Between 27 and 30 branches of supermarket chain Mega will close and 700-800 workers will be laid off, about 400 o fthem permanent employees plus another 300-400 temporary employees. These measures are part of the understandings reached last night between the management of Alon Group, which owns Mega, and the Mega workers, brokered by the Histadrut (General Federation of Labor in Israel), and aimed at rehabilitating the chain.
The Mega chain employs about 6,000 people, most of them members of the Histadrut, but 1,700 of these are temporary employees, and some are employed on personal contracts. The understanding reached between the sides relate to permanent employees only, with the workers committee agreeing to 300 layoffs, after it had previously agreed to only 175.
The workers committee and the management intend to offer the employees a voluntary retirement plan, and the workers committee estimates that at least 100 more employees will elect to leave under the plan.
The participants at yesterday's meeting were Alon Group CEO Avigdor Kaplan, Mega workers committee chairman Eyal Eli, and Histadrut chairman Avi Nissenkorn. Nissenkorn is due to convene a press conference this afternoon to announce the understandings that were reached.
The sides also agreed on items that had been discussed in the past. Alon Group will inject NIS 200 million into the chain, while the employees will receive one third of the shares in the chain in return for foregoing compensation components worth NIS 35 million a year for five years, NIS 175 million in total.
These understandings come after it became clear to all concerned that the Mega chain was liable to collapse soon because of its accumulated losses and the size of its debt. The workers committee therefore preferred to meet the management halfway in order to save the chain.
Mega has been suffering from a continuing decline in sales, and the current recovery plan will have to address the problem of its top line. Unless Mega succeeds in bringing consumers back to it, it will not be long before it finds itself with more loss-making branches that will weigh on its efforts to return to a growth path.
After signing an agreement with the workers, Kaplan intends to enter into talks with the chain's suppliers and the companies from which it leases stores in order to reach settlements with them. Kaplan told "Globes" three weeks ago, "It's clear to everyone that all the main players affecting Mega - workers, suppliers, those from whom it leases real estate, and the owners - must all lend a hand to revive the chain and put it back on track."
Kaplan went on to say, "We still haven't talked to everyone, but the general picture that I see emerging is that there is willingness on all sides to help Mega get out of its difficulties. To go from the level of talk to the practical level it's necessary to reach understandings with very many parties. We aren't on the way to a haircut - no-one should mistakenly understand that from what I'm saying "
Published by Globes [online], Israel business news - www.globes-online.com - on June 21, 2015
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