Israeli Tech vs. Israeli Unions: Two Local Powerhouses Set to Collide

Israel’s largest union wants to enter high-tech - and its using the sale of an Israeli giant to Intel to make headway

נתנאל גאמס
Netanel Gamss
Tower's chip factory in northern Israel. After being sold for billions to Intel, Israel's biggest union wants to represent Tower's workers and spark a unionization wave in local tech
Tower's chip factory in northern Israel. After being sold for billions to Intel, Israel's biggest union wants to represent Tower's workers and spark a unionization wave in local techCredit: RONEN ZVULUN/Reuters
נתנאל גאמס
Netanel Gamss

Israel’s biggest union is a powerhouse in the country more known today for its tech sector than its workers' rights. In fact, Israeli hi-tech is a powerhouse in its own right and since its rise to prominence in the 1990s the big historical labor unions have all but stayed out of tech, focusing instead on big organizations and leaving startups to their own devices.

The passing decade saw a small wave of workers getting organized in Israel’s high-tech world. The Histadrut Labour Organization, the largest in Israel, did manage to unionize several companies, mostly big firms like the local branch of the German software giant SAP. However, it also failed in an attempt to unionize employees at the Amdocs software company, one of the largest and most prominent companies in the market.

“There still isn’t a critical mass of organized high-tech workers in Israel, but there are first signs of increasing awareness regarding this issue,” said Yaki Halutzi, the chairman of the Cellular, Internet and High-Tech Workers Union in the Histadrut a year and a half ago. However, these nascent signs never matured. Last year, there were no new unions of high-tech workers under the Histadrut umbrella of unions. The tech front is also quiet at competing workers’ organizations, that have risen to challenge the stogy Histadrut.

The high-tech world remained quiescent with regard to the unionization of employees. However, things may be changing now - with the acquisition of Israeli chip-maker Tower by Intel for $5.8 billion two weeks ago.

The Histadrut sent a letter to Tower this week, not with warm congratulations over the massive exit they made - but rather with threats. The letter indicated that in light of the company’s refusal to discuss the implications of this deal on workers - including bonuses for employees and the safeguarding of their job security - the possibility of declaring a labor dispute and calling a strike would be now considered by the union.

But these threats, so far, have been empty ones. The Histadrut’s quiver is empty, or at least short on arrows. The reason is that in order for the Histadrut to be the official representative of Tower employees, Israeli law requires it to represent at least one third of them. The law is intended to aid workers’ attempt to unionize, providing official state recognition to any union that can get one third of a company’s workers to register as members. Tower employs 1,500 people in Israel. And though the union has not yet reached the target number of members, if you ask Leon Peretz, the chairman of the Histadrut’s northern regional office who signed the letter to Tower, the Histadrut is on the cusp of reaching that target: “We’re just about there – it’s a done deal in a couple of days, and then we can instigate some steps,” said Peretz earlier in the week.

He said that the rate of joining the Histadrut picked up after the deal was announced. The reason is, he said, that workers feel that management sold the company but forgot about their benefits. “Employees here gave the best years of their lives to the company, and when it’s sold for such a price, one would expect some bonus to be handed out, maybe according to seniority,” added Peretz.

‘There could be a strike’

In the letter, the Histadrut claims that the company is preventing union representatives from visiting its factory, violating workers’ fundamental right to unionize. Peretz said that the tech company ultimately agreed to allow Histadrut officials to enter the premises. “They’ll let us come in, but they preceded this by setting a festive event for their employees. They’ll apparently make all kinds of promises, thus affecting their motivation to join the Histadrut and form a workers’ committee. They do this every time we try to organize workers, but last time they didn’t keep their promises.”

Peretz said that when the Histadrut manages to enroll one third of the workers, he’ll demand an immediate launching of negotiations for a collective bargaining agreement which will include bonuses for the workers.

If negotiations fail, he says, “then I’ll declare a labor dispute. This could turn into a strike.”

Leon Peretz, who is head of the Histadrut's northern branch, wants to unionize Tower's workers and make sure they get a slice of the sale to IntelCredit: Gil Eliyahu

“We definitely don’t want to put the deal at risk. It should take place since it will benefit the employees and Migdal Ha’emek, where the company is located. But there is room for improving workers’ employment conditions.”

It seems that the Histadrut is trying to take advantage of the acquisition in order to become the employees’ representative labor union. If it manages to officially enter the company right after the sale and ensure some bonuses for its employees, it could leverage this achievement in order to kick start the wave of hi-tech unionizations that was halted in recent years.

However, the battle over public opinion is one-sided for now, since Tower is maintaining total silence for now. Since the deal was announced, the company is not talking to the media. Despite this, sources in the company say that the Histadrut has been trying to get a foothold in the company for years, with workers uninterested in cooperating with these attempts.

The battle over image is critical in this case, since the wave of unionizations several years ago raised the alarm in parts of this industry. There were concerns that workers’ committees in tech companies would impact flexibility and ability to compete. Voicing old concerns about unionizations, opponents of labor unions in tech argued that the high wages and generous work conditions in this sector make any intervention by labor groups redundant, since many workers increase their earnings by frequently moving between companies, making it unnecessary to have mechanisms that would guarantee their “job security” in this or that firm.

'At this stage'

Tower CEO Russell Ellwanger praised and thanked workers for their part in the firm’s success: 'Together with Intel, we believe we will grow'Credit: Eyal Toueg

Tower did reveal some of its plans in this regard in a letter from CEO Russell Ellwanger to employees, sent after the deal was signed. In the letter, he praised and thanked them for their part in the company’s success and added that “together with Intel, we believe that in the future we will have more rapid growth, which will serve both our customers and you, our employees…we believe that our integration with Intel will serve the interests of the company’s employees.”

Despite the thanks, praise and faith expressed by Ellwanger, Peretz is concerned. “In his message to employees there was no mention of a bonus. On the contrary, the message was that at this stage there will be no firing or closing of sites. But for me, when you sell the company to Intel and say ‘at this stage,’ people will definitely be fired later. Employees need to know this.”

Peretz may be wrong. Intel, which currently produces chips only for itself, is in the midst of a comprehensive process of setting up a division which will grant the right to create chips to other companies as well. This is where Tower comes in. It specializes in manufacturing bespoke analog chips for other companies as part of what is called the foundry market. Intel wants Tower to help it gain a foothold in this tailor-made chip market. Thus, the significance of the acquisition for Intel is the expansion of its operations. It is not an acquisition of a company that does the same thing Intel already does and thus may be shut down. Therefore, there is apparently no reason to worry about the jobs of people on the production line in the two factories in Migdal Ha’emek.

In Intel’s two recent large acquisitions in Israel, of Mobileye and Habana Labs, these companies remained as separate and independent units, continuing to grow after their acquisition by Intel.

Nevertheless, people in the industry note that after the deal is closed there could be some operations that are superfluous as far as Intel is concerned, mainly regarding non-technological positions, such as in administration and finances. In contrast to the acquisition of Mobileye and Habana Labs, Intel specifically noted that Tower would not remain as an independent unit but would be fully integrated into the new division Intel is setting up.

Tension between the Histadrut and Tower did not begin with the company’s sale last week. Last June, the Histadrut submitted a petition to the District Labor Court in Nazareth, asking Tower to allow its employees to unionize. The Histadrut approached Tower’s management asking it to immediately desist from violating workers’ rights to unionize. Tower responded by saying that it abided by the law and respected its employees’ rights. In response to attempts to unionize in June, and earlier, a group of employees at Tower got together to oppose the establishment of a workers’ committee.

This group said this week that the Histadrut was exploiting the fact that the company cannot respond in the media, “in order to deceive the public and the company’s employees. The Histadrut represents no one at Tower, they didn’t manage to set up a workers’ committee there. Employees are happy with the new deal and know that, as before, the management will look after their employees.”

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