Wages Director: 'There's No Logic or Justice Within the Public Sector'

Ilan Levin rejects the argument that the government's stance is misguided, and says there is no war on unions.

"My best friends are the union leaders. I wouldn't have survived in this position without trust and dialogue with my partners in the workers' unions. It's true that during negotiations things sometimes get difficult and leave scars, but even during strikes, you're ultimately working with people who truly believe they're public representatives."

You have to know outgoing Finance Ministry wages director Ilan Levin to understand that none of this is being said sarcastically. During his four years on the job, Levin conducted intensive negotiations with most of the country's large unions. Several of these incidents led to major labor crises - the social workers, the public defenders, the doctors. In several cases, he was subject to harsh personal attacks. But Levin doesn't consider the workers to be his enemies.

Ilan Levin
Emil Salman

"Unfortunately, it's difficult to come to an intelligent agreement with workers without going through a strike," he says. "The unions know that strikes only enhance their achievements. Why come to an early agreement with the treasury if you can strike and sweeten the deal?

"Public-sector workers continue receiving salaries during strikes," he adds. "Plus, everyone feels pressured, the court gets involved and pushes everyone to compromise."

Why is the pressure to compromise mainly on the government?

"There's less public support for the government's stance. Following the [social] protest, the public supports unions almost automatically. Thus you had people even protesting on behalf of the port workers."

Levin rejects the argument that the government's stance is misguided, and says there is no war on unions.

"We're working to strengthen organized labor, and we gave generous agreements to unions that agreed to organizational renewal - such as the teachers, the doctors and now the nurses ... Instead of just giving [the nurses] another raise, we came to an agreement that strengthened the system."

You have only praise for the unions. You don't think they take advantage of their monopolistic power to get benefits they don't deserve?

"I don't think the unions are exploitative. It's true that they're optimizing their gains over the short term, which is a mistake. A union that thinks only about maximizing its members' salaries ultimately brings its employer to a state of dangerous inefficiency. Look at the Israel Electric Corporation."

So how haven't there been reforms at the IEC or the ports?

"I believe the IEC is on the brink of change. The way to push through institutional change in Israel is to create a balance of forces versus the workers, meaning that the workers are also losing from the lack of change. That's what's happening at the IEC, due to its debts - there's no more money to fund early retirement. For years they haven't received raises beyond what the public sector as a whole receives, since the corporate governance there has improved and they're not giving out any more unauthorized raises. The IEC's union is intelligent and it understands that structural reform is crucial for the workers."

Meaning the way to push through reform is to "dry up" a company until the workers are on their knees?

"Sometimes there's no choice but to dry up companies. The IEC and the Broadcasting Authority are proof of this - unions that came ready for reform since their companies started facing competition or since the workers were exasperated with how the organizations were being managed. They know they can't go on like this."

And the ports?

"They have a monopoly, high fees and partnerships with management that give workers raises without going through the treasury. They tell me, 'The ports are doing better, so don't interfere,' but I remind them that while their profits may be increasing, this isn't true profitability, it's monopoly profits."

Could government monopolies start facing competition?

"There are already private power plants dealing the IEC competition, and Mekorot [water company] is also facing competition from desalination plants. This is precisely how to show the public what the alternatives are to government products and force the unions to improve."

Does the management at the large government monopolies serve workers' interests?

"Management is primarily interested in the bottom line, so if they need to pay the workers another NIS 7,000 a month so that there will be quiet at the ports, they'll do it.

"We aren't really giving the management the tools to manage - they can't fire workers; they can't move workers; the unions are generally run by family members; there are ministers influenced by workers' pressure; and there's a union that thinks it manages the company no less than the CEO and lets itself curse the CEO and even damage his car - and you still can't fire the workers. So what exactly are we expecting the management to do?"

Levin, 49, is considered rather good at his job, partially due to his balanced approach. Contrary to how the doctors' union head tried to paint him, Levin is a moderate man who understands everyone's interests.

So how do you sleep at night when a forklift operator at the ports is earning NIS 40,000 a month while the average social worker is earning NIS 10,000?

"I don't sleep at night. There's no logic or justice within the public sector. Wages are set based on each institution's power. It's unreasonable that port workers, who are protected by a collective wages agreement, receive the kind of salaries earned by unprotected private-sector workers.

"But there's no quick solution to the wage gaps within the public sector. I could never cut salaries at the ports. The only thing to do is halt raises, and over the years let other professions start receiving those kind of salaries."

Giving lower salaries to new hires at institutions like the ports hasn't worked out, because once these workers become the majority, they start seeking the same outrageous terms for themselves, too, Levin says.

The only solution is fixing institutions one by one, once they reach a crisis.

"The right method is giving significant raises in exchange for reforms. The salary deal with the doctors, for example, is the most expensive deal we've ever signed with them, even though many doctors aren't satisfied. The only reason the treasury agreed to pay is that, in exchange, we're instituting differential salaries that will encourage doctors to move to the periphery and fill needed specialties."

However, most public servants aren't being paid enough, he says.

"Under group wage agreements, beginning engineers currently receive NIS 7,000 a month - half of what they'd receive in the private sector," he notes. "The private sector also differentiates between different types of engineers, and sets salaries based on demand. In the public sector it's all the same salary." For instance, the Atomic Energy Commission complained that it wasn't able to hire new engineers, he adds.

Ministry director generals currently earn NIS 37,000, so everyone else has to earn less. As a result, the government pays some professionals far less than they would earn in the private sector, he says.

As a result, many excellent professionals quickly leave the public service. "There are no more people like me who spend their lives in the public service," Levin concludes.