Following 20 years of fruitless discussions and negotiations, the government team headed by Ministry of Finance director general Shai Babad and Ministry of National Infrastructure, Energy, and Water Resources director general Udi Adiri has reached an agreement with Israel Electric Corporation (IEC) (TASE: ELEC.B22) and the Histadrut (General Federation of Labor in Israel) on a format for reform in IEC. The parties will present the principles of the reform to the minister of finance and the minister of national infrastructure, energy, and water resources tomorrow.
2,800 IEC employees will be laid off over eight years under the plan, at an estimated cost of NIS 5 billion. Employees retiring after the period of the agreement will have NIS 1,700 added to their monthly pensions, starting at retirement age, substantially less than the NIS 2,500 that the Histadrut promised to the IEC workers' committee.
Employees who leave the company before retirement age will be entitled to 120% severance pay and a NIS 1,200 addition to their monthly pensions. Workers will also receive a reform bonus of NIS 30,000 per tenured worker and NIS 10,000 per temporary worker. Over a five-year period, the company's current gas-powered production sites (Eshkol, Reading, Alon Tavor, Ramat Hovav, and the eastern part of the Hagit site) will be sold. IEC will not build new power stations, and the power stations that it retains will be divided into two government-owned subsidiaries. This will make it easier in the future for the government to privatize these companies if consent for this measure is obtained.
In addition, management of the system and part of the technology development section (systems planning) will be taken out of the company and sold to a separate government company. The company will operate in the transmission and distribution sub-sector as a monopoly, and the supply sub-sector will be gradually opened to competition. Starting this Sunday, the parties will conduct intensive talks aimed at reaching a detailed collective agreement within 45 days. No agreement in principle has been signed at this stage, because the parties want to sign the final detailed version.
Published by Globes [online], Israel Business News - www.globes-online.com - on December 27, 2017
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