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Constitutionalism and Anti-Privatisation Strikes: Introducing an Eclectic Model

Published online by Cambridge University Press:  21 October 2019

Lilach Litor
Lilach Litor*
Affiliation:
Dr Lilach Litor, Division of Public Law and Public Policy, The Open University of Israel; lilachli@openu.ac.il.
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Abstract

The rise of neoliberal agendas of political actors and a wave of privatisation in the globalisation era have often been followed by anti-privatisation strikes. These are union strikes against the privatisation process and against contracting out and opening markets to competition. The article presents the distinction between different versions of constitutionalism regarding anti-privatisation strikes. It discusses two approaches to constitutionalism – the economic approach and the collective approach – and their manifestation in the case law of Israel and the United Kingdom.

The collective approach suggests the recognition of a constitutional status of collective rights as a basis for counter-balancing the neoliberal practices of regulators and political actors. Following the effects of liberalisation on the labour market – both in influencing union organisational capacity and in weakening job security of individual employees, the collective approach is aimed at protecting employees’ rights in a globalised-privatised era. Within the collective approach, constitutionalism is used as a basis for recognising anti-privatisation strikes. In contrast, the economic approach denies the existence of a constitutional right to strike against privatisation.

The article presents an eclectic model which merges the two approaches, and advocates its adoption. Drawing on New Institutional Economics, the eclectic model offers a theory for moderating the constitutionalism practice and developing partial and restrained constitutionalism. It proposes the adoption of a constitutional right to strike against privatisation, when its application reduces transaction costs and advances efficiency and economic goals for the benefit of the public.

Keywords

anti-privatisation strikecollective constitutionalismeconomic constitutionalismeclectic modeltransaction costsNew Institutional Economicsconstitutional right to strike
Type
Articles
Information
Israel Law Review , Volume 52 , Issue 3 , November 2019 , pp. 327 - 366
Copyright
Copyright © Cambridge University Press and The Faculty of Law, The Hebrew University of Jerusalem 2019 

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Footnotes

I would like to thank Dr Orr Karassin for her helpful comments on an earlier draft of the article.

References

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4 The public interest is the welfare and well-being of the public in general, which is reflected in achieving conditions of free competition and a reduction in the prices of products and services.

5 The term ‘privatisation’ in this article includes privatisation of the workplace, as well as contracting out and opening markets to competition.

6 In the UK, despite the absence of a formal constitution, according to the Human Rights Act 1998 a law must be interpreted in compliance with the European Convention on Human Rights (ECHR). In Israel, even though a formal constitution has never been adopted, the two Basic Laws – Basic Law: Human Dignity and Liberty, and Basic Law: Freedom of Occupation – are perceived by the courts as having constitutional status.

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8 Efficiency is a situation in which the aggregate income minus the aggregate costs – including transaction costs – is high; hence, it is a situation of the highest profit and the least costs. When there is efficiency, transaction costs are zero and there is competition within the markets: North, Douglass C, ‘The New Institutional Economics and Third World Development’ in Harriss, John, Hunter, Janet and Louis, Colin M (eds), The New Institutional Economics and Third World Development (Routledge 1995) 17, 17–19Google Scholar.

9 Glachant and Perez (n 7); EJ Goedecke and GF Ortmann, ‘Transaction Costs and Labour Contracting in South African Forestry Industry’ (1993) 61 South African Journal of Economics 44, 45.

10 Goedecke and Ortmann, ibid 44–45; Ronald H Coase, ‘The Problem of Social Cost’ (1960) 56 Journal of Law and Economics 837. Transaction costs in our case include bargaining costs, costs paid for finalising agreements, compensation paid to employees in an attempt to obtain their approval of new reforms, supervision costs and external costs imposed on the public.

11 Hence, the eclectic model considers the monopolistic status of certain corporations and the exaggerated power of unions in monopolistic industries.

12 Joskow (n 7).

13 Majone, Giandomenico, ‘From the Positive to the Regulatory State: Causes and Consequences of Changes in the Mode of Governance’ (1997) 17(2) Journal of Public Policy 131, 140–43CrossRefGoogle Scholar; Yarrow (n 3).

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16 International Covenant on Economic, Social and Cultural Rights (entered into force 3 January 1976) 993 UNTS 3.

17 Art 8 states that no restrictions may be placed on the exercise of these rights, other than those prescribed by law and which are necessary in a democratic society in the interest of national security or public order or the protection of the rights and freedoms of others.

18 ILO Convention No 87 concerning Freedom of Association and Protection of the Right to Organise (entered into force 4 July 1950) 68 UNTS 17. The ILO is a tripartite UN agency; its special status and the effect of its principles is derived from bringing together governments, employers and workers of 187 member states.

19 ILO Convention No 98 concerning the Application of the Principles of the Right to Organise and to Bargain Collectively (entered into force 18 July 1951) 96 UNTS 257.

20 International Labour Conference (81st session), Report III (Part 4B): Committee of Experts on the Application of Conventions and Recommendations General Survey on the Freedom of Association and Collective Bargaining (June 1994) 64; Freedom of Association: Digest of Decisions and Principles on the Freedom of Association Committee of the Governing Body of the ILO (5th edn, 2006); Compilation of Decisions of the Committee on Freedom of Association (6th edn, 2018) (Compilation of Decisions), arts 753–54; Poland (Case No 3111) (14 January 2015) Report on the ILO Freedom of Association No 378, paras 674, 708; Djibouti (Case No 2471) (26 October 2005) Report on the ILO Freedom of Association No 344, para 891; Greece (Case No 2506) (12 July 2006) Report on the ILO Freedom of Association No 346, para 1076; Chad (Case No 2581) (10 July 2007) Report on the ILO Freedom of Association No 354, para 1114.

21 ILO Declaration on Fundamental Principles and Rights at Work (adopted by the ILO 86th Session, 18 June 1998).

22 It should be noted that there is an alternative approach of some governments who do not see ILO mechanisms as binding and prefer not to cooperate with them. The Canadian government, for instance, refused to cooperate with decisions of the ILO committee according to which the Canadian union enjoyed collective rights in the privatisation of hospital services: Fudge, Judy, ‘The Supreme Court of Canada and the Right to Bargain Collectively: The Implications of the Health Services and Support Case in Canada and Beyond’ (2008) 37 Industrial Law Journal 25CrossRefGoogle Scholar. Following that, the Canadian Supreme Court held that the union enjoyed a right of collective bargaining in light of the privatisation process: Health Services and Support v British Columbia [2007] 2 SCR 391, 2007 SCC 27.

23 Norman, Ken, ‘ILO Freedom of Association Principles as Basic Canadian Human Rights: Promises to Keep’ (2004) 67 Saskatchewan Law Review 591, 596–97Google Scholar; Langille, Brian, ‘The ILO and the New Economy: Recent Developments’ (1999) 15(3) International Journal of Comparative Labour Law and Industrial Relations 229, 229–30CrossRefGoogle Scholar. ILO norms are dealt with through a complaints process, which requires governments to take corrective action and to keep the ILO informed of their responses. Nevertheless, some governments, such as Canada, sometimes choose not to cooperate with ILO demands: Tucker (n 1) 367–68.

24 Swepston, Lee, ‘Crisis in the ILO Supervisory System: Dispute over the Right to Strike’ (2013) 29 Journal of Comparative Labour Law and Industrial Relations 199Google Scholar.

25 Fudge (n 2) 295–96; Claire La Hovary, ‘Showdown at the ILO? A Historical Perspective on the Employer's Group's 2012 Challenge to the Right to Strike’ (2013) 42 Industrial Law Journal 338, 342–43. The employers group at the ILO claimed that the committee of experts did not have the legal mandate to interpret the Conventions.

26 ibid.

27 In Canada, for instance, the debate over the years has been whether the right to strike and the right of collective bargaining should be considered constitutional rights. Hence, in 1987 three cases in the Supreme Court of Canada, known as ‘the labour trilogy’, were marked by sharp disagreement as to whether the freedom of association in s 2(d) of the Canadian Charter included the right to strike. The labour trilogy refers to three appeals: Reference re Public Service Employee Relations Act (Alta) [1981] 1 SCR 313; PSAC v Canada [1987] 1 SCR 424; RWDSU v Saskatchewan [1987] 1 SCR 460: see Fudge (n 2) 295–96.

28 For instance, in Canada in recent years the Supreme Court has based the recognition and application of a constitutional right in cases of essential services on the recognition of a fundamental right to strike in international law – mainly within ILO principles: Fudge (n 2) 295.

29 Scholars have emphasised the deliberative democratic justification as a basis for the effect of international law on local law. It is the improved quality of debate achieved in discussing controversial issues at the international level: Novitz, Tonia, International and European Protection of the Right to Strike (Oxford University Press 2003) 24–25CrossRefGoogle Scholar.

30 For instance, these collective rights were not included in either the Canadian Charter or the Israeli constitutional norms – the Basic Laws. Another example is the German constitution, which does include freedom of association in Basic Law for the Federal Republic of Germany, art 9(3): ‘The right to form association to safeguard and improve working and economic conditions, shall be guaranteed to every individual and to every occupation and profession. Agreements that restrict or seek to impair this right shall be null and void’. This article relating to the right to form associations has been considered over the years by the German Constitutional Court as guaranteeing the right to strike, in addition to the right of collective bargaining: Bundesverfassungsgericht [BverfG] 103, 1993. The Constitutional Court held that art 9(3) of the German constitution protects the right to strike, as long as it is related to an economic strike, aimed at enhancing negotiations regarding collective agreements: Bundesverfassungsgericht [BverfG] 212, 1991, 26 June 1991 Entscheidungen Des Bundesverfassungsgericht.

31 Gray, John, Mill on Liberty: A Defence (2nd edn, Routledge 2003) 1–9Google Scholar, 43–63.

32 Laissez faire is based on the French ‘laissez faire, laissez passer’ [‘let do and let pass’]. It requires allowing people to be free without interference and specifically allowing owners of businesses to determine the rules of commerce and employment, without government intervention: Gamst, Fredrick C, ‘Foundations of Social Theory’ (1991) 12(3) Anthropology of Work Review 19, 20CrossRefGoogle Scholar.

33 Yonay, Yuval, The Struggle over the Soul of Economics: Institutionalist and Neoclassical Economics (Princeton University Press 1998) 5–8CrossRefGoogle Scholar. The neoclassical economy elaborated on Adam Smith's theory and continued to include the basic assumptions of hedonism and rationality, and added the marginal calculus.

34 Shamir, Hila, ‘The Public/Private Distinction Now: The Challenges of Privatisation and of the Regulatory State’ (2014) 15(1) Theoretical Inquiries in Law 18, 18–24CrossRefGoogle Scholar.

35 ibid.

36 Privatisation is needed in order to accelerate efficiency and achieve economic goals. The application of a constitutional right to strike against privatisation interferes with efficiency goals and the free movement of capital and the work force: Reich, Norbert, ‘Free Movement v Social Rights in an Enlarged Union: The Laval and Viking Cases before the ECJ’ (2008) 9 German Law Journal 125, 126–29CrossRefGoogle Scholar. The application of a constitutional right to strike was considered by the ECJ as an interference with economic freedom and free competition.

37 According to this view, courts should refrain from extensive involvement in the markets through the imposition of collective rights-oriented duties that interfere with free movement in international and local spheres and economic market activity. For instance, Posner claims that labour law and the recognition of labour rights are founded on a policy that is the opposite of free competition and economic efficiency: Posner, Richard, ‘Some Economics of Labour Law’ (1984) 51 Chicago Law Review 988, 990CrossRefGoogle Scholar.

38 The neoclassical economic approach claims that following labour market regulation through recognition of collective rights, a monopoly-like cartel of unions is introduced. It is claimed that this leads to an increase in wages above the market level. As a result, firms that suffer from reduced profit tend to shift part of the cost to consumers or reduce the quality of their services: Posner, ibid 988; Kenneth G Dau-Schmidt and Arthur R Traynor, ‘Regulating Unions and Collective Bargaining’ in Kenneth G Dau-Schmidt, Seth Harris, D and Lobel, Orly (eds), Labor and Employment Law and Economics (Edward Elgar 2009) 96, 103Google Scholar; Lilach Luria, Yuval Feldman and Orly Lobel, ‘An Economic Approach to Labor Law’ in Ariel Proccacia (ed), The Economic Approach to Law (Nevo 2012) 477 (in Hebrew); Blanchflower, David G and Bryson, Alex, ‘What Effects Do Unions Have on Wages Now and Would “What Would Unions Do” Be Surprised?’ (2004) 25 Journal of Labor Research 383CrossRefGoogle Scholar; Bruce E Kaufman, ‘Labor Law and Employment Regulation: Neoclassical and Institutional Perspectives’ in Dau-Schmidt, Harris and Lobel, ibid 3, 3–5.

39 For instance, governments might initiate vast reductions in the labour force before privatisation or enable such reductions in the post-privatisation era in order to attract potential investors: Sunita Kikeri, ‘Privatisation and Labour: What Happens to Workers When Governments Divest?’, World Bank Technical Paper 396, 1997, 5–6.

40 Marshall, Thomas Hamphrey, ‘Citizenship and Social Class’ in Marshall, Thomas Hamphrey and Bottomore, T (eds), Citizenship and Social Class (Pluto Press 1992) 1, 30–32Google Scholar; Marshall proposed the division of citizenship into three parts: civil, political and social. The social part refers to a right to economic welfare and the right to live the life of a civilised being.

41 Tushnet, Mark, ‘The Issue of State Action and Horizontal Effect in Comparative Constitutional Law’ (2003) 1 International Journal of Constitutional Law 79CrossRefGoogle Scholar.

42 For the meaning of recognising labour rights, see Langille (n 1) 198–99.

43 The source of some of these liberal rights is the Universal Declaration of Human Rights, UNGA Res 217A (III), 10 December 1948, UN Doc A/810 (1948). For instance, art 17 ensures the right to property; art 21(2) ensures the right of everyone to equal access to public services in their own country. It could be claimed that an APS affects reforms in public services and hence also affects the rights of citizens to fair and equal access to public services. In the United Nations International Convent on Civil and Political Rights (entered into force 23 March 1976) 999 UNTS 171 (ICCPR), art 12 ensures the liberty of free movement; art 25 ensures access to public services.

44 Etherington, Brian, ‘The Right to Strike under the Charter after Saskatchewan Federation of Labour: Applying the New Standard to Existing Regulation of Strike Activity’ (2016) 19 Canadian Labour and Employment Law 429, 431Google Scholar.

45 A negative liberty does not have positive implications, and therefore does not impose parallel obligations on the state and public employers to recognise collective action in privatisations and in similar circumstances: Langille (n 1).

46 Barak, Aharon, ‘The Role of the Supreme Court in a Democracy’ (1998) 3(2) Israel Studies 6, 6–12CrossRefGoogle Scholar.

47 Barak, Aharon, ‘A Judge on Judging: The Role of a Supreme Court in a Democracy’ (2002) 116 Harvard Law Review 19Google Scholar.

48 Medina, Barak, ‘Constitutional Limits to Privatisation: The Israeli Supreme Court Decision to Invalidate Prison Privatization’ (2010) 8(4) International Journal of Constitutional Law 8Google Scholar.

49 Oliphant, Benjamin, ‘Exiting the Freedom of Association Labyrinth: Resurrecting the Parallel Liberty Standard and Saving the Freedom to Strike’ (2012) 70(2) Toronto Faculty of Law Review 36, 54–55Google Scholar.

50 Steven Barrett and Benjamin Oliphant, ‘The Trilogy Strikes Back: Recognizing Constitutional Protection for the Freedom to Strike’ (2014) 45 Ottawa Law Journal 206. Recognition of a constitutional right to strike might offer wider protection for strike action, such as a positive obligation and meaningful exercise of a right to strike. Such wider protection could include, for instance, a restriction on using replacements for striking workers.

51 Individual human rights discourse is the recognition of only individual economic rights within the constitutional system, such as the right to liberty and dignity: Savage, Larry, ‘Workers’ Rights as Human Rights’ (2009) 34 Labor Studies Journal 8CrossRefGoogle Scholar.

52 ibid.

53 Human Rights Act 1998 (UK), s 2. Another example is Canada, where the constitutional order includes liberal individual discourse, and scholars have claimed that it could not be a basis for the recognition of labour rights as constitutional rights: Savage (n 51).

54 Tucker (n 1).

55 For instance, with regard to the decline of the Israeli Labour Party see Aronoff, Myron J, Power and Ritual in the Israel Labor Party: A Study in Political Anthropology (Routledge 2015) x–xiiiCrossRefGoogle Scholar.

56 Fudge (n 22).

57 Savage (n 51).

58 Langille, Brian and Oliphant, Benjamin, ‘The Legal Structure of Freedom of Association’ (2014) 40(1) Queen's Law Journal 250, 284, 294–97Google Scholar (stating that we must distinguish between the role of a judge in interpreting the constitution, and the role of democratic branches of government. Therefore, limitations should be placed on judges when drafting complex labour codes covering freedom of association or strikes).

59 For instance, Dotan presents the claim that courts do not have the democratic mandate to make such decisions regarding privatisation: Dotan, Yoav, ‘Informal Privatisation and Distributive Justice in Israeli Administrative Law’ (2010) 36(1) Hamline Law Review 27, 36Google Scholar.

60 Tushnet (n 41).

61 Freund, Otto Kahn, ‘The Impact of Constitutions on Labour Law’ (1976) 35 Cambridge Law Journal 266Google Scholar. Therefore, generally the scope of social legislation is a political question and courts are portrayed as ill-equipped to settle these issues: Langille (n 1) 202.

62 Heeman, Roy L, ‘Saskatchewan Federation of Labor and Strikes in the Public Sector: Confusing Social Rights with Fundamental Ones’ (2016) 19 Canadian Labour and Employment Law Journal 399, 401Google Scholar; Cameron, Jamie, ‘The Labor Trilogy's Last Rites: BC Health and a Constitutional Right to Strike’ (2010) 15 Canadian Labour Law and Employment Journal 298, 311Google Scholar; Dotan presents the claim that the judiciary does not have the professional expertise: Dotan (n 59).

63 Privatisations also have budgetary implications and are aimed at reducing government spending.

64 We should also bear in mind that in the age of post-Fordism, the patterns of workforce outsourcing and New Public Management (NPM) reforms, which are characteristic of the new globalised era, have weakened the position of public employees. The meaning of post-Fordism as a labour process can be defined as a flexible production process, based on flexible machines or systems, and an appropriately flexible workforce: Jessop, Bob, ‘Post Fordism and the State’ in Greve, Bent (ed), Comparative Welfare Systems (Macmillan 1996) 165, 184Google Scholar. NPM reform is the incorporation of market-oriented modes of management, efficiency goals and marketisation in the public sector: Cohen, Nissim, ‘Forgoing New Public Management and Adopting Post New Public Management Principles on the Ongoing Civil Reform in Israel’ (2016) 36 Public Administration and Development 20CrossRefGoogle Scholar.

65 Tucker (n 1); Fudge (n 22). In that sense, constitutionalism counter-balances neoliberalism in the political arena and the legislator's intention to roll back workers’ rights.

66 It should be considered that in the modern era the sharp dichotomy between the judiciary and parliamentary branches, according to the classic principle of separation of powers, no longer applies: Barak (n 47) 26.

67 Paquette, Jason R, ‘The Call for Deference in Labor Relations: An Answer to Justice Rothstein’ (2016) 19 Canadian Labour and Employment Law Journal 413Google Scholar.

68 Dotan (n 59) 27, 36.

69 Bogg and Ewing (n 1) 399–400.

70 ibid 399.

71 Paquette (n 67).

72 Davidov, Guy, ‘Judicial Development of Collective Labor Rights – Contextually’ (2010) 15 Canadian Labour and Employment Law Journal 235Google Scholar.

73 Basic Law: Freedom of Occupation; Basic Law: Human Dignity and Liberty.

74 HCJ 6821/93 Bank Hamizrahi v Migdal 1995 PD 49(4) 221. The court also ruled that it held the power to review regular legislation of the parliament, leading to the potential disqualification of unconstitutional laws. These rulings came to be known as ‘the constitutional revolution’: Hirschl, Ran, ‘The “Constitutional Revolution” and the Emergence of a New Economic Order in Israel’ (1997) 2(1) Israel Studies 136, 142–47Google Scholar.

75 The Basic Laws of human rights include only the protection of a limited list of individual liberal rights. Nevertheless, over the years the list of constitutional rights has been expanded by the courts to include several derivative rights. For instance, the right to equality has been recognised as a derivative right: HCJ 6298/07 Yehuda Ressler, Major (Ret) v The Knesset (21 February 2012).

76 Thus, the right to a minimum standard of living has been recognised as a constitutional right: HCJ 10662/04 Hassan v The Social Insurance Institution 2012 PD 65(1) 782. The right is included in the ICESCR (n 16); it is classified as a social right having been formulated within the ICESCR as a positive state obligation imposing affirmative duties of action. It is also one of the rights arising from the social contract and context within a given society, unlike social rights, civil and political liberties, which were designed to protect individuals only from arbitrary governmental encroachment: Rabin, Yoram and Shany, Yuval, ‘The Israeli Unfinished Constitutional Revolution: Has the Time Come for Protecting Economic and Social Rights?’ (2004) 37 Israel Law Review 299, 301CrossRefGoogle Scholar. Nevertheless, despite the recognition of a right to a minimum standard of living as being of a constitutional nature, the Israeli court has refrained from stating what standard of living is actually recognised within the constitutional right.

77 For instance, HCJ 1181/03 Bar-Ilan University v The National Labour Court 2011 PD 64(3) 204.

78 Daphne Barak-Erez, ‘Applying Administrative Law to Privatisations in Israel’ in (2006) Israeli Reports to the XVI International Congress of Comparative Law 47.

79 Regarding the general neoliberal wave, see Jonathan Preminger, ‘Israel's Recent Unionizing Drives: The Broader Social Concept’ (2018) 33 Israel Studies Review 23.

80 For instance, Dotan claimed that the Supreme Court refrained from using socio-economic fundamental rights or intensively intervening in the process of privatisations: Dotan (n 59); see also Barak-Erez, Daphne, ‘Israel Administrative Law at the Crossroads: Between the English Model and the American Model’ (2007) 40 Israel Law Review 56CrossRefGoogle Scholar; Barak-Erez, Daphne and Gross, Aeyal, ‘Social Citizenship: The Neglected Aspect of Israeli Constitutional Law’ in Barak-Erez, Daphne and Gross, Aeyal (eds), Exploring Social Rights: Between Theory and Practice (Hart 2007) 245, 245–46Google Scholar; Hirschl emphasised that the Basic Laws have been interpreted in a way that protected mainly the authority of the economic sphere and the rights of employers: Hirschl (n 74) 142–47.

81 Ruth Ben-Israel, Strikes and Lock Outs in a Democracy (The Open University of Israel 2003) 121 (in Hebrew); Davidov (n 72).

82 Mundlak, Guy and Harpaz, Itzhak, ‘Determinants of Israeli Judicial Discretion in Issuing Injunctions Against Strikes’ (2002) 40(4) British Journal of Industrial Relations 753CrossRefGoogle Scholar.

83 HCJ 1074/93 The Attorney General v National Labour Court 1994 PD 49(2) 485.

84 HCJ 525/84 Hativ v National Labour Court 1986 PD 40(1) 673.

85 According to ILO principles, whereas strikes of a purely political nature do not fall within the protection of Conventions 87 and 98, a right to strike is considered fundamental and legitimate as long as it is utilised as a means of defending economic interests: Compilation of Decisions (n 20) para 751. With regard to political strikes, see Compilation of Decisions (n 20) para 761; Republic of South Korea (Case No 1865) (2007) 346th Report on the ILO Freedom of Association Cases, para 749.

86 HCJ 1074/93 Bezeq v National Labour Court 1995 PD 39(2) 485 (English translation at http://versa.cardozo.yu.edu/topics/judicial-review?page=3).

87 The category of the semi-political strike was introduced in this case. If the privatisation process affects working conditions, it would be classified as a semi-political strike. The semi-political strike, as the judges in Bezeq stated, is a political strike with economic elements. Such a classification is attained when the employees can demonstrate that certain economic effects on wages and working conditions will result. A strictly political strike is forbidden altogether as it is seen as undermining democratically elected institutions, including the government and parliament. Contrary to a purely political strike, a semi-political strike has enabled short-term collective action to take place, usually for only a few hours on each occasion: Bezeq (n 86).

88 For instance, CDA 50556-09-11 The General Histadrut v The Train Association (28 September 2011).

89 Preminger (n 79).

90 Mundlak (n 14) 4–6; Mundlak, Guy, ‘Addressing the Legitimacy Gap in the Israeli Corporatist Revival’ (2009) 47 British Journal of Industrial Relations 765, 767–70CrossRefGoogle Scholar.

91 Meidany, Assaf, ‘The Case of the Israeli State Economy Arrangement Law’ (2008) 19 Constitutional Political Economy 301Google Scholar.

92 Cohen, Yinon and others, ‘Unpacking Union Density: Membership and Coverage in the Transformation of the Israeli IR System’ (2003) 42 Industrial Relations 692, 693–95Google Scholar; Mundlak (n 14) 4–6.

93 ibid.

94 Meidany (n 91).

95 Train Association (n 88).

96 ibid paras 8–13.

97 Israeli courts have developed a proportionality test for the review of collective action and tend to issue injunctions in cases of disproportionate strikes which affect the public interest or third-party interests. It was developed mainly in CDA 1013/04 Bank Discount v The General Histadrut (26 September 2004). The proportionality test, in general, is designed to keep infringement of human rights to the minimum necessary in the circumstances: Pnina Alon Shenker and Guy Davidov, ‘Applying the Principle of Proportionality in Employment and Labour Law Contexts’ (2013) 59 McGill Law Journal 375, 377. In Israel, the proportionality test has been adapted to employment law and has been used as a major tool in strikes: proportionality tests have been used by the National Labour Court as a means of balancing the right to strike with other rights. Courts take into account mainly the rights of service recipients. Hence, courts could issue an injunction against the strike on the ground of the harm caused to the rights of service recipients. For instance, in CDA 20/07 The State of Israel v The Organization of Teachers in High Schools, Seminars and Colleges (13 December 2007), the court issued an injunction against the strike because of the harm caused by the strike to the rights of pupils to education.

98 Since collective action included stopping the train in the middle of the route: Train Association (n 88) 8–13. As long as strikes against privatisations were considered illegitimate, the application of the proportionality test was not needed. Hence, the very use of proportionality tests indicates that courts began to enable regular collective action against privatisations.

99 For instance, CD (Haifa Regional) 54547-07-13 The Electricity Corporation v The General Histadrut (17 September 2013).

100 ibid; CDA 10973-06-13 The Electricity Corporation v The General Histadrut (2 June 2013) (Dorad); CD (Haifa Regional) 15413-07-13 The Electricity Corporation v The General Histadrut (17 September 2013) (Electricity Corporation (2)).

101 NLC 40815-07-13 The Chamber of Commerce v The General Histadrut (23 September 2013) 18–19; Electricity Corporation, ibid.

102 GCD 40815-07-13 The Commercial Chamber v Histadrut (2013) (Private Harbours)

103 ibid; Electricity Corporation (n 100).

104 Private Harbours (n 102).

105 The court emphasised that the strike was also not of a semi-political nature, according to the classification that was introduced in Bezeq (n 86).

106 Private Harbours (n 102).

107 ibid.

108 Dorad (n 100)

109 ibid; see also CDA 50696-01-13 The Electricity Corporation v General Histadrut (11 February 2013) (OPC case).

110 The Israeli Antitrust Authority announced in February 2016 that the Israeli electricity company had abused its monopolistic position and caused harm to customers who started to buy from private electricity producers: Israel Competition Authority, Press Release, 2 February 2016, http://www.antitrust.gov.il/eng/subject/182/item/33927.aspx.

111 cf text at n 100.

112 In Dorad, the government introduced a reform which was intended to transfer all electricity manufacturing – once carried out only by the public electricity corporation – to the private sector. According to this reform, all manufacturing of electricity would be transferred to private manufacturers and would be based on the use of gas and new energy. The old government coal-based power stations would be used only as a backup for emergency situations.

113 For instance, in the past the National Labour Court has held that an APS involving the privatisation of a bank was disproportionate, as it was a political strike against the privatisation process itself: Bank Discount (n 97). Stephen Adler, Chief Justice of the National Labour Court, emphasised that the workers did not have the power of veto over government privatisation decisions.

114 For instance, in the past the fact that the strike against a government reform was classified as political influenced the court in determining that it was disproportionate: The Organization of Teachers (n 97); Merony, Mordechay, ‘The Involvement of Law and Labour Courts in Strikes in the Public Sector: New Problems and New Challenges’ (2012) 14 Law and Governance 271Google Scholar, 284 (in Hebrew). Disproportionality in these cases stems from the substantial harm caused to the public and the public interest.

115 The General Histadrut (n 15). An appeal to the Israeli HCJ in this case was dropped after a while by the government: HCJ 5027/17 The Private Electricity Manufacturers Forum v The National Labour Court (4 July 2018) (Electricity Manufacturers).

116 Nevertheless, it should be mentioned that in comparison with the National Labour Court, the Israeli Supreme Court showed unease with this trend. In July 2017 the Supreme Court issued an order for the Histadrut Labour Federation to state why the judgment of the National Labour Court should not be cancelled: HCJ 5027/17 Electricity Manufacturers, Decision (23 July 2017). Judicial expressions in the Israeli Supreme Court in the appeal in Dorad threatened the Histadrut – the largest workers’ organisation in Israel, which preferred to stop sanctions in order to prevent a problematic ruling: see, eg, ‘The High Court of Justice Accepted the State's Position, and the IEC Board Stops the Sanctions’, The Marker, 20 July 2017, https://www.themarker.com/dynamo/1.4278483 (in Hebrew). It seems that the Supreme Court believes that the current collective approach is not ideal. Yet, as agreement regarding the electricity reform had been reached between the government and the Histadrut in July 2018, the Supreme Court rejected the appeal of the private electricity manufacturers. It ruled that the appeal had become theoretical, as the unions had ceased their sanctions against the private manufacturers and agreement with the employees regarding the government reform had been reached: Electricity Manufacturers, (n 115).

117 Since 1906, legislation has provided immunity from liability in tort for strikers under certain conditions: Trade Disputes Act 1906 (UK). Legitimate strikes, which are granted protection by the law, are those which comply with the definition of a ‘trade dispute’ within the legislation: s 244 of the Trade Union and Labour (Consolidation) Act 1992 (UK) provides that a trade dispute is a dispute between workers and their employers, which relates wholly or mainly to one or the other of various categories: ‘(a) terms and conditions of employment or the physical conditions in which workers are required to work’.

118 Ewing, Keith D and Hendy, John, ‘The Dramatic Implications of Demir and Biarka’ (2010) 39 Industrial Law Journal 2, 20CrossRefGoogle Scholar.

119 Immunity from liability in tort can be claimed only if the aim of the collective action comes within the statutory definition of lawful trade dispute, and satisfies the requirements placed on unions to hold a ballot and give notice to the employer. Such requirements, as pre-conditions for immunity from liability, do not exist in Israeli law. In Israel, immunity from liability in tort is wide and exists mainly provided the strike is proportional: CA 593/81 Ashdod Vehicles v Tzizik 1987 PD 41(3) 169; CA 862/02 (Haifa) X v Rishon Lezion Municipality (23 October 2008).

120 Novitz, Tonia, ‘Collective Action in the United Kingdom’ in Ales, Edorado and Novitz, Tonia (eds), Collective Action and Fundamental Freedoms in Europe (Intersentia 2010) 173Google Scholar, 176.

121 Ewing, Keith D, ‘The Human Rights Act and Labour Law’ (1998) Industrial Law Journal 275, 275–82CrossRefGoogle Scholar.

122 ECtHR, Enerji Yapi-Yol Sen v Turkey, App no 68959/01, 21 April 2009. The ECtHR has also held that the right of association includes the right of collective bargaining: ECtHR, Demir and Byarka v Turkey, App no 34503/97, 12 November 2008.

123 Simpson, Bob, ‘Trade, Disputes and Industrial Action Ballots in the Twenty First Century’ (2002) 31 Industrial Law Journal 270CrossRefGoogle Scholar.

124 Mercury Communications Ltd v Scott-Garner [1984] Ch 37, [1983] 3 WLR 914.

125 John Hendy, ‘Caught in a Fork’ (2000) 29 Industrial Law Journal 59.

126 During the 1980s the Trade Disputes and Trade Unions Act 1946 (UK) granted immunity from lawsuits for employees involved in a strike that was regarded as related to a trade dispute.

127 University College London Hospital NHS Trust v UNISON [1998] EWCA Civ 1528, [1999] ICR 204.

128 ibid. The court took the view that the dispute was not about terms and conditions of employment, but about terms and conditions yet to be entered into between the workers and the new private employer. Hence the court granted an injunction against the strike: ibid 213–16.

129 Hendy (n 125).

130 University College (n 127).

131 The Lord Mayor and Citizens of Westminster City Council v UNISON [2001] EWCA 443.

132 Case C-438/05 Transnational Workers' Federation Union v Viking [2007] ECR I-10779.

133 Daniels, Gary and Mcllroy, John, Trade Unions in a Neoliberal World (Routledge 2009) 209Google Scholar.

134 Howard Davies, Political Freedom, Associations, Political Purposes and the Law (Continuum 2000) 170.

135 Govia Railway Ltd v Associated Society of Locomotive Engineers and Firemen [2016] EWCA Civ 1309.

136 ibid.

137 See, eg, CA 573/68 Shavit v Hanan 1969 PD 23(1) 516.

138 Enerji Yapi-Yol Sen (n 122).

139 ECtHR, Unison v United Kingdom, App no 53574/99, 10 January 2002.

140 ibid.

141 Ewing and Hendy (n 118).

142 ECtHR, National Union of Rail and Transport Workers v United Kingdom, App 31045/10, 8 April 2014. The ECtHR held that under art 11 the freedom of trade unions to protect the occupational interests of union members must be secured and the core of trade union activity protected. Hence art 11 aims to achieve the correct balance between the interests of labour and management paras 85–86. It was also held that if a restriction on strike action does not relate to the core but an accessory aspect of trade union activity, a margin of discretion to member states to restrict strike action is allowed: ibid para 87.

143 The UK government claimed that secondary action had the potential to infringe the rights of persons who are not party to the industrial dispute, and to cause broad disruption within the economy: ibid para 82.

144 Bellamy, Richard, ‘Political Constitutionalism and the Human Rights Act’ (2001) 9 International Journal of Constitutional Law 86, 94–95Google Scholar.

145 This is used as a last resource.

146 Bellamy (n 144).

147 Ewing and Hendy (n 118) 12–13; Richard Hyman, ‘The Historical Evolution of British Industrial Relations’ in Paul Edwards (ed), Industrial Relations: Theory and Practice in Britain (Blackwell 2003) 37, 38–40.

148 Novitz (n 120) 175–76.

149 Collective Agreements Act, 1957 (Israel), art 19.

150 Dismissal of employees on the basis of participating in a strike is forbidden according to the Collective Agreements Act, 1957 (Israel), art 33(10).

151 Davidov (n 72).

152 Mundlak, Guy, ‘The Israeli System of Labour Law: Sources and Forms’ (2008) 30 Comparative Labour Law and Policy Journal 159Google Scholar; Davidov (n 72).

153 Looking at the discussions in the parliament with regard to the Labour Court Act reveals that the intention was to replace strikes with adjudication.

154 Davies, Anne CL, ‘One Step Forward, Two Steps Back? The Viking and Laval Cases in the ECJ’ (2008) 37 Industrial Law Journal 126, 146CrossRefGoogle Scholar.

155 Mundlak (n 14) 4–6.

156 Mundlak (n 2).

157 CDA 18983-09-14 The Histadrut v The State of Israel (2017) 4.

158 For instance, while a union could lawfully call a strike, striking workers were in breach of their contracts of employment and might therefore be dismissed: Hyman (n 147).

159 ibid.

160 Regarding this matter Novitz quotes Kahn-Freud, describing the British system as collective laissez faire: Novitz (n 120) 175.

161 ibid 174, 175.

162 Ewing (n 121) 275–82.

163 National Union of Rail and Transport Workers (n 142).

164 In the EU some economic freedoms are considered to be fundamental rights – freedom to provide services: Treaty Establishing the European Community (2002), art 56 (formerly art 49); and freedom of establishment: ibid, art 49 (formerly art 43).

165 Train Association (n 88).

166 The monopolistic status of some governmental corporations and their employees has never been taken into account within the proportionality tests.

167 The General Histadrut (n 15).

168 CDA 57/05 The General Histadrut v Metrodan (3 March 2005).

169 ibid.

170 Train Association (n 88).

171 University College (n 127).

172 According to UK government data, trade union density has been in decline over the last two decades since 1995. Whereas in 1995 union density was 32%, in 2000–01 it was only 29%; in 2009 it was 27%, reducing to 24% in 2013: UK Government, Department for Business, Energy & Industrial Strategy, ‘Trade Union Membership: Statistical Bulletin’, May 2019, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/805268/trade-union-membership-2018-statistical-bulletin.pdf.

173 Also, consideration of efficiency and free competition goals by the judiciary will create policy cohesion between the various actors, regulators and political actors on the one hand (which typically advances privatisation in order to enhance efficiency), and the courts on the other. Policy cohesion is the strategy to support harmonious policy within different areas: Christos J Paraskevopulos and Robert Leonardi, ‘Adaptational Pressures and Social Learning in European Regional Policy Cohesion’ (2004) 14 Regulation and Federal Studies 315, 317.

174 Oliver E Williamson, ‘Foreword – The New Institutional Economics’ in Brousseau and Glachant (n 7) xxiii, xxxiii; Oliver E Williamson, ‘Public and Private Bureaucracies: A Transaction Cost Economics Perspective (1999) 15 Journal of Law, Economics and Organization 306. Williamson's general theory of the internal labour market can be applied in cases of contracting out and privatisation. The theory claims that in some situations the use of internal employees is more efficient as the process of hiring external employees itself has costs: Oliver E Williamson, ‘The Vertical Integration of Production: Market-Failure Considerations’ (1971) 61 American Economic Review 112, 112–13.

175 Glachant and Perez (n 7); Goedecke and Ortmann (n 9); Hwang (n 7); Young (n 7).

176 According to Ronald Coase – one of the earlier scholars of institutional economics – prices are generated from market activity and these prices themselves have a cost – the cost of producing market prices: Coase (n 10); see also Nee, Victor, ‘The New Institutionalism in Economics and Sociology’ in Smelser, Neil J and Swelberg, Richard (eds), The Handbook of Economic Sociology (2nd edn, Princeton University Press 2005) 49Google Scholar.

177 The need to reduce transaction costs could justify regulation that is aimed at strengthening union collective struggles and collective negotiations: ibid.

178 Contrary to the collective model, which suggests that a constitutional right to strike should be applied generally in privatisation cases, the eclectic model, in contrast, suggests completely refraining from the application of a constitutional right to strike in some cases.

179 The rationale behind anti-trust legislation is that a union is invulnerable to anti-trust liability as long as it pursues its traditional objective of maintaining working conditions and wages. Thus, when the objective of union conduct is legitimate in the broad sense, and it aims to achieve traditional self-interest within the labour market, it is portrayed as justified in recognising immunity from anti-trust liability: Handler, Milton and Zifchak, William C, ‘Collective Bargaining and Anti-Trust Laws: The Emasculation of the Labour Exemption’ (1981) 81 Columbia Law Review 459, 480–82Google Scholar.

180 In Israel unions are exempt from anti-trust legislation: Antitrust Act (1988) (Israel), art 3(9).

181 Kaufman (n 38). The NIE approach to labour law claims that generally there is no need for governmental regulation and we should aim for free markets and privatisation. Nevertheless, regulation of markets could be justified when there are transaction costs. Institutional scholars claim that it is not possible to create an efficient optimal pricing system based on national monopolies owned by the state, unless real markets for framing real transactions were created: Glachant and Perez (n 7).

182 Brown, J David, Earle, John S and Telegdy, Almos, ‘Employment and Wage Effects on Privatisation’ (2009) 120 The Economic Journal 683Google Scholar.

183 Glachant and Perez (n 7).

184 Boycko, Maxim, Shleifer, Andrei and Vishny, Robert W, ‘A Theory of Privatisation’ (1996) 106 The Economic Journal 309, 309–10CrossRefGoogle Scholar. The economic neoclassical approach emphasises the relative inefficiency of public firms and public services. Hence, they claim that there would be higher employment per unit of output in publicly provided services.

185 Williamson, ‘Public and Private Bureaucracies’ (n 174) 306, 330–36. NIE scholars claim, for instance, with regard to privatisation of security and army services and foreign affairs, that a state can best control violence and manage foreign affairs through public bureaucracies: Avant, Deborah D, The Market for Force: The Consequences of Privatising Security (Cambridge University Press 2005) 47–49CrossRefGoogle Scholar.

186 Novitz (n 29) 52.

187 Bordonga, Lorenzo, ‘Moral Hazard, Transaction Costs and the Reform of Public Service Employment Relations’ (2008) 14 European Journal of Industrial Relations 381, 392–93Google Scholar.

188 Scholars note that collective representation reduces transaction costs: ibid.

189 The success of unions in avoiding these issues also results in employee satisfaction and a more efficient workplace; for instance, collective rights advance social justice: La Hovary (n 25) 341.

190 Freeman and Meidoff, drawing on the collective voice theory, underline the economic impact of the collective response of unions to the dissatisfaction of employees: Richard B Freeman and James L Medoff, ‘What Do Unions Do’ (1986) 38 Economic Review 381.

191 Efficiency is a situation in which the aggregate income is higher than the aggregate costs.

192 Novitz (n 29) 80–81.

193 Marshall, Ray, Unheard Voices: Labor and Economic Policy in a Competitive World (Basic Books 1987) 112Google Scholar.

194 A free-rider effect occurs when individual corporations obtain benefit while passing the cost to society in general. These corporations benefit from resources or goods for which they do not pay, at the expense of society and, as a result, economic inefficiency is created: Runge, Carlisle Ford, ‘Institutions and the Free Rider: The Assurance Problem in Collective Action’ (1984) 46(1) The Journal of Politics 154CrossRefGoogle Scholar.

195 Quiggin, John, ‘Contracting Out: Promise and Performance’ (2002) 13 Economic and Labour Relations Review 88, 95–98CrossRefGoogle Scholar. It also affects the rights and welfare of working-class citizens and the public in general.

196 Boycko, Shleifer and Vishny (n 184) 309; Lawther, Wendell C, ‘The Role of Public Employees in the Privatisation Process’ (1999) 19 Review of Public Personnel Administration 28, 30–32Google Scholar.

197 Privatisation also involves a major change in the internal organisation of a company, leading to a change in the corporate culture. This change has an impact on employee well-being, as it is associated with increased uncertainty and produces increased occupational stress: Cunha, Rita C and Cooper, Cary L, ‘Does Privatization Affect Corporate Culture and Employee Well-Being?’ (2001) 17 Journal of Managerial Psychology 21Google Scholar.

198 The break-up of previously unified conditions of employment in collective-based public systems and the move to an unorganised private environment with fragmented career pathways increases the transaction costs of salary negotiation: Bordonga (n 187) 392.

199 Unions contribute to the general public welfare, as the collective struggles of unions lead to an increase in salaries and improvement in the standard of living of the working class and society as a whole, and guarantees an adequate standard of living.

200 Scholars stress that, in general, externalities and social costs provide the public interest rationale for employment regulation and the application of human rights in the labour market: Kaufman (n 38).

201 High transaction costs are involved in privatising governmental core functions and special services in which either special skills or special investments are required: Brown, Trevor L and Potoski, Mathew, ‘Transaction Costs and Institutional Explanations for Government Service Production Decisions’ (2003) 13 Journal of Public Administration Research and Theory 441CrossRefGoogle Scholar.

202 Williamson, ‘Public and Private Bureaucracies’ (n 174) 330–36.

203 Scholars demonstrate that the collective voice that unions enable can increase general welfare in several ways: Dau-Schmidt and Traynor (n 38).

204 Quiggin (n 195).

205 Tullock, Gordon, ‘Practical Problems and Practical Solutions’ (1977) 29(2) Public Choice 27CrossRefGoogle Scholar.

206 For instance, privatisation of the military and the system of military imprisonment, which are core government functions of the American army fighting in Iraq, led to inefficiency and economic costs in addition to corruption, failures in conduct and problems regarding contract enforcement and oversight and accountability issues: Minow, Martha, ‘Outsourcing Power: Privatising Military Efforts and the Risks to Accountability, Professionalism and Democracy’ in Freeman, Jody and Minow, Martha (eds), Government by Contract (Harvard University Press 2009) 110, 123–27Google Scholar.

207 Williamson, ‘Foreword – The New Institutional Economics’ (n 174).

208 It should be noted that the ILO Committee on Freedom of Association delineates a difference between a political strike and a working conditions strike. Strikes of a political nature do not fall within the scope of the principles of freedom of association: Compilation of Decisions (n 20) para 760; Guatemala (Case No 2413) (14 March 2005) Report on the ILO Freedom of Association No 340, para 901; Romania (Case No 2509) (20 July 2006) Report on the ILO Freedom of Association No 344, para 1245. A strike based on working conditions is considered legitimate and within the scope of freedom of association, as long as the strike is used as a means of defending their economic interests: Compilation of Decisions (n 20) paras 751–53. Unlike the ILO principles, such a distinction does not apply with the eclectic model.

209 Glachant and Perez (n 7) 335–36.

210 In some cases in Israel the collective action of the employees of a public corporation were aimed at a third party – a new entrant into the market or an existing private competitor. Collective action included a refusal to connect the new private manufacturers to the public corporation's infrastructure.

211 Essential services are those services interruption of which would endanger the life, personal safety or health of the population or part of it: Compilation of Decisions (n 20) para 836.

212 Even though union power diminishes if unions cannot threaten to stop these services, it should be noted that the right to strike may not include essential services even according to ILO principles. According to ILO principles, a situation in which a strike could be prohibited is where there is a clear and imminent threat to the life, personal safety or health of the whole or part of the population: Compilation of Decisions (n 20) para 836; Colombia (Case No 2355) (7 June 2004) Report on the ILO Freedom of Association No 343, para 469; Philippines (Case No 2488) (31 May 2006) Report on the ILO Freedom of Association No 346, para 1328; Sri Lanka (Case No 2519) (27 September 2006) Report on the ILO Freedom of Association No 348, para 1141.

213 Bogg and Ewing (n 1) 414–15.

214 According to the public choice theory, the capital elite, strong corporations and well-organised interest groups have the ability to lead conflicts in the political arena: Tullock (n 205).

215 Privatisations in Israel are often presented through a procedure that is connected with the budgetary process – the Economic Arrangements Law. It is performed without due process of the participation of NGOs in the legislative process: Dotan (n 59) 27.

216 Benish and Maron show that lawyers and jurists are different in their institutional logic than regulators and economists and tend to promote the logic of law: Benish, Avishai and Maron, Asa, ‘Infusing Public Law Norms into Privatized Welfare: Lawyers, Economists and the Logics of Administrative Reform’ (2016) 50 Law and Society Review 953CrossRefGoogle Scholar.