Teva and unions reach agreement on HQ layoffs

Teva strikers in Kfar Sava  photo: courtesy Histadrut

The Histadrut's united front has crumbled as each Teva workers committee is negotiating a separate settlement.

After intensive negotiations lasting several weeks Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) management, the workers committees and Histadrut (General Federation of Labor in Israel) reached agreement last night on severance conditions for 560 administrative staff at the company's Petah Tikva headquarters. The agreement includes improved severance terms for the Israeli pharmaceutical company's employees who are leaving.

Teva's workers committees conferred together some weeks ago ahead of the announcement of the company's streamlining plan in order to coordinate a united front. However, it now seems that each workers committee is holding separate talks with the company, thus weakening the employees bargaining position.

Workers committees representing headquarters administration staff in Petah Tikva (but not the Teva Assa generic R&D plant in Petah Tikva which is to be shut down) and the tablets factory in Jerusalem (but not the inhalers plant in Jerusalem) have reached agreements with management. In Jerusalem many layoffs have been postponed until the end of 2019 and now at Petah Tikva headquarters improved severance pay conditions have been achieved.

It is unclear what will be the fate of the remainder of the 1,700 Israeli employees due to be laid off. Workers committees representing employees at the plants in Kiryat Shmona, Netanya, Ashdod and Ramat Hovav near Beersheva are also conducting their own separate negotiations with management. The Kfar Saba plant has benefitted because it was marked out for layoffs earlier last year when interim CEO Yitzhak Peterburg was at the helm and there the workers committee was able to significantly reduce the planned layoffs and sign an agreement protecting the remaining employees until 2021.

1,700 employees of Teva out of 14,000 employees worldwide are due to be laid off as part of the company's streamlining program. The plan is being implemented in order to cope with the burden of a $35 billion debt taken on to acquire Actavis as well as the falling revenue and profit following the expiry of Copaxone's patent. As things stand, 1,200 Teva employees in Israel will be laid off by the end of 2018 including 560 at the Petah Tikva head office, 320 at the Jerusalem plant, and 185 R&D employees in various locations.

In 2019, a further 500 employees will be laid off and Teva's plants in Kiryat Shmona, Ashdod and its SLE distribution company will be put up for sale.

Teva's plants in Kfar Saba and Ramat Hovav will be unscathed by new CEO Kare Schultz's streamlining plan because agreement was reached with Histadrut chairman Avi Nissenkorn regarding layoffs there earlier in 2017.

The cost of the layoffs for Teva in 2018 will be $700 million.

Published by Globes [online], Israel business news - www.globes-online.com - on January 5, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Teva strikers in Kfar Sava  photo: courtesy Histadrut
Teva strikers in Kfar Sava photo: courtesy Histadrut
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