IAI’s management and its employee union signed a new collective agreement today that constitutes a central component in IAI’s growth plan. It involves reduction of the workforce and lower payroll costs, in addition to adaptations of IAI’s organizational structure to changes in the business environment and increased investment in marketing, R&D and infrastructure activity.
The backdrop for the signing of the agreement is IAI’s recent need to cope with increased competition in the markets and with their far-reaching changes, primarily in its civilian activity. In light of this, IAI’s management, in coordination with IAI’s employee organization, has decided on a comprehensive organizational process to improve efficiency and to increase its ability to compete. The agreement was signed in view of the mutual understanding between the parties that the company must work diligently to streamline and accelerate growth and profitability, in order to ensure its future and the future of its employees, while recognizing that its human capital is its central asset.
The agreement signed includes a number of central components and it involves extensive reduction in IAI’s expenses in the coming years:
- Termination of the employment of 730 permanent employees by way of early retirement. This is in addition to a group of non-permanent employees. Note that hundreds of additional employees are expected to take early retirement in the coming years.
- The employees’ union agreed to a reduction in salary costs for all IAI employees and managers, including, inter alia: over-time compensation, convalescence pay, annual vacation, and holiday gifts
- 3-year postponement of the signed public salary economic agreement.
The management and employees’ union also agreed to the implementation of organizational and structural streamlining processes. These include the consolidation of redundancies and different functions and the reduction of ceiling costs by streamlining headquarters across the company. The Company has also announced that it will increase its investments in the fields of marketing and R&D, which are essential for promoting innovation and breaking into new fields.
As part of the signing of this agreement, the Ministry of Finance’s claims regarding IAI’s alleged salary irregularities were settled. An agreement was reached regarding changes and adaptations in company policy on work hours entitled to salary and certain expense refunds, and the Ministry of Finance’s authorization was received regarding the resolution of all related disputes.
Yossi Weiss, CEO of IAI, said upon signing the agreement: “IAI is Israel’s largest and leading defence company. It is central to Israel’s defence and economy. Its basis is strong but it must cope with complex challenges inside and outside the organization. The company’s management has decided to implement the strategic steps required to maintain its leading status and to adapt to the changing market conditions. The agreement signed reflects the commitment on the part of both the employees and managers, to work together decisively in order to ensure the future of IAI, for the benefit of its thousands of employees and the State of Israel. This agreement is a central component, but not the only one, in promoting IAI’s business vision to continue to strengthen its status as a global leader in its fields of activity – at the forefront of technology. We see a stable, healthy and dynamic company that strives for excellence, without compromises. We are in the process of a changing of the guard and adaptation of our diverse human capital to the company’s developing business activity, while protecting our knowledge and passing on the baton. The process which we agreed upon today involves the difficult parting from many good people for whom IAI was a home for many years. We will do whatever is necessary to assist them and equip them with the tools for the future. I wish to express my appreciation to all those involved in this significant process – first and foremost to the Employees’ Organization, for enlisting and cooperating to ensure the future of IAI, and to the Board of Directors that gave its full backing to the management to execute the necessary steps. I would also like to thank the Government Companies Authority and the salary director at the Ministry of Finance for the support and backing that enabled us to reach the agreement.”
Ehud Nof, secretary of the IAI Employees’ Organization said: “IAI is our source of pride and livelihood and its success is important to each and every one of its employees. In order to continue to contribute to the defence of the State of Israel and its economy and to continue to support some 50,000 families, the Employees’ Organization has agreed on difficult rehabilitation steps that will strengthen IAI’s abilities and financial strength. Unfortunately, we are not supported by the government, as are other defence companies. The price we will pay for this growth agreement is high. We will be forced to say goodbye to some of our friends, for whom IAI is a home. During the period of the agreement, the employees who remain will relinquish some of their work conditions, in order to help rehabilitate the company. However, we are convinced that the agreement will enable IAI to continue to grow stronger, invest in technological development and grow as Israel’s largest and most influential hi-tech company, involved in the development of state-of-the-art ground, air, sea, space, and cyber technologies and systems.
IAI is a government company that does not generate profit for a single businessman or group of businessmen, but rather for the entire State of Israel. This agreement will enable us to continue contributing to the development of the Israeli economy, as well as to the security of the State of Israel and its citizens in times of peace and war. We are capable of this due to economic independence that has been yielding revenues for the country for two decades. I am confident that our joint efforts and our forward-looking perspective will lead to IAI’s growth and success. We are proud of our technological capabilities, our contribution to the country and of our economic independence.”
