Power to the People, Not the Electric Company's Union

Workers in competitive industries have a right to negotiate their wages, but organized labor in monopolies cannot be allowed to hold the public hostage

Israel Electric Corporation facilities in Hadera, northern Israel, August 2017
Yossi Weiss/Israel Electric Corporation

The reforms at the Israel Electric Corporation were approved by the cabinet this week after 22 years in which every attempt to make major changes in one of Israel’s largest government monopolies failed.

A bitter public debate preceded the approval of the electricity reforms in light of its heavy costs — 7 billion shekels (almost $2 billion), which the public will fund through its electric bills. The fear is that the benefits do not justify the cost and the government gave away too much to the IEC’s workers committee.

This fear is well founded: The great power of the IEC’s union, which holds the public hostage, could very well prevent the full implementation of the expensive reforms. If the union does take a bite out of important parts of the reforms, it is doubtful whether the government will succeed in imposing its authority. In such a situation, the billions of shekels invested in the reforms could go to waste.

This fear is what made it impossible to carry out the reforms over the years. But now, too, the government almost retreated from the agreement because of the union’s power. The IEC is not alone. The Ports Authority, Israel Airports Authority, Israel Railways, the teachers unions and the Israel Medical Association are also unions whose control of essential and monopolistic services gives them power that the government is incapable of dealing with. The result is enhanced pension benefits, short work hours, free electricity and, most important, the ability to block competition, as both IEC and port employees have done in the past.

Prime Minister Benjamin Netanyahu told the cabinet Sunday that for 22 years, since he was first elected prime minster in 1996, he had fought to rein in the labor unions, and failed. He was referring to the part of the electricity reform agreement that include the government’s agreement to withdraw its appeal in court to limit the right of organized workers in government-owned monopolies to strike. Netanyahu supports the proposal to require binding arbitration in such cases instead of the right to strike in the case of essential services, similar to the situation in many other democracies. Given the existing labor relations in Israel, it would have been better to adopt a similar arbitration model.

There is certainly room to allow the government to continue to advance the competitive reforms, such as was done in the ports and as is now being done in the electricity industry without the monopolistic unions having the right to prevent it. A structural change cannot be a justification for a strike. Workers have the right to negotiate the compensation they deserve because of their exposure to competition, but preventing competition is out of bounds. Such an expensive reform, which is being carried out without the country’s leaders being able to guarantee it will be implemented, is a problematic situation in which the public could well lose out twice.

The above article is Haaretz's lead editorial, as published in the Hebrew and English newspapers in Israel.