High-tech Unions Get a Cool Reception in Israel. Could U.S. Example Change That?

נתנאל גאמס
Netanel Gamss
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Amazon workers protest racism in the U.S.
Amazon workers protest racism in the U.S.Credit: KENA BETANCUR - AFP
נתנאל גאמס
Netanel Gamss

“One thing bothers me,” said Prof. Eugene Kandel five years ago, “and that is the phenomenon of unionization in big high-tech companies. If we see this happen in one or two companies, we’ll see a massive exit of companies from Israel.”

Two months after Kandel – Prime Minister Benjamin Netanyahu’s former economic adviser and today the CEO of Startup Nation Central – made these remarks at the annual Herzliya policy conference, workers at the big tech company Amdocs declared a formal labor dispute.

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They claimed management refused to recognize their union, part of the Histadrut labor federation. A few months earlier, the Histadrut had organized workers at the Israeli unit of America’s NCR, the world’s biggest maker of retail hardware.

It’s doubtful that unionization is bothering Kandel much these days. In the end, the unionization drives at Amdocs and NCR both failed. “We tried to organize, but management succeeded in breaking us, and no one is organized today,” said Yaki Halutzi, chairman of the Cellular, Internet and High-Tech Workers Union.

Unionization everywhere in Israel is in steep decline. In the 1980s, 80 percent of Israeli workers belonged to a trade union, but that rate dropped to 38 percent by the early 2000s and to 24 percent in 2017. Still, that’s higher than in the United States today, where just 12.1 percent of all workers and seven percent of those in the private sector are represented by union. No major legislation sponsored by trade unions has been passed in recent years and 27 states have so-called right-to-work laws, meant to deter collective bargaining.

But unionization is showing some signs of life in high-tech, far from its traditional bastions of the public sector and heavy industry.

In January, software engineers and other employees at Alphabet, Google’s parent company, formed the Alphabet Workers Union – affiliated with the Communication Workers of America – whose goal is “to protect Alphabet workers, our global society, and our world.” AWU hasn’t sought official recognition, but it is collecting membership fees of one percent of their income from 800 workers. That is a handsome amount for the union, considering the generous pay of Silicon Valley tech workers.

Some Amazon workers are joining unions, too. On February 8, the 5,800 workers at a company facility in Alabama received sent letters asking if they wanted to join the Retail, Wholesale and Department Store Union. If a majority votes in favor by the end of March, it will be the first Amazon warehouse in the U.S. to be organized.

Communications Workers of America, a veteran union that represents telephone company employees, recently formed the Campaign to Organize Digital Employees. Code-CWA is targeting the tech industry, in particular the video-game industry, where 60-hour “crunch” weeks ahead of big releases are common.

The Alphabet and Amazon unions are very different. The Amazon workers are blue-collar, while the ranks of the Alphabet union is filled with well-paid techies, some of America’s most privileged workers. Still the organization drives have sent shock waves through the tech industry because they are so rare.

Moreover, the AWU says it is committed to improving conditions for data center and contract workers at the company, whose pay is much lower. “Evil starts with the exploitation of the most vulnerable, but it never ends there,” the union’s mission statement says.

On February 5, the union filed a complaint against Modis, the high-tech unit of the Swiss-based temp agency Adecco. AWU claims that managers at Modis, which provide data center services to Google, tried to stop Google contract employees from discussing pay, which is illegal.

In Israel, the past decade has seen a wave of unionization drives in high-tech, which caused many to warn that it would hurt the industry. The dam has been broken and signs of worker consciousness are appearing, Halutzi said. But he admits the drive to organize high-tech has not reached critical mass.

Early on, Facebook founder Mark Zuckerberg said his goal was to “move fast and break things.” That’s the ethos of the entire tech industry. Companies operate in highly competitive, rapidly shifting markets, where businesses are formed and fail in a moment.

Facebook CEO Mark Zuckerberg speaks during the annual F8 summit at the San Jose McEnery Convention Center in San Jose, California.Credit: JOSH EDELSON / AFP

Entrepreneurs and executives fear unions will tie their hands, preventing them from responding quickly enough to the market and undermining their ability to compete. In Israel, in particular, many fear unionization will deter multinationals from setting up research and development centers locally.

In any case, union opponents argue, high pay and generous terms make unionization unnecessary. Workers raise their pay and get promotions by moving from employer to employer, they aren’t looking for the kind of “job security” unions promote. Union intervention in pay and other issues will come at the expense of the best workers, they claim.

The union Halutzi heads was formed in 2014 and today it has members employed by six high-tech companies, including the Israel arms of Germany’s SAP and Visonic of the U.S. It represents about 3,000 workers through collective bargaining agreements with the six firms.

The union also represents workers in the arms industry, such as Elbit Systems and Israel Aerospace Industries, which employ many in R&D. Other workers in these companies are organized through different unions. In addition, about 200 employees of Surecomp, a developer of software for the banking industry, are organized through Koach LaOvdim, the Democratic Workers’ Organization. A third labor organization, the Histadrut Haleumit, has no high-tech members.

Halutzi said the share of unionized high-tech workers in Israel is about the same as in Europe and much higher than in the U.S. Dealing with American companies operating in Israel is more challenging, he said, “because their business culture is a lot more aggressive.”

But he is not giving up. “[The Histadrut] is trying to build a network of shared interests between local management and the workers’ committee, which provide advantages to the companies’ global management. There are places where you have no choice but to fight to make it clear to global management that steps taken at the expense of workers will ultimately hurt it,” he said.

In an article on high-tech unionization, The Economist magazine noted that the impact on Alphabet and Amazon of organized workers could be very different.

Alphabet is in a position to improve conditions for contract workers if it wants to. It could also, to a certain point, cooperate with its software engineers and their goal of fostering world peace, for example, by refusing to provide cloud-computing service to the Pentagon.

Amazon, however, has more to lose. If its Alabama workers organize and win good contract terms, other logistics centers would be encouraged to copy them. Union demands on the timing of shifts, expanding capacity or automation threatens to hurt the company’s reputation for flexibility and speed, Mark Shmulik, a broker at Bernstein, told The Economist. That could erode Amazon’s already-thin profit margins on retail operations.

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