On Tuesday, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) president and CEO Dr. Jeremy Levin arrived at the office of Histadrut chairman Ofer Eini not to back down, but for Eini to help get everyone off his back. The short trip from Teva's headquarters in Petah Tikva to the Histadrut (General Federation of Labor in Israel) building in Tel Aviv was planned in advance to be the last stop of what had seemed just that morning of a long journey into the Israeli mire. After all, Teva is a global company, as its managers have made sure to mention this past week.
Levin knows how to settle matters with the workers committee at Teva, to divide and rule, to ensure that only four of the eleven workers committees attended the special meeting convened by the Histadrut just hours before Levin met Eini. On Tuesday, Levin even signed a generous salary agreement for Teva's pill plant in Jerusalem, where the employees belong to the rival Israel National Labor Federation.
It wasn’t the unions, it was the politicians, who were about to build their primary campaigns at Levin's expense, making press statements, speeches in the Knesset plenum, and going on air one after the other. MK Miri Regev (Likud), MK Gila Gamliel (Likud), MK Merav Michaeli (Labor), and, of course, Labor Party chairwoman MK Shelly Yachimovich - each one more aggressive and scathing than the other.
Knesset Finance Committee chairman MK Nissan Slomiansky (Habayit Hayehudi) also lambasted Teva's management and summoned Levin to a special committee meeting. Levin sent Teva SVP Ika Abarbanel, who ran around this week like he's never run before, in the hope that this would be the last time that he would be sent to the slaughter.
If that were not enough, State Comptroller Joseph Shapira, with timing from hell as far as Teva was concerned, published a report on the same day that laid bare the scandalous way in which Teva obtained extraordinary tax breaks from the government. Shapira did not hold back, making stinging criticism about Teva's intention to fire employees. And how is it possible to forget the phone call from Minister of Finance Yair Lapid, who later said that he made it clear to Levin that "Teva's relations with the State of Israel are reciprocal."
Eini's cure for Levin's headache
Eini provided the medication that Levin needed for all his headaches, and brought the week-long saga to a close. Even Yachimovich was quick to bless the "freezing of the layoffs", even though no one had ever intended to fire anyone quickly or within a couple of weeks.
As at every unionized workplace with a tradition of collective labor contracts, layoffs are a matter of negotiations between the workers committee, the union, and management. Eini's meeting with Levin ended with a promise that "no layoffs will be made in Israel without agreement with the Histadrut." This is little different from the Histadrut's announcement the previous Thrusday, which said, "The Trade Union Division chairman and representatives of Teva's management agreed that streamlining measures at the company would be coordinated with the workers committees and the Histadrut."
In the meeting with Levin, Eini sought to anchor the agreements in a written document, which would, among other things, lay out a mechanism for conflict resolution. Teva called up Adv. Nahum Feinberg for the mission, several drafts were drawn up, and Levin went out to consult with his aides and even with Teva executives overseas, but ultimately refused to sign a binding document. His aides said that "agreement with Eini" was the important thing. The pharmaceutical company undoubtedly understands the importance of chemistry.
Eini's aides complied with this ideal atmosphere, empty of a binding agreement, saying that the "handshake" was the important thing. The result is that the headlines about layoffs have been replaced with sentences to the effect, "First voluntary retirements, early pensions, and the transfer of employees will be made" phrases that Teva executives had been using over the past week, although no one really wanted to listen.
The Histadrut tried to present the agreement as a great achievement, because of the absolute veto over layoffs, but the reality is a bit more complicated. Levin himself made it clear at the end of the meeting that he could not promise that there be no layoffs, and obtained the support of Minister of the Economy Naftali Bennett, who said that objecting to layoffs was populism.
On Tuesday, Teva allowed itself it to issue a press release, which said, "Teva and the Ministry of the Economy, headed by Naftalil Bennett, will set up a joint team to review implementation of the streamlining measures, while preserving most of the manpower in Israel. The workers who will leave or released will receive assistance in job placement."
"Most of the manpower?" Thank you very much. "Employees who will be released?" Is this what Levin meant when Teva used the phrase "to fire sensitively"? Employees are not released; they are not shackled dogs who have to be freed. Maybe it sounds better in English, but, Jeremy, come on.
A ladder goes both ways
Eini needed Levin as much as Levin needed Eini. If Eini gave Levin a ladder to climb down, Levin gave Eini a ladder to again climb to the heights were he recently was - the position of national broker to whom pilgrimages are made to close deals and end crises. Eini has only taken blows since the new government was formed. Minister of Transport Yisrael Katz publicly ridicules him time and again and Prime Minister Benjamin Netanyahu does not return his calls.
And now, it seems that things are getting back on track. The Histadrut leaders meeting opened only after everyone had taken their seats, the photographers were in place, and the Internet was ready for live broadcasts. The last man to sit down was the Histadrut's no. 2 man, Trade Union Division chairman Avi Nissenkoren, and only after Eini entered the hall.
What do employers say when they want to sweeten the layoffs pill? Sometimes a crisis is an opportunity.
Published by Globes [online], Israel business news - www.globes-online.com - on October 17, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013