“Without a change, there will be no IPO at Israel Aerospace Industries”
Union chief: wage levels should be benchmarked against Nvidia.
The Israel Aerospace Industries (IAI) workers’ union intends to condition its support for advancing the company’s initial public offering (IPO) on an amendment to the Budget Foundations Law, so that employees’ salaries will no longer be subject to close supervision by the Government Companies Authority and the Commissioner of Wages at the Ministry of Finance.
This was stated by the chairman of the workers’ union, Yair Katz, in a conversation with Calcalist. According to Katz, “Without a change to the Budget Foundations Law, there will be no IPO at IAI. I don’t know a single investor who would want to invest in the company without the employees’ consent to such a move. This is a necessary step not only for IAI, but also for Rafael, which the state also wants to float. It is impossible to subject wage levels in the defense industries, which compete with publicly traded Elbit Systems and international companies, to the same supervisory rules that apply to the Antiquities Authority or Israel Coins. Wage levels at IAI should be examined in comparison with Nvidia.”
The IPO of the two defense companies, both fully owned by the state, is being promoted by the Government Companies Authority, headed by Roi Kahlon. The authority aims to list IAI this year and estimates its valuation at around 100 billion shekels, in light of business results in recent years that are considered the strongest in the company’s history.
In an interview with Ynet, Kahlon addressed the IAI IPO and said, “I hope the company’s employees will not delay the IPO and will not miss the opportunity again. If the company had gone public in 2020, every employee would already have exercised options worth about half a million shekels today.”
Katz rejected claims that IAI employees thwarted the IPO some six years ago, attributing the delay instead to opposition from the Ministry of Finance. “Beyond the IPO, I support privatizing the company, provided it operates to generate profits and according to business principles,” he said. “That cannot happen under rigid government wage regulation. If we want to operate in the capital market like Elbit, we must be given the same conditions that Elbit has.”
Calcalist has learned that despite progress in recent months in discussions among IAI management, the Government Companies Authority, and the Ministries of Finance, Defense, and Justice ahead of the IPO, the issue of employee wages remains unresolved. This is due to the insistence of the wage supervision department on maintaining the current regulatory framework. “This should not be a decision of the Ministry of Finance alone,” Katz said. “It requires ministers and members of the Knesset, because it involves a legislative change.”
The issue of wages at IAI has strained relations for years between the company’s management, the workers’ union, and the Ministry of Finance. Earlier this month, the parties signed an interim agreement allowing wage increases for thousands of employees after promotions had been frozen for an extended period due to alleged wage irregularities. The agreement, signed about two weeks ago, is intended to regulate relations between IAI and the Ministry of Finance until mid-2027, in the hope that a new compensation model for employees will be formulated by then.
At the same time, as the state seeks to advance the IAI IPO, Defense Minister Israel Katz and Minister in Charge of Government Companies David Amsalem have in recent days been promoting the appointment of Knesset member and former Likud minister Silvan Shalom as chairman of IAI. The move follows more than a year in which the company has been without a chairman, amid political tensions between the two ministers.
The senior appointments review committee, headed by retired Judge Shulamit Dotan, discussed Shalom’s candidacy last week but has not yet published its decision. Against this backdrop, calls for ministers to refrain from the appointment have intensified, following testimonies from women who have said that Shalom sexually assaulted them in the past.
Addressing the matter, Katz told Calcalist: “I do not determine who will serve as chairman of the company. I know that no criminal investigation was ever opened against him and no indictment was filed in this matter.”
