Privatisation, outsourcing and employment relations in Israel

This chapter focuses on the effect that outsourcing, as a subset of privatization, has had on employment relations in Israel. In particular, chapter highlights the adverse, and perhaps counter-intuitive, effects that the law has had on the plight of Israeli contract workers. Israeli governmental agencies and local councils have turned to outsourcing as a means to circumventing post limits and due to the Ministry of Finance’s pressures to increase ‘flexibility’ in the civil service. Intriguingly, paradoxically, and tragically, the law’s effort to regulate this growing phenomenon has led employers resorting to tactics which have redefined agency workers (teachers, nurses, etc) as workers subject to the “outsourcing of services” (teaching, nursing, etc). This has moved such workers into a legal void, depriving them of rights and protection

Shifting and Shirking: political appointments for contracting out services in Israeli local government

Principal-agent models in public administration concentrate upon policy drift-when agencies allow policy to drift away from the bliss point of executive politicians. We distinguish two types of policy drift: policy shifting and agent shirking. The first occurs when agents' political bliss points are located differently from those of their principals. The second occurs when agents do not competently carry out their principals' wishes. One response to policy shift is to appoint agents who share the bliss point of the principal, allowing the reduction of costly monitoring. Through 10 cases in three Israeli cities where political appointments were made to push through structural changes to contract out services, we show that political appointees are less effective than career bureaucrats, so that solving shifting often increases shirking, especially when monitoring is reduced. The agency problems thus created were only solved by increasing monitoring and returning to career civil servants