In COVID-induced Despair, Israeli Employers No Longer Trust Their Government to Help

As businesses are forced to cope with a second lockdown, the Treasury’s plan to discourage unpaid leave encounters widespread skepticism

Adi Dovrat-Meseritz
Adi Dovrat-Meseritz
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Businesses shuttered following the first coronavirus lockdown, Jerusalem, 2020.
Businesses shuttered following the first coronavirus lockdown, Jerusalem, 2020.Credit: Eyal Toueg
Adi Dovrat-Meseritz
Adi Dovrat-Meseritz

Finance Minister Yisrael Katz assured business owners Thursday they had no cause for worry over the second lockdown. “We have created a 90 billion shekel ($26 billion) economic safety net,” he said at a news conference with Prime Minister Benjamin Netanyahu a day before the lockdown went into effect. Katz vowed that more aid was on the way.

But while the government has promised a lot, many businesses say they still haven’t received the promised financial assistance for the first lockdown, this spring, an investigation by TheMarker found. Business owners say they aren’t confident help will arrive this time either, and that threatens to undermine the government’s efforts.

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“During the first wave of the coronavirus, the government made lots of announcements about grants but in most cases we received no money or we got only some of it, and late,” said Yuval Ben Neriah, a chef who owns the Taizu group of restaurants.

“They promised businesses compensation for the revenues we lost while we were shut and a grant for bringing back workers from unpaid leave,” he said. “And, even before we’re anywhere close to getting that money, they’ve declared a second lockdown.”

Ben Neriah said he was due to receive 7,500 shekels (around $2,150) for each employee he brings back from unpaid leave, but later learned that the sums would be paid in four installments, during which he is barred from furloughing workers again.

“We can’t possibly meet that requirement after the government announced a second lockdown. We’re going to have to put our employees on unpaid leave again. The bottom line is that we’ve gotten just 3,300 shekels per employee and it’s not clear we’ll ever get the rest,” said Ben Neriya.

He said the result would be “anarchy – everyone does what they want.”

The restaurateur said that for now he was observing the rules by limiting his operations to delivery, but when workers from nearby offices begin returning to their jobs he’ll consider reopening “even if it violates the directives.”

Chef Yuval Ben Neriah stands over broken plates in an act of protest against a new nationwide lockdown, Tel Aviv, September 15, 2020.
Chef Yuval Ben Neriah stands over broken plates in an act of protest against a new nationwide lockdown, Tel Aviv, September 15, 2020. Credit: JACK GUEZ - AFP

Gal Alon, Taizu’s CEO, said the group’s normal monthly turnover is about 2.5 million shekels but that the government’s total assistance to date has been only around 200,000 shekels, even though its Tel Aviv restaurant was shuttered by government order for two months.

“They left us to cope alone. Even the government-guaranteed loans we weren’t able to get from the banks despite all the promises because the banks said the restaurant sector is too risky,” Alon added.

Taizu isn’t an isolated case. According to the Finance Ministry’s own figures, only 505 million shekels of the 5.3 billion allocated for taking back workers on unpaid leave haד been approved to be paid out. One reason is that the process for disbursing the money has been hamstrung by red tape.

The Israel Tax Authority and the Israel Employment Service took a long time setting up websites for the program and, after they did, the application process proved to be cumbersome due to the language of all the laws governing the program.

It is believed that the program launched for the new lockdown will be operated by the Economy and Industry Ministry through its Small and Medium-Sized Business Authority, but it has yet to be seen whether it will do any better.

Shai Berman, the CEO of the Israel Restaurant and Cafe Association, gave as an example of the big gap between what the government promises and what it delivers a meeting of the Knesset Finance Committee in July.

Katz said that restaurants that had brought back their staffs by the end of May, before the earlier date under the existing rules, would still be entitled to compensation. But, Berman said that the rules were changed and the aid never arrived.

One of the key elements of the current aid package is 1 billion shekels for businesses that agree to keep employees on the payroll during the lockdown rather than placing them on unpaid leave. In theory the aid comes to 5,000 shekels per worker, but in practice most businesses will only qualify for a smaller amount. The grant is being calculated according to the drop in turnover a business suffers and the number of employees it doesn’t furlough. Sources said many might not even bother applying for it. It’s easier to put staff on unpaid leave.

Finance Minister Yisrael Katz, Jerusalem, July 19, 2020.
Finance Minister Yisrael Katz, Jerusalem, July 19, 2020.Credit: Emil Salman

Employers interviewed by TheMarker said even the 5,000 shekels wouldn’t be effective because they stand to save a lot more money putting workers on unpaid leave. In any case, all expressed a lack of trust in the government to pay the money.

Nehama Bogin, a lawyer who owns a property appraisal firm, said she struggled in May to keep all 10 of her employees on the payroll but didn’t receive any help from the government. She doesn’t expect any better this time around.

“I had a brief moment of joy when I heard now about the plans to encourage employers not to place workers on unpaid leave. But the minute I saw the actual plan, it was over,” she said. “During the first wave of the pandemic we believed all the promises, but the trust is gone. I’m not going to put my staff on unpaid leave, but that has nothing to do with any government plan, it’s just a function of my worldview.”

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