The announcement by eight Israel Railways drivers last night that they had again contracted a mysterious illness meant morning sickness for passengers uncertain about when their trains would leave. It was only 10 days ago that 35 drivers failed to show up for work, probably as a result of the same mysterious disease, after management again tried to change their work schedules. The trains eventually left on time, but this tension is typical of recent labor relations at Israel Railways.
The atmosphere at Israel Railways began to change last September, when workers' committee chairperson Gila Edri resumed her position. Edri directed the big conflict over privatization of railway carriages maintenance in 2012. She headed a militant struggle that included shutting down the railway. The crisis ended only after the Histadrut (General Federation of Labor in Israel) dismissed Edri from her position.
Since resuming her job as committee chairperson, Edri has behaved more subtly. She has avoided press interviews, kept out of the spotlight, and has adopted brinkmanship tactics. There have been no sanctions affecting passengers, but in Israel Railways' precarious state, any minor problem is liable to affect the already overburdened trains.
Labor relations on the verge of an explosion
The workers' committee strategy seems like a perpetual low-intensity dispute. The railway's management calls this white noise. There are currently no fewer than five declared labor disputes on various matters serving as grounds for sanctions, ranging from a locomotive locating system used to monitor employees to the holiday gift certificates for employees. The workers' committee, however, began sanctions for two other reasons: the new work schedule for drivers and the plan to lay off workers and cut jobs.
The new work schedule is designed to prepare for Israel Railways' spring timetables. Management and the workers' committee squared off on the drivers' work hours for which they are paid a premium, and on redundancy - the number of drivers not scheduled to drive. The labor court yesterday forced a compromise on the parties: management will devise a new work schedule and the number of redundancy drivers will be reduced. Immediately following the decision, eight drivers reported in sick, creating concern about possible disruptions, which did not occur. Sanctions are threatened almost every time there are new timetables.
At the same time, Israel Railways VP human resources Yifat Levy Mayer notified the workers in a letter that she planned to lay off workers. "Israel Railways has a significant deficit, and the state is demanding streamlining," she wrote in a letter addressed to Histadrut transportation workers union chairperson Avi Edri. "The company's main expense is salary. We therefore intend to cut this expense, both by cutting down on overtime hours, cutting jobs, and laying off temporary workers. We will later also seek an agreement for worker retirement and streamlining."
This declaration of intentions was the opening statement for negotiations. The letter added, "We wish to consult with you about the procedure for laying off temporary workers. We invite you to schedule a meeting on the subject." The call for dialogue was the spark for the sanctions conducted this week.
Despite the rising tension between management and the workers, it appears that Edri learned something from her previous struggle early this decade. Shutting down passenger trains will destroy public sympathy for the workers, and is liable to cause the Histadrut to disavow the workers' committee. This time, the sanctions are aimed at management, but (usually) not at passengers. Last night's sick calls by drivers, for example, kept several managers awake trying to solve the crisis and allow railway traffic to continue as scheduled. On the other hand, the workers' committee itself helped find drivers to replace those who called in sick. The problem is that the workers' committee also lacks complete control of events.
Faulty assumption about the future of procurement
The sanctions and tension with the workers are afflicting Israel Railways at an especially delicate time in which railway traffic loads are heavy and the company is being stretched to the limit. While the number of passengers is rising, the number of railway carriages is at a standstill. Four years ago, Israel Railways sought to buy 170 carriages, but only 90 were approved. The company now needs 150 new carriages, according to outgoing CEO Shahar Ayalon. The shortage of carriages is made even more acute by the operation of new lines: the Jezreel Valley route, the Haifa-Karmiel route, and the route between Ben Gurion Airport and Jerusalem.
The shortage of mobile equipment will be highlighted in a special report to be published soon by the State Comptroller. There are a number of reasons for it, all of which can be blamed on the outgoing management of Israel Railways, but it must be admitted that management acted under difficult conditions.
Israel Railways' procurement plan was based on the assumption that the railways tracks would be electrified starting at the beginning of the decade, and that the trains would be powered by electricity, not diesel engines. Based on this assumption, Israel Railways ordered 330 electric carriages from German company Siemens at a total cost of NIS 3.8 billion. Meanwhile, however, Israel Railways made an unfortunate choice of the company to carry out the electrification project - Spanish company Semi - and the entire project went awry.
The Israeli public has been following the failures of the high-speed train to Jerusalem project and the effort by Israel Railways to complete electrification of the line from Ben Gurion Airport to the Hagana railway station in Tel Aviv. The public does not know that meanwhile, there has been an enormous delay in the planned electrification of hundreds of kilometers of track all over Israel. Electrification of the existing track, with an emphasis on the tracks along the Ayalon Highway, is a much more difficult project than electrification of the track to Jerusalem. It is liable to take many years, and to cause severe, or even unbearable, traffic disruptions. The electric carriages ordered by Israel Railways will be unable to travel on the tracks, and Israel Railways will not need them in the coming years, while at the same time, an unplanned shortage of carriages capable of traveling on ordinary tracks has been created.
A train without a driver
The tender to procure carriages for the interim period is set to begin soon, but there is a deep crisis of confidence about ordering equipment between Israel Railways and the Accountant General department in the Ministry of Finance, whose approval of the purchases is required. Due to opposition from the Ministry of Finance, Israel Railways has purchased a much small number of carriages than it needs. The Ministry of Finance alleges that Israel Railways refused for unacceptable reasons to fulfill its obligation to conduct a regular tender for the procurement of carriages, and tried to force the state to agree each time to buy them according to a tender that was severely criticized by the State Comptroller.
To an onlooker, it appears that Israel Railways' management and the Accountant General are not speaking the same language, among other things because Israel Railways was managed in recent years by people with no business experience and no knowledge of accounting. This management crisis also resulted in Israel Railways having no regular chairperson until a year ago, and it will have no CEO in the coming months. Ayalon was forced to resign from the company following a bitter dispute. The process of finding a new CEO has begun, but no CEO can be appointed before a new government is sworn in. Meanwhile, Maj. Gen. (res.) Dan Harel, Israel Railways' dominant chairperson, is getting used to being the company's regular manager. Transportation sector sources say that Israel Railways will have trouble finding a CEO with influence and ability when the chairperson is involved in detailed management of the company.
Hope of additional revenue dashed
As if all of these troubles were not enough, things are set to get worse. The electrification project's failure will require Israel Railways' management to make a difficult decision: whether to discontinue the agreement with the Spanish electrification contractor , which has been a failure from start to finish, and split the huge project among a number of contractors. It is feared that this will result in expensive legal proceedings that could further delay this essential project.
In the longer term, Israel Railways will have to deal with the bottleneck along the Ayalon Highway. Construction of a fourth track was delayed, and the three existing tracks are full to maximum capacity, creating unbearable crowding. Any added route will force Israel Railways to lower the frequency of its service on the existing lines, and crowding will increase accordingly. After all of these crises, Israel Railways' management will have to cope with the worsening problem of it freight subsidiary, which is accumulating losses (at the last minute, the state prevented management from inserting a going concern warning for the freight subsidiary), and its real estate subsidiary, which is having great difficulty in pushing through commercial projects on the premises of the railway stations. The miserable state of these two subsidiaries, which were one of the state's main achievements in the 2016 reform, typify to a great extent the failure of that reform.
Published by Globes, Israel business news - en.globes.co.il - on March 4, 2019
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