Workers Face Layoffs, Pay Cuts at Troubled Defense Company

Israel Military Industries is to lay off 220 workers and cut wages by 10 percent for the rest of its staff, according to the latest rescue plan drafted by Finance Minister Benjamin Netanyahu and Defense Minister Shaul Mofaz.

The state-owned defense company is in dire financial straits and only paid May wages late in June. The conditions on wages and cutbacks were part of the terms the government set in order to provide NIS 350 million, which IMI CEO Ovadia Eli insists is the minimum needed to keep the creditors at bay.

However, the staffers are refusing to even discuss the new plan, Zachi Tabacman of the Histadrut labor federation said yesterday.

"The latest recovery program, signed three years ago, is valid until the end of 2006," Tabacman said. "Until that time, we will not agree to such cutbacks in IMI workers' conditions." He added that if June wages are late in payment, "we will react in earnest and not a single bullet will leave the company's plants."

The workers also hit back at treasury claims that wage costs at IMI are higher than in other companies facing financial crises. IMI workers committee chair Yitzhak Yehuda denied average wages at IMI were NIS 17,000 a month and that 230 senior staffers had wage costs of NIS 24,000 a month. Yehuda promised to release the "true figures."

This is the second plan put forward by the government in three years in an attempt to rescue IMI from collapse. In 2003, management and workers representatives agreed to lay off or give early retirement to some 720 workers and to cut wages of the remaining staffers by 11 percent.

IMI currently employs some 2,870 workers compared to 12,000 back in the giddy days of the 1990s.