Sources inform ''Globes'' that the critical meeting on the reform of Israel Electric Corporation (IEC) (TASE: ELEC.B22) between the government, the Histadrut (General Federation of Labor in Israel), and IEC employees broke down on Tuesday evening over the issue of salary excesses. The committee chaired by Government Companies Authority chairman Ori Yogev had planned to complete the negotiations with IEC's employees last night on the agreement of principles that will be the basis for detailed negotiations. But the meeting, which was scheduled to continue past midnight, broke up at 10 pm, when it became clear that the many disputes between the parties remained open and could not be settled.
Today, Yogev will consult Minister of National Infrastructures Silvan Shalom and Minister of Finance Yair Lapid, who appointed the committee that he heads. A government source told "Globes", "If we cannot float IEC, we'll have to raise electricity rates to finance the reform."
The Histadrut opposes floating IEC.
The cause of the breakdown of yesterday's talks was the proposal by IEC workers committee chairman Miko Tzarfati to discuss the salary excesses. The Labor Court is due to hear the case next week, and Tzarfati proposed that the parties should notify the court that they wanted the hearing to be rescheduled. Director of Wages Kobi Amsalem replied that the subject of salaries "is not a critical part of the reform negotiations." Amsalem's remark caused an uproar and the meeting ended.
At an energy conference earlier this week, Histadrut Trade Union Division chairman Avi Nissenkorn said that the Histadrut would not agree to the IEC reform without settling the issue of its employees' pensions and salary excesses. At the conference, Amsalem said that he opposed a general amnesty for the excessive salaries, as happened with the ports reform. He said that such a settlement would send the wrong moral message to the employees of other government companies, and that it made no sense to give a general amnesty when the government did not even know the financial extent of the salary excesses at IEC.
It is important to note that in addition to the salary excesses, there are several other major unresolved disputes between the government and the Histadrut and IEC workers committee. The biggest open dispute is compensation for the remaining IEC employees after the retirement of 2,600 employees. The Histadrut also opposes Yogev's initiative to issue 15% of IEC. The workers committee opposes the plan to sell the Eshkol Power Station in Ashdod to an independent power producer, and the Yogev Committee's demand to allow the new grid management company that will be established to directly operate IEC's electricity production system.
Published by Globes [online], Israel business news - www.globes-online.com - on March 5, 2014
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