed the labor actions that the workers committee had taken as an issue of protecting employees against layoffs that would inevitably result from the government’s planned reforms.

The labor courts agreed with the Histadrut’s argument, but on Thursday the High Court accepted the state’s contention that the labor courts had erred twice over – once by allowing workers to declare an open-ended strike without an evidentiary hearing, and a second time by allowing a strike aimed at blocking government reforms.

State attorneys noted repeatedly during the Thursday hearing, which stretched more than five hours, that the labor courts’ had ignored a 1993 High Court ruling against strikes aimed at frustrating the government’s right to undertake economic reforms.

“The chairman of the Histadrut is standing here and threatening a labor action in the electricity sector that has no connection to IEC or its employees. We can’t agree to have sovereign power handcuffed like that,” an angry Shai Babad, director general of the Finance Ministry, told the court.

In the end, the court was readying to issue a 60-day order instructing the workers committee to end its slowdown and for the state to refrain from “critical structural changes” at IEC, but not barring it from undertaking industry reforms.

When the 60 days are up, the two sides could then negotiate terms for how the reforms will affect IEC workers but not over the reforms themselves. It was then that Nissenkorn staged the Histadrut’s retreat for fear of the implications.