A recovery arrangement was signed with Israel Post: Approximately 1,050 employees will be laid off

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by Ifi Reporter Category:Hitech Sep 19, 2022

A recovery arrangement was signed between the Accountant General and the Israel Post in the amount of NIS 1.7 billion, along with a new collective agreement with the Post's workers' council. As part of it, out of the company's 5,000 employees, approximately 1,050 employees will be laid off in two phases - the first of which will be in December.
The financing agreement consists of the sale of real estate of the post office - which has 700 branches throughout the country - to the state. The value of the assets to be sold is estimated at NIS 800 million. The state will also finance the retirement of 150 employees as part of an agreement already signed in 2020. In addition, the state will provide a loan of NIS 400 million NIS, and if necessary another NIS 180 million, in exchange for the sale of additional assets.

As part of the collective agreement, 650 employees will be retired and 400 employees will retire on a path that includes compensation from the company. 500 more workers will be able to leave voluntarily under special retirement conditions. Half of the employees will be laid off by the end of 2022 and the rest by mid-2023, in order to prepare the company for privatization already during 2023. It was also agreed with the workers' council that the postmen will become couriers, to support the package system in the face of the decline in mail delivery activity. The employees will also receive a privatization grant of 3% of the sale proceeds, in accordance with the Companies Authority procedure, and after privatization they will receive an additional bonus.
The privatization of Israel Post is a huge event, as part of which the state will transfer the ownership of the government company to private hands in the coming years. The new collective agreement is supposed to start the process of privatizing the post office, by making it a more efficient company in preparation for its sale to a private investor. The company is in financial difficulties and a going concern note was attached to its latest reports.
The dramatic cut of nearly a third of the employees gathered many senior officials to the discussion table this evening: Treasury representatives from the budget division, the Companies Authority and the Accountant General; representatives of the post office, including chairman Michal Vaknin and CEO David Laron; Representatives from the Ministry of Communications, including the director general of the ministry Liran Avishar Ben Horin; and representatives of the workers' council together with representatives from the General Histadrut, including Histadrut Chairman Arnon Bar David.
At the end of 2021, Communications Minister Yoaz Handel and Finance Minister Avigdor Lieberman decided on the privatization of the post office. The privatization outline presented initially was based on the model of issuing 40% of the company's shares and selling 60% of the shares to a private investor - with the option of a full sale.
The Companies Authority examined the possibility of a partial issuance and sale. In recent months, the Authority has expressed concern that the IPO may fail, both due to the market situation and due to the fact that the Post Office is insolvent - a situation where the sale of only part of the company does not attract investors. Lieberman accepted the position of Michal Rosenbaum, director of the Companies Authority, and the government embarked on a move to privatize through a sale to one investor.
But in the financial situation that the post office is in, the state is in a race against time to save the company from bankruptcy - a situation that will require the state to reach into its pocket and finance its survival. In the first half of 2022, the company recorded a loss of close to NIS 176 million and an 8% decrease in revenue compared to the first half of 2021. Similar to the first quarter - the reports for the second quarter of the year were also accompanied by a going concern note.
Against the background of the privatization plan, major changes were made at the post office from the beginning of the year, including the replacement of the heads of the company. Vakanin was appointed chairman of the company's board of directors in place of Hezi Zaig, and Valron was appointed CEO in place of Danny Goldstein. The postal board of directors approved an internal efficiency plan that includes reducing management members, reducing duplication of positions and consolidating management systems. Along with the recovery and retirement agreements signed today, changes in the regulation of the postal market were also approved - which have not yet entered into force.
The management and the workers' representatives reached an agreement that was not easy for the workers, since these are layoffs on a huge scale. The agreement includes the possibility of managerial flexibility - that is, the postal management will be able to make decisions on the movement of employees from one position to another, without compromising the conditions and without entering into negotiations with the committee on any such change. Thus, since the postal world is changing, those whose role until today was the sale of stamps - Insurance or an appointment for a courier service will be marketed tomorrow, in an attempt by the post office to offer more services to increase the company's income.
Laron said after the signing of the agreement: "The workers' representation understands the magnitude of the time. In light of this, we reached together, for the first time, a collective agreement that also includes managerial flexibility to make fundamental changes in the organization's structure and activities."

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