Israeli Union Leader Calls for General Strike on Expected Teva Cutback Reports

On Wednesday, Avi Nissenkorn, the chairman of Israel's biggest labor union has called for a general strike following reports that Teva Pharmaceuticals Industries Ltd. plans to lay off over half of its employees in Israel. "Teva's founders are turning in their graves," Mr. Nissenkorn said in a press conference.

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Calcalist reported Teva intends to terminate 3,300 jobs in Israel in the next months after reviewing an internal Teva document on Wednesday. According to the document reviewed and people familiar with the matter who spoke on conditions of anonymity Teva intends to shut down most of its manufacturing operations in Israel, a clear break from the company’s past domestic policy.

Avi Nissenkorn. Photo: Moti Kimchi

The planned layoffs are part of a wider restructuring strategy put forward by Teva's new CEO Kåre Schultz to turn the struggling drugmaker around.

On Wednesday, two Israeli parliamentary committees announced emergency meetings to be held next week to debate the planned cuts. Israeli Labor party lawmaker Shelly Yachimovich, who heads the state control committee, called on Israel’s Minister of Finance Moshe Kahlon and on Mr. Nissenkorn to take action against the upcoming layoffs. A second committee, the Israeli parliamentary Finance Committee will convene Tuesday.

"Teva, the flagship of the Israeli industry, is becoming the symbol of its destruction," Mr. Nissenkorn said Wednesday. He added that all of Teva's facilities in Israel will go on strike Sunday, and that all workers that are members of the General Organization of Workers in Israel will go on a half-day strike on Sunday as an expression of solidarity with the company’s employees.

Daniel Shabtay, who heads the workers' committee at Teva's Petah Tikva headquarters, said the upcoming layoffs will have a great impact on Israel's economy. He added that the workers expect the Government and specifically the Minister of Finance to handle the situation and prevent the cutbacks.

Teva sales made up 12.16% of Israel’s overall industrial export in 2016, and 76% of the country’s pharma export that year, according to data by Israel’s central government bureau of statistics.

Technology export from Israel, which includes pharmaceutical exports, has seen a decrease of 2.2% year to year for September-November. For pharmaceutical export only, the data shows a median monthly drop of 4.1%, making for a yearly drop of 39.5%.  

Teva’s status as a major exporter is not reflected in the taxes it pays, due to the extensive tax exemptions the company received until three years ago. In 2015 Teva paid around NIS 700 million in taxes in Israel, contributing only 0.2% of the state’s tax income that year and only 1% of the state’s income from corporate taxes.

An employee at one of the plants slated for closure told Calcalist that Teva should be made to return some of the money it saved through tax exemptions. "If the company is firing 10% of employees, it should return 10% of the tax exemptions. If it fires 50%, it should return 50%," he said.

Teva’s layoffs and planned outsourcing are expected to impact more than just its direct employees in Israel. The company’s operations provide business and income to a wide range of auxiliary service givers. In a notice given to Teva’s car leasing agency Avis earlier this week, the company froze all planned car swaps/trades and new leasing deals. The company’s last vehicle leasing tender, held in 2013, counted 1,400 vehicles in Teva’s leased fleet.