From 1% to 99% in 10 Seconds Flat

Sami Peretz
Sami Peretz
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Sami Peretz
Sami Peretz

Moshe, 42, was fired eight months ago from his job as marketing manager because of cutbacks. It took 10 seconds to tell him he was history at the company. He hasn't been able to find work since. His dismissal sent his family spiraling down from the 10 percent, if not the 1 percent, straight to the class of the hoi polloi.

Last week Israel's nurses managed to wrest a pay raise out of the Finance Ministry, 13 percent to be precise. Moshe, meanwhile, is still pounding the pavement for job interviews and futilely scanning the want ads. So far, no success.

A lot of people identify with Moshe, but not everybody.

Israel's labor market can be crudely sliced into three sectors. One is people with contacts in the right places. These lucky fellows have absolute job security – they can't be touched. Next come the people who don't have contacts in the right places, who claw ahead by virtue of talent. These guys, like Moshe, could lose their jobs at the drop of a hat. In the third and sorriest category come the people without contacts and without much else either. These poor saps are temps, foreign workers and other lower-ranking cogs who have no protection or representation on the labor market. They are interchangeable. They are invisible.

But people like Moshe are also invisible, especially when they lose their jobs. They aren't protected by any union. They have to take care of themselves in the cruel jungle, pulling whatever strings they can.

Over the last few decades, as the Israeli economy bloomed, people like Moshe did quite well. Israel was a magnet for multinational companies, and technologies developed. Entire industries grew here – cellular communications, commercial television, the Internet. In tandem with that spectacular growth, law firms and architects and consultancies flourished. For workers like Moshe, there were well-paid jobs, easy mortgages and world travel. They even set aside a little for a rainy day. They had, at long last, reached the 10 percent.

But these days are uncertain ones. Moshe and his ilk, who clawed ahead by virtue of talent, not sweetheart contacts in government, may find themselves rudely ousted from the rarified heights of prosperity. As long as they are working, they're doing fine. But in reality, they are living paycheck to paycheck, and a few months of unemployment is enough to send them down the financial chute to 90% land.

Why are people like Moshe losing their jobs and what does it portend for the future? Hearing his story, somebody defining himself as a "crony of the tycoons" told me, "It's all because of the social justice demonstrations, which led to tax hikes. It's because of that crazy Kahlon that 1,000 people are out looking for work but there isn't any to be had."

Kahlon's first name is also Moshe. This Moshe is also the author of a sweeping reform for the Israeli cellular communications industry, one which drastically lowered consumers' monthly cell phone bills. And the "crony" isn't the first to blame the cost-of-living protesters for all Israel's economic ills. He isn't wrong, factually speaking: Many companies had to slash their marketing and advertising budgets. The cellular companies massively dismissed staff, eliminating thousands of jobs as they scaled back costs. Companies are on the defensive, which means they've been cutting their spending to the bone.

Was that the intention of the cost-of-living protesters? Of course not. But paring back is apparently a necessary stage in the Israeli business scene. After two decades of prosperity, in which telecoms, finance, high-tech, energy and other sectors boomed, Israel now finds itself at a crossroads.

The economy is now marked by intense economic concentration and a paucity of competition. We have inequality and our resources are allocated unfairly. The few control the resources for the many.

So here we stand, with two roads diverging into a yellow wood, and we, the nation, we cannot travel both.

We can stay on the current path, the disparate, winner-take-all, poor-be-damned road, or we can take the other fork. We can spread out the power, open entire industries to competition, and eradicate inefficient and exploitative structures, like pyramidal conglomerates.

The Netanyahu government's policy on these issues has been muddled. The government set up a panel to tackle the issue of economic concentration but never completed the legislation. Kahlon, as communications minister, opened the cellular industry to competition, but whole areas crying out for it – such as the banks, electricity, port services and land – haven't been touched.

So at this point in time, with the crossroads clearly in sight but the direction not clear at all, the business sector is hunkering down. It's tough for people like Moshe to find decent work.

The muddle serves all the political camps. Netanyahu preens over the successful reform of the cellular industry but ignores the areas gouging consumers without cease. Over in Labor, Shelly Yacimovich focuses entirely on the cost of what reforms there have been, which means that jobs get lost, while ignoring the greater good of consumers, let alone reforms that still need to be done that would, eventually, create jobs for the likes of Moshe.

Let's take the banking system. Since the mid-1990s it's been heavily focused on lending to business, but all too much of the credit goes to activity that does nothing whatsoever for the greater good, such as financing leveraged buyouts, or loans to holding companies.

Look at the graphic provided herein. It tells the whole story. The banks make most of their income from you – from household customers who have no clout, and who are not particularly risky clients. Households repay their debts. But the banks charge businesses, which do default on loans, much less, even though these clients are riskier.

If the banks allocated more of their credit to small businesses, which create the jobs in Israel, the banks would lose less money to defaulting companies. And very possibly, Moshe could find work.

For those climbing the ladder of the Israeli economy, it's getting easier and easier to fall.Credit: Reuters