The New Labor Law as a Social Text: Reflections on Social Values in Flux

Abstract

ISRAELI LABOR LAW IS CURRENTLY in flux. What is the source of its instability? Many would pinpoint 1 January 1995 as the pivotal day that distinguishes the "old system" from the newly emerging one. On that day the new National Health Care Insurance Law went into effect, cutting the umbilical cord between health care provision and trade union membership and simultaneously nationalizing health care by guaranteeing all citizens and residents of Israel health care insurance. 1 This dramatic change in the Israeli health care system seems unrelated to labor law, and its effects on industrial relations and the governance of the Israeli labor market only a marginal derivative. The law on labor relations has remained the same. Participants in the Israeli industrial relations system have remained, at least in the preliminary stages, the same. Yet, given the fact that the Histadrut, Israel's major trade union, had dominated the provision of health care in Israel, then a health care reform must also be regarded as a labor reform. One of the major social and financial pillars of the Histadrut was torn down. The damage was even greater than expected, because the other pillars holding up the Histadrut's temple were already shaking: its pension plans revealed a huge actuarial deficit, and it started selling its vast economic activity, which included a major bank, an insurance company, and the largest industrial concern in Israel. What was deemed by some to be a "state within a state," and by others as the "fourth branch of government," turned into a lean organization with enormous debts and grave organizational difficulties. 2

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