Israel Electric Corporation (IEC) (TASE: ELEC.B22) CEO Eli Glickman today cancelled the automatic pay hike, due to come into effect in April. The announcement was made in an e-mail to employees, and management anticipates an angry reaction by the powerful workers committee to the unexpected and unilateral act.
IEC's 10,000 tenured employees receive an automatic 7% pay hike every two years.
"We will not allow the deadlock in the reform negotiations to continue, which is why we decided on a series of steps, some of which are under management's authority and some are under the authority of the board of directors," said a top IEC source. "Soon, because of the uncertainty about completing the reform negotiations, IEC will have to tighten its belt and cut costs, including salaries and job terms. The company has a contingency plan for wildcat strikes and labor sanctions."
At the order of IEC chairman Yiftach Ron-Tal, the board today decided to automatically dock the pay of any employee who participates in a strike or labor sanctions, without the need to petition the labor court. The board also decided to stop pay grade rises and cancelled training sessions. Participants at the meeting said that Ron-Tal was in a "combative" mood.
Glickman said that his action was because of the utilities "dire financial straits". In its upcoming financial statement, IEC is expected to report a loss of more than NIS 500 million in 2013.
Sources inform ''Globes'' that, in contrast to the past, this time, IEC's management did not coordinate its steps with workers committee chairman Miko Tzarfati, who learned about them in the same e-mail sent to all employees. Management's steps are believed to be a force of strength against the workers committee, after the Yogev Committee on IEC reform failed to reach a deal with the committee and the Histadrut (General Federation of Labor in Israel) last week.
Ori Yogev said, "There is a major dispute between the government and the workers and the Histadrut on four key issues: cancellation of the free electricity benefit; salary excesses; the sale of power stations; and an IPO of 15-20% of the company."
Tzarfati called Glickman's decision "insane", but is not for the time being calling a strike or other sanctions.
"This step shows the management has taken leave of its senses," Tzarfati told "Globes", "Clearly we can't let this pass without responding, but at this stage we won't be dragged into hasty steps. For us, it's more important to repair the damage to electricity pylons caused by the weather, but it's clear that we are headed for a rough period."
The workers committee is certain that the Labor Court will not allow unilateral infringement of workers'' rights enshrined in a collective agreement.
Published by Globes [online], Israel business news - www.globes-online.com - on March 13, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
Published by Globes [online], Israel business news - www.globes-online.com - on March 13, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014