Yesterday, the Knesset Finance Committee allowed the Ministry of Finance to grant a NIS 68 million loan to Israel Military Industries Ltd. (IMI) The company will use the money to pay its employees their salaries for October, which were due to be paid last week, but were not, due to the company's cash flow problems.
IMI's workers committee unanimously supported the loan yesterday, but warned that there was no alternative to achieving an urgent solution for the government defense company's distress. This is the third time that the Finance Committee has been asked to approve a loan to pay IMI's salaries or buy raw materials to enable production. At the same time, procedures for the merger of IMI with Rafael Advanced Defense Systems Ltd., or IMI's privatization, are deadlocked.
In view of the unending crisis, the Finance Committee decided last week to oversee the negotiations between the Histadrut (General Federation of Labor in Israel), the Ministry of Finance, and IMI's employees through a special subcommittee chaired by MK Shai Hermesh (Kadima). The subcommittee will meet on Wednesday, by which time the parties have been asked to submit position papers on possible scenarios for solving IMI's crisis, including a recovery plan with no privatization or merger (under a proposal by Hermesh).
Sources at IMI and close to the negotiations for solving the company's crisis say that the gaps between the government and IMI's workers and the Histadrut are fairly small. They concern the safety net for IMI's remaining employees after privatization, to ensure their rights if they are fired by IMI's new owners. The gap between the safety cushion the Ministry of Finance is willing to support and the employees' demands is NIS 200 million.
IMI says that these gaps have resulted in an absurd situation on the ground, because the lack of a decision on the issue means that the previously agreed plan for the retirement of 950 IMI employees cannot be implemented. The annual salary cost of these employees is NIS 220 million.
The parties also disagree over the number of IMI employees who will be eligible for compensation by the safety net. IMI chairman Nitza Posner told the Finance Committee last week that the employees' retirement would reduce the company's annual salary cost.
Meanwhile, the plan to release land held by IMI in Ramat Hasharon for the construction of 23,000 apartments is moving forward.
Published by Globes [online], Israel business news - www.globes-online.com - on November 14, 2011
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