The Day After Israel's Election: What Business and Labor Want

Help for contract workers, reducing regulation, reining in municipal tax rises and helping people to better plan their pensions are on the agenda

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Stock prices flash on an electronic screen displaying world clocks at the Tel Aviv Stock Exchange (TASE) in Tel Aviv, Israel, on Thursday, Dec. 11, 2014.
Stock prices flash on an electronic screen displaying world clocks at the Tel Aviv Stock Exchange (TASE) in Tel Aviv, Israel, on Thursday, Dec. 11, 2014.Credit: Bloomberg

The high cost of living and the rising cost of housing, income inequality, cartels and government spending. These were the big economic issues at the forefront for voters in Tuesday’s election.

But for organized labor and business, there are a host of issues they are concerned with and will be pressing the next government hard to address. Many don’t receive the attention the big issues do, but they have a major impact on the economy.

TheMarker asked labor and business leaders what they see as the most important issue the next government has to address in their sector, and to speak about one issue outside their field they think requires urgent care.

What labor wants

Avi Nissenkorn, chairman, Histadrut labor federation

His top priority: “We must first act to improve conditions for hundreds of thousands of contract [temporary] workers in Israel. Pay and employment conditions for security guards and cleaners improved after we campaigned for it, but the phenomenon of low-paid contractors is still very widespread and we need to reduce it significantly. The phenomenon hurts conditions for Israeli workers as a whole, including those in permanent jobs.”

Sector in need of urgent help: “We wanted to help students in Israel who suffer a variety of problems, not just high tuition fees but everything connected with their future after graduation,” said Pini Kabalo, the Histadrut’s vice chairman. “Many students who want to study professions like teaching or social work fear becoming employed as contract workers.”

The business agenda

Shraga Biran, president of the Manufacturers Association

His top priority: “The government must adopt a comprehensive industrial policy to strengthen industry and improve its competitive ability, starting with professional and technical training to investment and research and development grants, and funding to help small- and medium-sized industries. In Europe they created in 2012 a policy whose goal is to increase the share of industry in the economy from 16% to 20% by 2020. After the 2009 economic crisis, they learned that economies with strong manufacturing sectors passed through it better.”

Sector in need of urgent help: “Reforms are urgently needed to reduce government regulation. The outgoing government approved a plan, but it has yet to be implemented. We’re talking about a 25% reduction in regulations. The Manufacturers Association has proposed starting by removing rules that block economic growth, which no one opposes, such as duplicate or contradictory regulations. We also need to connect factories to the national gas pipeline network.”

Uriel Lynn, president, Federation of Israeli Chambers of Commerce

His top priority: “The first agenda item that must be advanced is completing legislation that would ban once and for all raising arnona [municipal taxes] year after year on households and businesses. Instead of automatic annual increases based half on the cost-of-living index and half on an index of public sector wages, arnona rises should be linked exclusively to the cost-of-living index. Also, the law should ensure that approvals for exceptions to the rule, which have become the norm, will only be given according to defined criteria, with complete transparency and the approval of the Knesset Finance Committee.”

Sector in need of urgent help: “The most-needed reform is in the opening of all sectors of the economy to competition, including agriculture. This includes removing entirely quotas on food imports, raw materials and farm products in exchange for direct subsidies to growers. In addition, we should adopt international standards and inspection procedures, as is done in Europe. We also have to equalize benefits for exporters so that they are given equally to exports of good and exports of services, whether it’s done through the Law for Encouraging Capital Investment or another law.”

Sectorial interests

Ilan Flato, CEO, Israel Association of Publicly Traded Companies

His top priority: “We must advance a comprehensive program to restore the health of the Israeli capital market. In the face of a sustained regulatory attack on publicly traded companies and the business sector in general, hundreds of companies have delisted from trading on the Tel Aviv Stock Exchange and trading volume has fallen 50%. New companies don’t want to trade and the bourse is dying.”

Sector in need of urgent help: “The finance minister and prime minister must act to reduce regulation and encourage economic growth. There’s a long list of sectors, among them retail, insurance, banking and the gas industry, that have paid a heavy price because of the uncertainty and instability. The government has to come to decisions quickly to stop the regulatory witch hunt, which is hurting employment and growth.”

Uri Aldubi, chairman, Oil and Gas Exploration Industry Association

His top priority: “It is important to create a stable regulatory environment for the natural gas industry. As of today, because of the instability, international players aren’t interested in coming to Israel, and without them the domestic oil and gas industry can’t be developed. The second task is to remove the barriers to developing the Leviathan reserve so that gas can reach Israel’s shores as fast as possible. Only then can we worry about connecting more factories to gas and about lowering the price of electricity and water, which will lower the cost of living in Israel.”

Sector in need of urgent help: “The government must urgently come up with solutions for the gas sector, after years of doing nothing. The gas sector can generate hundreds of billions of shekels for the government, money that can be used to address Israel’s burning social problems – in education, welfare and health. Israel can also use its gas finds to strengthen political ties with neighboring countries.”

Moshe Pearl , CEO of the Association of Banks in Israel

His top priority: “We will propose a plan to help solve the pension crisis by establishing a system for objective financial counselling of a long-term savings product in the banking system. The drop in income upon retirement, longer life expectancies and the challenge presented by low interest rates for pension investments are all factors that demand that every saver do something today so that the money he is saving is invested wisely and in a way that reflects his needs. It’s his only chance of reaching retirement age with adequate savings. Today there’s no such system that operates, with the force of law, in the interest of the saver. In spite of the Bachar committee recommendations, in spite of all the Finance Ministry plans and declarations in the Knesset, an objective advisory system for the wage-earning public hasn’t moved forward because of red tape.”

Sector in need of urgent help: “We must address the growing crisis of confidence between the government and the business sector, and between different industries and Israeli society. Only by dealing with these two problems will the government be able to make the correct decisions in dividing up the national pie, not to mention the need to increase the size of the pie itself. Ignoring this crisis of confidence is reducing the size of the pie, which will only exacerbate the struggle over dividing it.”

With reporting by Avi Bar-Eli, Ora Coren, Haim Bior, and Sivan Aizescu.

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