The President of the Manufacturers' Association, Oded Tira, took everyone by surprise this week when he announced he was cutting his salary by 10 percent as of now and until the end of 2002. In a meeting with key figures in the business sector, Tira called on his colleagues to follow suit "and make the powers that be understand that business is not as usual and that it is incumbent upon the government to take action."
Tira also said that many plants have reported an increasing number of workers who are willing to slash their pay and benefits in order to hold onto their jobs. This only proves what we have known for a long time - that workers are much smarter and more reasonable than their political representatives.
The score has not yet been settled with Amir Peretz, the chairman of the Histadrut labor federation, over the factors that sent unemployment soaring. Peretz and his friends in the Knesset raised minimum wages in times of recession, and passed the temporary workers' bill, which is now resulting in massive redundancies of such workers in private firms and government offices alike. Practically anything can be legislated. A bill can be approved that raises minimum wages to $1,000 a month, and another could immediately give temps the status of permanent employees, all perks included - but you (still) can't force anyone to employ these workers.
Tira's personal move on the wage issue is exemplary, but the second part of the plan he suggests is more problematic. Tira proposes that the government subsidize one third of the wages of every newly-hired worker up to a ceiling of NIS 1,500 a month. This stunt has already been pulled in the mid 1990s. Many businessmen capitalized on it in a big way, fraud cases abounded, and the cost to the budget ran to billions. It is so easy to fire a worker from company A and pass him on to company B, under the control of the same owners. The mid-'90s exercise proved that the subsidy did not cause employers to hire more workers - they knew the subsidy was a provisional measure, so they didn't integrate it into their business planning, but collected a quick buck and laughed all the way to the bank.
Tira also suggests that higher tariffs and taxes be imposed on imports in order to help local industries; but this would make consumer goods more expensive to all. He proposes that loans and grants under the Law for Encouraging Capital Investment be awarded to plants that move to remote areas, and that the Law be amended to bar what he calls "dumping imports." Tira also supports a freeze on wages, municipal taxes, and power charges - which would drain billions out of the state coffers - billions that the state simply does not have and cannot afford.
So maybe, as a first step, leading manufacturers should cut their salaries by 10 percent, and once we are all satisfied that they have done so, we'll move on to discuss the other steps that Tira advocates.
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