A Game of Monopoly With Only One Winner (And It's Not You)

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Dozens of representatives of eight multinational corporations working in the field of underwater marine infrastructure were due to arrive in Israel next week. A tour had been arranged for them at the sites where two new, privately run ports are planned in Ashdod and Haifa. But the delegation won't be coming - not because of military tensions in the region but because Israel's National Labor Court wouldn't allow the visit.

In the process, Israel has suffered a public relations black eye and we as a country have moved one step closer to the dishonorable norms of the Middle East - where meetings are scheduled, set up weeks in advance, flights booked, and then at the last minute everything is cancelled, come what may.

The withholding of approval for the visit is a direct extension of a recent ruling by the court, by a panel headed by Judge Yigal Plitman, the deputy president of the National Labor Court. The judicial panel ruled that the state cannot proceed with the process of soliciting bids to construct the ports; instead, it must sit down for "talks" with the labor committees who represent the port workers at the existing state-owned ports in the two cities.

What kind of dialogue does the court have in mind? After all, these are workers committees that will do everything in their power to head off the establishment of ports that would compete with them. They want to maintain their current total monopoly, which puts their hands at the controls. Come to think of it, the National Labor Court is a monopoly, too.

The court has totally ignored the current sorry reality in which the Ashdod and Haifa ports are controlled by militant workers committees that have debased the ports; where waste, inefficiency, excessive salaries, a bizarre bonus structure and nepotism reign.

Israel's exports are hurt? Imports are delayed? Ships wait offshore? Growth is curbed? Prices go up? What does the court care?

At the ports, the response is that it's all a plot. They're good kids who do good work, and their wages are lower than what they really deserve. From their standpoint, it’s normal for a port navigator to earn NIS 70,000 a month; a steward gets NIS 65,000; a mechanic rakes in NIS 60,000; and drivers are paid NIS 40,000 a month.

When staff at the Finance Ministry examined the issue, they found that the annual damage being inflicted on the economy by the ports runs to about NIS 800 million, and we all bear that cost in the form of high prices. It's a "port tax." But even that doesn't make an impression on the labor court. Something rotten is going on here.

Not long ago the Haifa Regional Labor Court ruled that workers at the state-owned Israel Electric Corporation are entitled to refuse to connect a privately owned electric power plant to the national electricity grid, until negotiations are held with the workers over reforms to the electricity sector. In other words: monopolies are good, reform is bad.

If it were up to me, I would require that judges take at least one course in price theory. Maybe then they would understand the damage that monopolies inflict on the economy. If it were up to the court, none of the reforms that have been carried out in the past would have gone ahead.

In the judges' worldview, cellular service providers Cellcom and Partner Communications (which does business as Orange) would not have been allowed to compete with Pelephone's monopoly, because the latter’s workforce would have been hurt by it. When he was communications minister, Moshe Kahlon would never have been able to authorize the competitors who came later, including Golan Telecom and Hot Mobile, because it would result in layoffs at Pelephone, Cellcom and Partner.

The Open Skies pact with the European Union, which is liberalizing commercial airline services in Israel, would also not have been possible due to the damage it would cause El Al. And let's not even talk about satellite television service provider Yes, which entered the market to compete with HOT, the cable operator.

The labor court just doesn't understand that injecting competition into a monopolistic market is a legitimate act on the part of a government that, heaven forbid, wishes to promote growth and lower the cost of living. We are not dealing with internal port reform here, so the court has no basis for intervening. And, in any event, the recent court rulings are giving the major workers committees a feeling that they are even stronger, and that will lead to a demand for even better salaries and working conditions.

In the process, the "port tax" will go up, along with the "Israel Electric Corporation tax" and the "tax" courtesy of the Israel Airports Authority.

The surrender by the labor court to the major workers committees represents a policy that will eliminate any prospect for future reform. With a subject so fundamental, one can only hope that the Supreme Court will step in and rectify the situation.

A worker sitting as a crane unloads containers from a ship at the port of Haifa, April 23, 2013.Credit: Reuters

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