Public sector shakedown

The campaign season is under way – and therefore, so too is the season of public-sector strikes. The run-up to an election is the ideal time for public-sector workers to extort money from the government, because no incumbent wants to go to the polls with the public furious over being unable to obtain basic government services due to strikes.

If the word “extort” seems harsh, consider the pretexts for some of these recent strikes:

• National Insurance Institute employees launched sanctions in early January to protect a bizarre perk: the right to either come to work 20 minutes late, leave 20 minutes early or be paid extra should they deign to work a full day. The Finance Ministry recently gave this arrangement some long-overdue scrutiny and concluded that it was illegal. NII workers retaliated by denying service to the public.

On January 5, for instance, they crashed the institute’s computers to make service impossible. Last week, they shut the institute’s doors until further notice. Then they threatened to withhold monthly allotments to some of society’s neediest members, many of whom have no other source of income. Keep that in mind next time the Histadrut, which backed the sanctions, poses as champion of the poor: It would rather deprive the truly needy of their sole source of income than make union members work a full day.

But the strike ended on Monday, after Finance Minister and Acting Premier Ehud Olmert approved an elegant political solution: The illegal arrangement will continue until after the elections; then, negotiations will begin.

• Employees of the state-owned Oil Refineries launched a wildcat strike last Thursday at the company’s Ashdod refinery, and the Histadrut threatened to have the Haifa refinery join in unless the government sweetens its offer. And what was this offensive offer? In order to compensate workers for its plan to privatize the company by selling each refinery separately, the government offered a one-time payment of a mere NIS 150,000 to NIS 300,000 per worker.

Private-sector workers, of course, do not receive a penny in compensation when their company changes hands. Moreover, the proposed sums are hardly trivial: For a minimum-wage worker, even the lower figure would represent almost four years (!) worth of pay; for the far more highly paid refinery workers, it is still the equivalent of about a year’s salary. But to the public sector’s pampered unions, such an offer justifies striking for a better deal.

• ISRAEL DISCOUNT Bank employees have been engaging in sanctions for over two weeks in which they randomly close several branches to the public each day. These sanctions have several pretexts. First, workers want a bonus for 2004; second, they want a raise for the years 2004-2006; and third, they are unhappy with the formula for calculating another bonus, worth some NIS 40,000 to NIS 50,000 per employee, that they were previously promised as compensation for the bank’s privatization.

Needless to say, Discount employees are hardly starving: On average, according to Central Bureau of Statistics data, bank workers make close to double the average wage and almost four times the minimum wage. But this is an especially good time for them to demand even more, because while the government signed an agreement last year to sell the bank to investor Matthew Bronfman, the sale has not yet been finalized, and workers are threatening to disrupt the closure if their demands are not met. That, of course, would be the last thing Olmert needs before an election: for a successful privatization concluded by his predecessor at the treasury, Binyamin Netanyahu, to fall apart on his watch.

The Histadrut also authorized several new public-sector work disputes last week; these employees will be legally entitled to strike as of next week. And more are sure to follow as Election Day draws near.

The problem with such strikes is not only that they disrupt services to the public, though that is bad enough. They also constitute a serious drain on the government’s budget, since settling them always involves hefty government payouts.

Consider what it cost to settle just two of last fall’s strikes, both called over impending privatizations. One, at Discount (the same bank that is now striking again) cost NIS 250 million; the other, at Bank Leumi, cost NIS 350m. Had that NIS 600m. not been promised to a few already well-paid bank workers, it would be available for more pressing needs. Such a sum, for instance, would suffice to restore more than half the cuts in NII allowances (excluding child allowances) enacted under the emergency economic program of 2003 – those same cuts that the Histadrut so hypocritically rails against for hurting the poor.

Every year, the government spends literally billions of shekels on unjustified perks for public-sector workers that are extorted via punitive strikes. Were those billions instead devoted to the general welfare – education, health care, anti-poverty programs – they would go a long way toward closing the “social gaps” that the Histadrut and its allies so love to decry.

Thus if whatever new government is elected in March is serious about fighting poverty, it must plug this constant drain on the government’s purse. But the rot is so deep that only the most drastic of measures is likely to help – namely, legislation making strikes by public-sector employees illegal, as is the case in the United States, Canada and Japan. There, public-sector labor disputes are sent to binding arbitration instead.

The unions would certainly strike in protest. But since public-sector workers, unlike their private-sector counterparts, enjoy almost total job security, a ban on striking is hardly an unfair price to pay. And once the legislation passes, the government would have a powerful weapon should the strikes not cease: Some of the country’s 250,000 unemployed would undoubtedly be happy to replace the strikers.