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Reinventing the Israeli Cooperative

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The following article is reprinted with permission from the Spring 2005 issue  of NA'AMAT WOMAN 

Reinventing the Israeli Cooperative

Originally from http:// www. laborisrael.org/Reinventing%20the%20Cooperative.htm

By EETTA PRINCE-GIBSON

It's an old idea with a new twist. Some 200 new cooperatives were established in Israel last year. They give workers a sense of pride, value, belonging and independence.

Seated among the high piles of khaki army shirts in a large factory hall, Miriam Pilous bends over her sewing machine. The machine buzzes as she deftly attaches a collar to a shirt, her fingers steering the coarse material under the needle.

Nearby, Rachel Itias stands near. a long, hot bar that imprints the markings for the buttonholes that Esther will make and the buttons that Luba will sew on.. Every week, they sew thousands of uniforms, under contract from Israel's Ministry of Defense.

Pilous, 56, is chairwoman of the board of the Mitzpe Ramon Independent Cooperative Society, Ltd., a cooperatively-held industrial sewing plant in Mitzpe Ramon, a dusty, neglected development town in Israel's southern Negev desert. Of the 25 women who work in the plant, 18 are the shareholders of the cooperative and have assumed financial, operational and legal responsibility for the factory.

Being chairwoman of the board does not give her any privileges, Pilous says clearly. She's willing to take off only a few minutes to describe the work, all the while looking over at the workers to make sure that the sewing proceeds smoothly.

Before it became a cooperative, the industrial sewing plant employed 58 women. The now-pleasant work room was then a bare hangar, with neon lights, exposed wiring and small airless windows. In the stifling summer, the women had to bring their own fans. In the cold winters, they brought their own space heaters to warm their hands and feet. They were paid less than minimum wage, with no social benefits, productivity premiums or seniority credits - all of which is illegal in Israel. But the unemployment rate in Mitzpe Ramon is over 14 percent and options are limited. For the women, it was the only way to feed their children.

In June 2000, the owner threatened to close down the factory. Afraid that he wouldn't pay even their meager wages, the women went on strike, guarding the factory in three eight-hour shifts, to prevent the owner from selling them out.

Since it was summer vacation, they turned the plant into a day camp. Someone brought in a plastic wading pool, others brought toys. The children played, ate and even slept at the plant with their mothers, and some of the fathers joined in, too. When not on duty, the women prepared traditional delicacies for their comrades-in-strike. They got to know each other - not only as the one who stitched collars or sewed labels, but as people. NA'AMAT leaders met with them, and NA'AMAT volunteers visited the women every day and provided essentials such as food, cosmetics, Clothing, schoolbags. Fifty-eight determined women with no other options can be very formidable, and the strike lasted for six weeks.

The group began to attract national attention. But no one was offering to buy the Plant, until, after six weeks, Knesset Member Amir Peretz, head of the Histadrut, Israel's Labor Federation, suggested that the women buy the plant. He helped the women obtain a long-term floating loan of $200,000 and each woman borrowed nearly $1,300, a vast sum for each. NA'AMAT lobbied the government to order more army uniforms from them. In a burst of energy and hope, they painted the dingy walls, put clean linoleum down on the dining room floor, and hung up a few green plants.

It's four and a half years later, and much of their energy and hopes have been dimmed. They've tried to get other contracts, to sew other materials, but the equipment is too old and the women don't have the training to learn to sew new products. So they continue to depend on contracts from the Ministry of Defense and on help from the Histadrut. "None of us makes more than minimum wage here, and I don't know if we ever will," Pilous says resolutely. "But before we were a cooperative, the owner tried to cheat us. Now, we get vacation pay, sick pay and a pension plan. And we treat ourselves honestly and decently."

Miles away, in the town of Laqia in the northern desert, Naama al-Saana, director of Terri: el-Badia (Desert Embroidery), sits at a sewing machine, too. The Desert Embroidery Factory is a not-for-profit company for Bedouin women, held by the Laqia Women's Association.

A dozen women work at the sewing machines in the brightly-lit sewing hall, putting finishing touches on the hand-embroidered bags, dresses, tablecloths, eyeglass cases and even cell phone holders. Another 140 women work out of their homes, coming to the plant once a week to bring in their work and receive their paychecks.

In a tent just outside the workroom, several women are explaining the significance of the strong colors and intricate embroidered designs to a group of tourists.

As the Bedouins transitioned from a nomadic way of life to settled cities, al-Saana explains, the Bedouin woman lost her ability to contribute to her own and her family's livelihood.

"We barely make ends meet she says, "and we don't ever pay more than minimum wage But we pay all the benefits that the law gives the women. And anyway, this factory isn't only about work. It's about giving the women a feeling of independence and a belief in themselves. It's about honesty, decency and pride."

Over 100 miles to the north, Boris Selnikov sits in the Tel Aviv offices of the Shomer Yisrael (Guardian of Israel) Cooperative going over long lists of bills and payments. Like Pilous, Selnikov is chairman of the board, which means that he runs the cooperative as a volunteer and then does his guard duty shift at night.

Shomer Yisrael, established in 2003, employs some 80 workers, 50 of whom are members of the cooperative. Like Selnikov, most of the members are immigrants from the former Soviet Union.

Says Selnikov, "I did not think that I would ever do anything socialist again, after leaving Russia. But I know that in the situation in Israel, being a cooperative is the best thing we can do for ourselves." According to Kav La'Oved, a non-profit workers' rights organization, the security industry has grown by more than 25 percent since the outbreak of violence in October 2000. More than 135,000 guards work in nearly 300 companies, with combined annual revenue of about NIS 8 billion ($1.83 million). 

Despite the demand, the combination of unemployment, widespread outsourcing by public institutions, lack of organized labor, and deliberate lack of enforcement of minimum wage and legally-mandated benefits mean, that security guards are one of the most exploited sectors in the Israeli economy. Workers, many of them immigrants from the former Soviet Union or from Ethiopia who cannot read legalese Hebrew, are made to sign draconian contracts.  Many of these contracts include a capricious system of penalties - fines meted out by company supervisors who make spot checks on the guards. Most of the guards are employed by manpower companies, which, in many cases, do not pay minimum wage and fire the employees before they have completed nine months of employment - so that they will not be entitled to many of the benefits provided by Israeli law and by collective bargaining agreements.

As in Mitzpe Ramon, the Histadrut has been very active in providing "Shomer Yisrael" with loans, professional guidance and support.

Selnikov is proud, but realistic. "We each receive minimum wage, with all the benefits," he says. "But we aren't cheating ourselves. And we make our own decisions. I'd rather work harder and be paid minimum wage and feel pride than feel that I'm being taken advantage of."

In Arab villages in the north, groups of day care providers are meeting, under the guidance of Kayan, a feminist activist group, and discussing the possibility of forming a cooperative. In several cities, groups of women have begun to organize to form a cleaning service cooperative. In Tel Aviv, a group of computer specialists, aided by globalization and hi-tech communications, is considering establishing a cooperative together with colleagues in Singapore. Like Independence Sewing Plant in Mitzpe Ramon, the not-for-profit Desert Embroidery and the Shomer Yisrael cooperative security service, these are just some of the examples of the many new forms of employment that have been developing in Israel over the past few years.

According to the Ministry of Industry. Trade and Employment's attorney Uri Seligman, who is responsible for the legal operation of cooperatives, 197 cooperatives were established in Israel during 2004, and several dozen more are already in the final stages of incorporation. Currently, there are nearly 3,200 cooperatives in Israel, including kibbutzim and kibbutzim industries.

As they are legally defined, cooperatives are organizations whose main goal is to improve the well-being of their members, both financially and socially. While most private companies seek merely to maximize profits, the cooperative pays attention to its members, all of whom are equal. Cooperatives are run by the members, who make decisions at general meetings, and only members of the cooperative are allowed to be members of the governing board. By law, each member of the cooperative is paid the same amount.

Cooperatives, of course, are not new in Israel. The kibbutzim, considered by many to be the ultimate cooperative experience, played a crucial role in the development of the State of Israel. Israel's two largest transportation companies, Egged and Dan, are cooperative, member companies. Throughout Israel's history, consumer, housing and welfare cooperatives served their members well.

But today the kibbutzim are failing socially and financially. Egged and Dan have become mixed companies, with a relatively small number of members and a larger number of hired employees, who do not benefit from the social concerns of the cooperative. And most of the consumer, housing and welfare cooperatives are a thing of the past.

For the past decade, capitalism, individualism and private initiative have been the key concepts in Israel's economy. Finance Minister Benjamin Netanyahu, from the Likud Party, has made it very clear that he opposes collective structures and intends to privatize as many public services as he can.

So how can we explain the resurgence of the old-new cooperative?

"Capitalism had real strong appeal when the economy looked good and people believed that they would all get rich," says Yair Levi, director of the International Research Center on Rural Cooperative Communities at Ramat Efal College. "But people are wiser now, and they realize that cutthroat capitalism has created social gaps and a lack of social solidarity. They know that in cutthroat capitalism, a few people get rich, most of the people don't, and a lot of people become very poor and disadvantaged."

Cooperatives are usually thought of as synonymous with socialism. These newer cooperatives, however, are different. Unlike the kibbutzim, notes Levi, they are not all-inclusive, total organizations. And unlike the old-style kibbutz, they do not simply divide up all the profits. Rather, since the product produce, especially in services, is individual, salaries are prorated according to equal formulas.

Cooperatives, says Seligman, are growing throughout the world, a strong counterforce to globalization and privatization. Although not well-known in the United States, the roof organization of the world's cooperatives, the International Cooperative Alliance (ICA), totals more than 750 million people. Cooperators and their families make up over one-third of the world's population, and cooperatives exist in almost every nation in the world, where they play a significant element in the economic and social structures of industrialized, developing, newly industrialized and post-industrialized economies.

Nor are they limited to tow-tech services such as cleaning and guard-duty. In Finland, there are computer services cooperatives and musicians' cooperatives. In Italy, much of the sophisticated agriculture is produced by cooperatives, and gardening cooperatives are responsible for the parks and grounds in some of the largest cities. But most important, says Levi: "In times like these, when it seems that making money is all that matters, cooperatives are able to put social issues first. It's a more balanced situation. In a cooperative, a state of well-being, rather than a search for wealth, prevails."

Because cooperatives reward work, instead of capital, Seligman explains, they are able to subordinate economic considerations to social considerations. Because the organization belongs to the workers, and not to the investors, the influence of the capital is neutralized in terms of operative decisions and the division of profits.

But this doesn't mean that they are not efficiently run or unprofitable. Or that the members of the cooperative don't intend to make money.

"We have great plans for Shomer Yisrael," says Selnikov. "We are very efficient. We have no middlemen or intermediaries, and no one is making money off of our backs. It will take a while, but we will do welt."

In fact, says Amir Peretz, the kibbutzim failed not because cooperative ventures can't compete, but because they acted in the national interest and not in the interests of their cooperatives. "If cooperatives such as the kibbutz had acted out of economic interests, they would be the strongest economic players in Israel today, and they would still be progressive and socially just."

And cooperatives, insists Israel Prize recipient Professor Ariel Rubenstein of Tel Aviv University's Department of Economics, are good for the economy. "Outsourcing to manpower companies doesn't really produce any real economic benefit - it merely makes the intermediaries rich," he says. But for cooperatives to succeed, they must operate in an encouraging environment, Seligman contends. Without government help, they will never be able to rise above minimum wage and subsistence earnings.

In France, for example, the law, the Code Demarche Publique, mandates that the government must give priority to workers production cooperatives as long as the proposed contract is reasonably competitive. In Italy and Spain, the governments provide significant, low-cost loans and tax breaks to workers production cooperatives.

"If the government helped, a cooperative like the Mitzpe Ramon Independence Sewing Plant could be paradise," Seligman says. "And Shomer Yisrael could fulfill their dreams."

But the current climate in Israel is far from encouraging. Pilous says bitterly: "Even the government only cares about the bottom dollar. The Ministry of Defense sends out most of its sewing projects to Egypt and to other cheaper countries. Then they bring the finished product back to Israel to sew on the symbols and tags.

"I guess there's still some national pride left," she concludes ironically.

Some cooperatives would need low-cost loans to get off the ground. Shomer Yisrael, for example, would like to compete for some of the more lucrative security contracts, but many of these require special weapons, jeeps and other equipment that Shomer Yisrael simply cannot afford to buy. An attempt at a women's catering cooperative in the development town of Sderot failed, because the women were unable to mobilize the funds to buy shares and to purchase refrigerators, stoves, dishes and other necessary equipment. And some of the Israeli government's policies actually break the cooperatives' chances to compete for tenders in the capitalist market. The government is Israel's largest single employer, and over the past few years it has outsourced (that is, given to other, mostly manpower, companies) most of its necessary services, such as accounting, secretarial, security, janitorial, sanitation and maintenance services.

Throughout Israel, more than 30 percent of all workers in recent years have been employed through manpower agencies and other means of outsourcing, according to Kava La'Oved. Contractors win contracts through bidding, which allows public institutions to reduce the cost of purchased services. True, standard contracts in the public sector include clauses that compel contractors to abide by the laws of the State of Israel. Yet the~e same institutions regularly award contracts to the company that offers the lowest rate ‑ even if it is clear that the company cannot provide the service at that price and still pay its workers according to the law. "We've put in bids for security work for government offices," says Selnikov.  “But we lose to manpower companies not because we are inefficient, but because these companies aren't paying their workers fairly or even legally." The government does not deny this.

Responding for the Ministry of Welfare with regard to the employment of cleaning workers through a manpower company, a spokeswoman, who refused to be identified, would only say: "According to the laws of tenders, there is no obstacle preventing us from accepting an attractive offer, even if it is lower than market prices…. The contractor is responsible for the employment conditions and employment of his workers."

The Finance Ministry, says Rubenstein, puts a premium on "what they see as the bottom line ‑ cutting costs. Because temporary and outsourced workers do not appear on the official roster of workers, ministries can boast that they have cut costs. And outsourcing is part of the widespread trend of privatization."

But there are other bottom lines, too, warns Rubenstein. "People cannot work if they feel abused and taken advantage of. This is not a healthy way for a society to develop." Peretz acknowledges that although he and the Histadrut support cooperatives fully, they are a "second best" solution. Once, he says, work mattered and workers had a value. Workers, from high-level engineers to janitors and the man in the cafeteria who knew how you take your coffee, were employed directly by the company for which they worked. "They belonged, they had value. Now, workers are merely an expense. But I know that in today's climate, it is not likely that service providers will be hired directly, especially not by government companies. And so I will give all the help I can to any group that wants to start a cooperative."

Although women have less capital and so are less likely to be able to buy in and initiate cooperatives, these forms of employment may be particularly beneficial to women. In capitalist economies, women are often the weakest links and the most exploited, providing under-the-table services at subsistence levels.

"What could the women of Laqia do?" challenges al-Saana. Even if the men would allow them to travel out of the village they would only be able to work at the lowest level, without benefits and without respect. Because we are a not-for-profit company, the little bit of extra money that we do make goes back to the women - we provide women's empowerment training, we teach them to read and write, and how to care for their health and their children's health."

"I know it may not seem like much to others," says Pilous, "but at least we respect ourselves. And that really matters."

Related - Urban Kibbutz - Socialist-Zionist Pioneering in Israeli Cities

More about Urban communes (Kibbutz) in Israel: www.communa.org.il

You are reading this article at E-Zion - The Zionism and Israel Viewpoints Online Magazine

 


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