The Israel Military Industries Ltd.'s (IMI) board of directors today decided to lay off 500 employees, on the grounds that there has been no progress in the company's privatization. The board instructed management to initiate the required proceedings against employees whom it declared were "redundant". The layoffs had already been decided on but had been delayed at the request of Minister of Defense Ehud Barak, who had asked that they be concurrent with a comprehensive recovery plan. Negotiations on IMI's privatization have been dragging on for years, but never actually materialized.
Most of the argument now is over the safety net for the employees to be laid off as part of IMI's privatization. The employees are demanding NIS 700 million to secure their financial rights, while the Ministry of Finance is offering NIS 400 million.
IMI has had no chairman for the last six months as Barak and Minister of Finance Yuval Steinitz argue over who has the authority to appoint one. Two months ago, Ministry of Finance officials proposed Shlomo Ness for the job, but Barak demurred.
IMI's management has prepared a two-stage privatization: first the sale of 49% of the company to the public, and the sale of the government's remaining stake later. Preparations for the IPO would include restructuring the company's capital, employee rights, and guaranteeing Israel's security interests. The negotiations on the privatization have been deadlocked for months.
IMI workers committee chairman Itzik Yehuda told "Globes" today, "We heard about a similar decision in February, but the Defense Minister blocked it. I have no doubt that this is torture by the Ministry of Finance, which treats IMI employees like dirt. The board of directors was ordered by the ministry and by the Government Companies Authority to make the decision to create a crisis, while ignoring Israel's defense needs and betraying the workers. This measure is aimed at slandering IMI and causing irreversible damage to its image. This is job terrorism by the Ministry of Finance. IMI's workers have nothing to worry about. We'll win this time, too."
A Ministry of Finance official said in response, "The decision is a function of forecasts for next year, in which the Defense Ministru can no longer provide advances to pay salaries, because they have already been paid at the expense of procurements in 2011. The board weighed its options and found that there was no alternative to this measure."
Published by Globes [online], Israel business news - www.globes-online.com - on December 15, 2010
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