Bethel Finance: IEC workers want NIS 100,000 grant for reforms

www.bethelfinance.com
The workers committee of the Israel Electric Corporation (IEC) (TASE: ELEC.B22) is demanding a one-time payment of NIS 100,000 for each employee in order to agree to the reform plan for the utility. The demand has been raised as part of a counter proposal to the management's proposal on discussions about the reform. The gap in cost surrounding the proposal amounts to NIS 3-5 billion.

Talks over the reform are expected to resume soon after they were broken off at the start of the year. So far agreement has only been reached regarding the first phase of the reform, which would change the company's structure including partial privatization of some of IEC's power stations.

At present the two sides are discussing the streamlining plan led by flexible management, and finding a solution to the company's difficult financial situation. At the heart of the talks is what IEC's 13,000 employees will receive in exchange for agreeing to the reform.

In November, IEC CEO Eli Glickman submitted the management's proposal without coordinating it with the Ministry of Finance and the government. The plan includes mass retirement of 2,000 employees over the age of 50 and who have been at IEC over 25 years. According to the management's proposal these employees would be entitled to redundancy compensation at a rate of 150% at an average cost of NIS 1.65 million per employee totaling NIS 3.5 billion.

Glickman is also proposing financial compensation for relinquishing free electricity benefits, and compensations for employees remaining at the company. Sources close to the negotiations say that the cost of the package could reach NIS 5 billion.

The cost of the proposal of the IEC workers committee, led by national chairman Micky Tzarfati, would be NIS 8-10 billion. At the heart of the proposal are three main demands that the government is currently refusing to sanction. The first is a one-time payment of NIS 100,000 for each employee remaining at IEC after the mass retirement plan is implemented. This is based on the precedent by which port workers were given a payment for their agreement in 2004 to split the Ports Authority.

The second demand is for a significant pension supplement for the employees remaining at the utility to be paid as an annuity. Under this proposal the workers committee would allocate billions of shekels from which employees could receive a monthly supplement of an average NIS 3,000 for their pension.

The workers committee's third demand is to raise the rate of redundancy compensation for the retiring employees from 150% to 180%. This demand is based on the fact that 150% compensation was paid in the past as part of employee's voluntary pension arrangements - without workers having to give anything in exchange.

IEC's workers committee said in response, "The workers committee won't be drawn into conducting negotiations through the media and on the basis of selected data and distorted figures leaked to cause incitement against IEC employees."

"The Ministry of Finance is again trying to make spin on the back of employees in order to cover up its mistakes, which have caused a dramatic rise in the price of electricity and a grave crisis in the electricity sector."

"It would have been better for government representatives to finally call a meeting for talks rather than engaging in chasing after headlines."