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October 20, 2013 5:12 pm
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‘Mass Terror Attack’ Averted: Labor Union Will Decide Future Layoffs at Teva

avatar by Gidon Ben-zvi

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Israeli Labor party leader Shelly Yachimovich. Photo: Wikimedia Commons.

Following a wave of public criticism over Teva Pharmaceutical’s decision to lay off 700-800 Israeli employees as part of a companywide restructuring program, Teva announced an agreement with the Histadrut labour federation not to dismiss any workers without the federation’s consent.

The debate over the fate of Teva’s workforce reached a fever pitch earlier in the week when opposition leader Shelly Yachimovich (Labor) called Teva’s plan “a mass terror attack,” saying that given the near-zero taxes the pharmaceutical giant pays, the plan was an “act of cannibalism.”

The problem with Yachimovich’s populist blather is that it spares her the necessity of having to explain how Israel is strengthened – economically and socially – by the Histadrut’s strong arm tactics. While claiming to be acting in the interest of Israel’s workers, Histadrut has actually made things worse for the middle class.

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Histadrut has increased the burden on Israel’s middle class by rigorously protecting thousands of jobs – no matter how overpaid or badly performed – at the ports, the Israel Electric Corporation, the banks, the water utility Mekorot, local municipalities, the military industries, Israel Railways, and elsewhere.

Employees at these government monopolies are paid in excess of a billion shekels a year, far above what they would earn in a competitive market. The salaries of these overpaid union members and government workers are financed directly by the middle class.

Yes, the same middle class that Yachimovich and her Histadrut cronies claim to be helping has seen its standard of living plummet as a result of rampant government intervention.

To listen to Yachimovich and Histadrut, one might be tempted to believe that they are earnestly trying to save Israel from becoming Russia, a country where corruption has penetrated all levels of government and most other aspects of life.

Sure – the Israeli economy has problems, in particular, a startling degree of income inequality. But in the span of just a few decades, Israel has transformed itself from a semisocialist backwater into a high-tech superpower.

While most of the world is afflicted by an economic meltdown, Israel demonstrates fiscal responsibility, sustained economic growth and a conservative, well-regulated banking system. Furthermore, the emergence of Israel as a hi-tech hub has allowed it to get through the global economic downturn with no deficit or stimulus package.

Yet, Yachimovich and the Histadrut continue to chase the windmills powered by the memories of 450 percent inflation. But 2013 is not 1973. It turns out that the elixir for Israel’s societal ills was to free itself from one-party control of the government and the economy. Today, economists around the world agree that free trade creates jobs through economic expansion.

If Israel’s powerful organization of trade unions and liberal politicians are truly interested in protecting the country’s workers, they should focus less on preventing ‘mass terror’ attacks and more on opening up the country to competition and international trade, which would allow all Israelis to raise their standard of living.

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  • Ilbert Phillips

    Either the economics explained in this article are true or not. California and Wisconsin both had the same problem of overpaid governmental workers (including teachers) supported by strong unions who are not subject to the incentives of the market. Wisconsin solved its problem by taking control from the unions. California by raising taxes. Now California is moving toward making illegal aliens legal to pump more money into the system rather than controlling governmental expenditures and getting its excessive union plan under control. All liberals use the Marxist lingo of “unbridled capitalism” to avoid dealing directly economic reality. Capitalism stopped being unbridled in the United State under FDR and in Israel in the 1970’s.

  • “Yachimovich’s populist blather”, the populist blather is all from Netanyahu and the panderers to unbridled capitalism. The author of this rubbish appears to be anonymous, how brave!

    • First of all, with respect, my name appears right under the headline, so I am definitely not hiding. With regard to populist blather, telling your Prime Minister to go and speak “right now” with the Director of Teva and dictate what he must do, as if he is a two year old who just disobeyed his mother is both disrespectful and ridiculous. It is an attempt to please the public without effect, that is populist.

      Thank you for reading and commenting on my post.

      Gidon Ben-Zvi

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