The Bottom Line / If not now, then when?
Karnit Flug, head of the Bank of Israel's research department, presented a chilling forecast for the Israeli economy in 2003 this week. Finally, the Bank of Israel understands that neither high-tech nor the global slowdown is to blame for our ills, rather the security situation is the central factor for the recession.
Karnit Flug, head of the Bank of Israel's research department, presented a chilling forecast for the Israeli economy in 2003 this week. She said that next year's Gross Domestic Product will contract further, private consumption per capita will fall, investment will plummet by 6 percent, and exports, excluding diamonds, will also drop. Finally, the Bank of Israel understands that neither high-tech nor the global slowdown is to blame for our ills, rather the security situation is the central factor for the recession.
Flug points out that with a worsening recession, unemployment is expected to creep up, and therefore, employment of foreign workers - whose labor costs are generally 40 percent lower than their Jewish colleagues - should be made less attractive. But the Knesset believes otherwise. The Finance Committee recently rejected, and not for the first time, a treasury proposal to impose a NIS 4,000 fee on employing a foreign worker. But the committee represents the interests of contractors and farmers, such as MK Zvi Hendel, and is headed by MK Yaakov Litzman who wants to go easy on the foreign caregivers. So where will the Israeli unemployed find work? Well that really doesn't interest them.
Flug expects a large budget deficit in 2003, and the defense item will be the problem. Currently there is a NIS 5 billion hole there, and Shaul Mofaz, the newly appointed defense minister, suggests that the hole be plugged by a special tax on the population. He fails to consider for even one moment that maybe he could trim the fat from the defense establishment. In his opinion, one can cut pensions, make those living off income supplements tighten their belts, or even have single-parent families forgo luxuries. But to economize or slash inefficiencies in the IDF? Oh no no no no.
That reminds me of an old friend who, when serving in the army, was asked by his company commander to find out how they could make cuts in personnel. But "pretty quickly, it became clear that the officers were not cooperating, and worse - they forbade their subordinates to cooperate. On one base, the supplies staff was forbidden to talk to me. On another, I was given `an assistant' who clung to me, making sure that no one slip any incriminating information on personnel."
But despite the difficulties, he said, "clearly there was overmanning. In several cases, savings could be made through the merging of duties, and so finally, after seven months of work, I submitted a report proposing a cut of 650 positions. But nothing came of it."
Which brings us to yesterday's comments by Chief Rabbi Israel Lau, who said that during this difficult time of terror attacks, we should stand together and elections should be postponed. Lau should understand that if the present government stays, the present policies will continue, there will be no diplomatic developments, the attacks will go on, the IDF will dig in further in the territories - and the economy will slide into a social-economic crisis that would make our current slump look like child's play. So now is the ideal time for an election, because now we need to hope for the better.
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