Finance Ministry Balks at Israel Aerospace Streamlining Deal

A collective bargaining agreement reached by Israel Aerospace Industries with its workers for pension provisions in its streamlining program appears at risk due to lack of backing from the Finance Ministry, Globes said on Sunday.

A planned layoff of some 800 employees at the state-owned IAI depends on financing from the Ministry, which officials said would not be forthcoming. As of Sunday, Finance Minister Moshe Kahlon had reportedly no intention to back the bridging pension for the employees who will be asked to resign, a pivotal provision of the streamlining plan.

Instead, ministry sources said that the company had been in a streamlining process for some time, and that it was on its own. They suggested that the IAI should pay for it out of its resources. If available funds were insufficient, then the company could float shares on the Tel Aviv Stock Exchange, despite longstanding opposition from the employees. The yield from a TASE offering would cover the costs of streamlining, with plenty left over for investment, the sources claimed.

The 800 figure represents a compromise arrived at through negotiations. The initial demand of management was for the layoff of 1,200 employees and cuts in pay and conditions.

The workers committee countered that cost-cutting should include layoffs of senior managers and an end to the excessive hiring of external consultants. (A State Comptroller’s report released in October 2015 revealed payments totaling NIS 56 million to various consultants).

Depending on the number and rank of the employees laid off, the cost of the streamlining plan could reach more than 1.5 billion shekels.