Analysis |

How Labor Strikes Became History, and May Become Our Future

Globalization, technology weakened unions, a growing economy caused strike days to plunge 90% in the last decade

Sami Peretz
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Electric Company's employees protest in front of the Prime Minister's on January 28, 2014.
Electric Company's employees protest in front of the Prime Minister's on January 28, 2014.Credit: Tali Mayer
Sami Peretz

Every party needs an enemy to build its narrative – it’s a hard and fast rule of politics all over the world. Avigdor Lieberman and Yair Lapid have the Haredim, Netanyahu has Ahmad Tibi, and now for Naftali Bennett and Ayelet Shaked of Hayamin Hehadash it’s the Histadrut labor federation.

In recent months they have been trying to frame the Histadrut and organized labor as the great enemy of the Israeli economy. The inspiration seems to be Moshe Feiglin and his libertarian political agenda. Feiglin didn’t get enough votes to enter the Knesset last April on his Zehut party ticket, but he won enough from Hayamin Hehadash’s natural constituency to keep that party out of the Knesset, too. They don’t want that to happen again.

Nevertheless, the timing of their attack on unions is puzzling. The Histadrut is responsible both now and in the past for many of the economy’s problems, such as low labor productivity, bureaucracy, nepotism and the gap between older unionized workers and a new generation of outsourced workers.

But when you look at the issue of strikes, the last decade has been unusually peaceful, compared with the previous one. In 1998-2007, 2.5 million work days were lost to strikes annually on average, while in 2008-18 the number plunged to 250,000. When you consider how much the labor market has grown between the two periods, the decline is even more dramatic.

Prof. Lilach Litor, of Israel’s Open University, charts the decline in strike activity since the 1980s in Israel and the world in her recently published book “The Strike: Law, History and Politics” and attributes it to several factors:

Globalization: The option employers have to move factories overseas where labor costs are lower or even to outsource locally has led to a drop in union membership, hence the ability to organize strikes.

Neoliberalism: Since the 1980s many countries have adopted laws that make it more difficult to organize or strike. The rise of individualism has led many workers to prefer personal contracts over collective labor agreements. That trend has been reinforced by the spread of higher education and specializations as has privatization of state-owned enterprises.

Technology change: Led by the internet and cellphones, technology has enabled businesses to disperse their operations and manage them remotely. On the labor side, technology has enabled the rise of the gig economy of freelance workers and subcontractors. The form of corporate organization makes it tougher to organize workers and represent their interests.

In Israel, the trend has been exacerbated by the Histadrut’s ceding control of its economic assets, including pensions, funds, big business like Bank Hapoalim and Koor, and the Clalit health maintenance organization during the 1990s. The Economic Stabilization Program of 1985 and other legislation also weakened it. In the mid-1980s, 75% of Israeli workers belonged to unions; today it is about 25%.

There are some positive factors, too. The last decade has been one of steady economic growth and historically low rates of unemployment. Meanwhile, the government never tried to overhaul the inefficient public sector, thereby sparing itself any friction with labor unions. The one major reform there was with the state-owed Israel Electric Corporation and there the unions were compensated generously for their sacrifices.

By comparison, the previous decade had started with a three-year-long recession, the dot.com bust and the second intifada. The government cut back and the public sector was hurt and resorted to strikes in response.

What has changed, as Litor notes, is the growth in strike days in the private sector. In 2008-18, public sector strike accounted for 69% of all strikes, compared with 92% in the previous decade. Over the last two decades, organized labor has existed mainly in the public sector or in companies that were once stated-owned like El Al Airlines.

However, in recent years unionization has begun to spread to the private sector, for instance the cellphone companies and insurers. Many of this decade’s strikes are connected with trying to organize a union in the first place. Litor found that in 2013 while 68% of strikes were in the public sector, 81% of the work-days lost to strikes were in the private sector.

Litor found that only 8% of strikes in 2013 affected vital public services, like electricity and the ports. But that misses the point. The workers’ committees at places like IEC and the Israel Airports Authority are so powerful that they don’t need to strike. They used labor slowdowns to deliver their messages. They’re like a country with nuclear capability that doesn’t have to use it to get what it wants. The IEC reforms, in which employees got billions of shekels in compensation, is a classic example.

The era of labor peace may be coming to an end after the next government is formed and starts grappling with the growing budget deficit at a time when it has to address traffic chaos in Gush Dan, the health system’s dwindling resources and the army’s demand for billions more for defense.

The jobless rate in Israel is so low that the only direction it can go is higher. Automation is putting many jobs at risk, not the least those of drivers who may be replaced by self-driving vehicles. With or without labor unions, the next decade may well be stormy.

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