Zim to Workers: Accept Pay Cut Because of Hard Times

And don't strike while company reorganizes, management urges; workers not persuaded.

Zim Integrated Shipping Services is urging its workers to accept an immediate pay cut because of its dire financial condition, and worker representatives did not shoot the concept out of the water.

Manpower manager Yitzhak Brauner held a meeting with labor representatives a few days ago to explain the company's situation. The meeting had mixed results: Avi Shitrit, chairman of the administrative workers guild, opposed the idea. Avi Levy, chairman of the maritime officers' guild at the Histadrut labor federation, did not rule it out.

Zim ship - Itzik Ben-Malki- 24112011
Itzik Ben-Malki

Zim is owned by The Israel Corporation, which in turn is controlled by the Ofer family.

This is not the first time that Zim has asked its employees to forgo pay so that it can heal. Two years ago its 850 workers employed under a collective employment contract agreed to forgo 5% to 10% of their wages, saving the company NIS 41 million. The pay cut for maritime officers had been 4%. Now management is demanding that pay and social provisions be cut by about the same degree because of the sudden decline in global trade, which has slammed the shipping industry.

The workers' main beef is that management hasn't proved it will share the pain, it seems. "We would consider some decrease in our pay or social provisions if management had told us where else it means to cut back, and when it means to stick its hands into its own pocket and inject capital," said Shitrit on Wednesday. It has not done so yet, he added.

The wage cost of Zim's Israeli workers is low - only 3% of Zim's operating costs, said Shitrit. Once workers outside Israel are factored in, wage costs still amount to only 8% of the company's operating costs, he claimed. Therefore, wages are marginal relative to other ways the company could streamline, he claims.

Avi Levy, who represents about 200 maritime officers working on Zim ships, was more conciliatory. "We are living the crisis in the global shipping industry and therefore cannot reject the management's demand outright," he said on Wednesday. "We are negotiating and will surely find the equilibrium between the company's needs and our pay."

But the company should not cut pay too deeply, he warned: Otherwise the maritime officers will jump ship to other companies.

Three weeks ago Zim management demanded that workers promise not to strike or launch sanctions during the next three years, in order not to disrupt the plans for structural change, which will effectively split the company in two. The workers, backed by the Histadrut labor federation, refused.

Zim management said it would not comment at this stage.

The Israel Corp. also owns Israel Chemicals, Oil Refineries, Inkia Energy, and has stakes in electric-car venture Better Place and in the Chinese carmaker Chery.