Contradictions in Liberal Reforms: The Labor Regulation of Sub-Contracting
Guy Mundlak
Neoliberalism is typically associated with the commoditization and flexibilization of the labor market and a project of –de-regulation. It is a general term that points at a trajectory, often designating an ideology, rather than a particular institutional or theoretical blueprint. Arguments on neoliberalism therefore cluster around the acknowledgment of an alternative, or its previous “Other”. In the context of the employment relationship this Other is designated as the ‘standard employment relationship’ (SER).
For the last few decades, there are abundant indications of the multiple forms of employment relationships that depart from the SER. The decline of the SER’s pervasiveness in Israel may reflect trends that are associated with the neoliberal turn in the Israeli economy and politics . On the one hand it is the product of universal trends, such as globalization and increased competition, the move from traditional industry to a service economy, the changing nature of the public sector, and the growing anomy in society. On the other hand it is associated with factors that are characteristic of a more particular group of political regimes that have undergone a process of liberalization. Finally, some accounts may refer to the particular Israeli path, although hardly idiosyncratic, such as the ever-growing presence of the economic right in government since 1977, the retrenchment of the welfare state circa 2002-5, and the orthodoxy of privatization.
While various deviations from the SER prevail, one of the most meaningful in the Israeli system, and also perhaps the most controversial, is that of mediated employment, also referred to as triangular employment relationships. In this triangular relationship, work can be performed through different types of employment mediators, the most common being temporary work agencies and subcontractors.
The simple neoliberalization story would highlight the growing reliance on mediated employment relationships, and its contribution to employers’ attempts to circumvent the mutual responsibility that characterized the simple bi-lateral SER arrangement. It would further elaborate on all the ingredients that were listed here to point at the ways and means by which the neoliberal turn destructs the pillars of social-economic stability and equality of the past. This story is true. However, in this chapter I would like to describe the regulatory response to the growing reliance on mediated employment. This response points at factors that complicate the obvious reflections on neoliberalism. To the extent that neoliberalism assumes the shrinking of the state’s capacity to govern the labor market, the following case-study reveals an ever-growing body of regulations that draws on a network of statutes, collective agreements and extension decrees. To the extent that neoliberalism refers to the shrinking role of collective bargaining, the case-study depicts the revitalization of collective bargaining at the sector and national levels. To the extent that neoliberalism alludes to changing industrial norms, the case study displays the agility of these norms, rather than a fixed and deterministic process.
The story of mediated work therefore depicts a less systemic movement then could be predicted. Section 1, describes in detail that growing body of law that governs mediated work, with a particular emphasis on the regulation of subcontracting that followed the regulation of temp work agencies. Drawing on the complex system of governance that developed, Section 2 suggests two reservations regarding the common assumptions made by the conventional set of ideas that are clustered under the heading of neoliberalism. First, unlike the assumptions associated with the ideology of neoliberalism, such as the withdrawal of collective bargaining and de-regulation, the process of governing subcontracting arrangements reflects an incremental conversion of former institutions and the layering of new governance methods to countervail the effects of subcontracting. In this process, the complex tri-partite interaction, with an important addition of a "4th side" of civil society, seeks to improve the sub-standard wages, working conditions and fringe benefits of the least well-off workers. However, the second point is in tension with the egalitarian thrust of the first. Whether intentionally or not, the fragmented process of hyper-regulation does not succeed in structuring a strong coalition of interests and remains as an overstretched bandage over the structural dualist trend in the Israeli labor market. It remains to be seen whether such a process grows into a coherent statement against dualism, or remains a political compromise that actually seeks to legitimize it. The failure to draw a comprehensive statement on dualism generally and subcontracting in particular, coupled with the quilt-work of regulatory and negotiated responses, may weaken the collective strength of workers in the service economy and reveal the fragility of partial regulatory solutions. The cumulation of norms on mediated work extend legal rights, but they fragment class-based coalitions and are likely to undermine further attempts at a funadamental re-drawing of an equitable alternative to the SER.