How a Labor Union Left Israel Powerless

Thousands were left without electricity because the Electric Corp’s workers’ wanted to score a point. Unions aren’t an answer to Israel’s inequality problem, they're just corrupt.

David Rosenberg
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Some IEC workers who were fixing something as the stormwinds blew: Others chose that time to start a go-slow strike.Credit: Courtesy of the IEC
David Rosenberg

If apart from its more elevated categories like humanities, science and the arts, the annual Israel Prize had a category for gall, the awards committee could rest easy this year. It could start writing the citation now for the Israel Electric Corporation union.

Even in a country where chutzpah is as integral a part of the environment as hummus and parking on sidewalks, the workers’ committee decision to call a labor slowdown in the middle of a huge blackout certainly makes it the standout nominee. But it also belies the fantasy that labor unions can play a useful role in reversing decades of growing income inequality and piggish capitalism.

The source of the problem was, as Israel Electric insisted among a variety of excuses, was no less than God himself, who pounded Israel’s coastal plain on Sunday with a torrential storm. It wasn’t quite the “mini-tornado” that IEC claimed it to be, but it was enough to down power lines and leave up to 200,000 homes without electricity, some for days.

But the real problem though wasn’t the deity or 130 kilometer-an-hour winds. It was the workers’ committee, which prevented management from putting IEC operations into emergency mode. Employees refused to work overtime, undertake assignments in parts of the country where they were most needed or let outside contractors pitch in. Work to restore power was delayed, leaving families and businesses in the dark for no reason other than that union leaders wanted to protest the government’s feeble and endless attempts to reforms of the power industry.

Who, me say that?

David Tzarfati, the IEC union boss, sometimes owned up to what the workers were doing and sometimes not, depending on the moment.

Two weeks ago he all but threatened a labor slowdown: “If anyone thinks that in the next storm there will be someone to rescue him they are mistaken.” Then, this is what he said earlier this week when asked in labor court why IEC staff were doing so little to address the emergency, : “We didn’t tell workers to do nothing, just to work as usual, according to their regular hours.”

Then this is what he said a little later in the week, seemingly saying that surely he would never do such a thing: “I agree that in an emergency there’s no room for a labor slowdown.”

David Tzarfati, IEC union leader with magically morphing positions.Credit: Tomer Appelbaum

It’s not that Tzarfati is particularly PR-conscious. The IEC workers’ committee – like the other powerful labor unions at the ports, Israel Aeronautics, the water company, the airports and the banks – doesn’t go out of its way to cultivate a positive public image. Its modus operandi is raw power, which has successfully cowed management, the customers that rely on their employers’ services and the country’s politicians.

Even Benjamin Netanyahu, who was ready to bomb Iranian nuclear installations and tangle with the leader of the free world, isn’t ready to take on the electric corporation’s workers’ committee.

The face in the mirror

Tzarfati and the IEC workers’ committee is the face of unionism in Israel today. It’s a far cry from decades ago when an idealistic Histadrut labor federation was the bulwark of the working and middle classes, not only organizing workplaces, but acting as an employer, a pension fund, a provider of health care and even a landlord. Over time the Histadrut gave up all these functions, leaving it as a traditional union.

Meanwhile, a changing Israeli economy weakened its hold over private sector labor. Today maybe a third of Israel’s labor force is organized – a pretty high percentage by developed country standards – but unions are concentrated in the public sector, the banking industry and a few old-line industrial companies.

You might notice that these are nearly all monopolies or near monopolies where the costs of inflated pay, overstaffing, inefficient work routines, strikes and slowdowns are happily passed on to a public that has no choice. A company competing in the global market couldn’t survive with the likes of Tzarfati.

Saving the sidewalks?

Israel and the rest of the developed world have been grappling with the problem of rising income inequality, and one of the solutions some people offer up is to encourage labor unions.

There is no question that the decline of unions in the U.S. and Europe since their heyday in the 1950s and 1960s has come hand-in-hand with a declining share of national aggregate income going to labor.

In Israel, for instance, labor’s share dropped to 57% last year from 65% in 2000, while capital’s share grew from a low off 11% in 2002 to 17%. Organizing more of the labor force would let workers claw back those losses, widening the income gap between the 1% and everyone else.

In fact, in Israel there has been a small surge of renewed unionization. Cellphone companies, insurances, a few high-tech companies and even accounting offices have been organized in the last two or three years. The numbers hardly add up to a new era of organized labor, but they do testify to workers’ anxiety. 

A greater percentage of Israelis are in the labor force than any time in decades while the unemployment rate it at its lowest in years, but wage growth is slow and the jobs Israel’s economy is creating tend to be low-paying, unchallenging and insecure.

By itself, more unionization won’t stop rising inequality – and Israeli-style unionization certainly won’t. Too many factors are at work to assume that ensuring workers are strong enough to win a bigger share of the pie will solve the problem.

But, in any case, people like David Tzarfati aren’t the kind of people leading the working classes.

There are different styles of unions. There’s the Israeli and American style, which is a narrow interest group preying on the most vulnerable sectors of the economy. There are the highly politicized unions of France and Britain before Margaret Thatcher defanged them.

And there are Scandinavian and German unions, which everyone looks up to for their discipline and spirit of cooperation with management. They look out for the company’s interests as much as the workers and in Germany, workers' representatives even sit on management boards. Two-thirds of Sweden’s workforce is unionized, among the world’s highest rates.

But before you start saying “sign me up” in Swedish (which, by the way, is “registrera mig,” according to Google translate), be aware that Sweden has suffered the sharpest growth in income inequality among developed countries over the last two decades and the rate of unionization has been falling, too. In other words even in the highly unlikely scenario that Israelis could some adopt Scandinavian discipline, it probably wouldn’t solve anything, though maybe fewer people would park on sidewalks.

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