An Economy Minister in Service of Tycoons, Not the Consumer

Nehemia Shtrasler
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A Tel Aviv supermarket.
Nehemia Shtrasler

It’s always sad to discover once again that the fat cats always manage to put one over on us. They find an attentive audience in the cabinet ministers, who fulfill their wishes. This time, it has to do with a consumer law of the utmost importance: the price labeling law.

The law requires all supermarkets to affix a price label on every item, enabling shoppers to quickly and easily know, at the store and at home, which items cost more and which cost less, and to make an informed decision.

Economy and Industry Minister Orna Barbivai wants to do away with this important law. Her very job description involves aiding the economy and consumers, but instead she is serving the tycoons, the heads of the supermarket chains, who want to get rid of the price labeling requirement. And they all want to eliminate it, everyone from Itzik Abercohen (the CEO of Shufersal) to Rami Levy (Shivuk Hashikma) to Hagai Shalom (Tiv Taam).

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They and all of Israel’s other supermarket chains have been fighting for years against the full item pricing requirement. They simply do not like the law that prevents them from being able to raise prices easily whenever they feel like it.

The price labeling law is 23 years old. It was passed in 1998 by Industry Ministry Natan Sharansky. For this, he deserves to have his name carved in gold letters atop an Israeli consumer hall of fame. The supermarket chains hate this law. They want us not to remember prices and not to be able to compare prices, either at the store (between the shelf and the checkout) or at home (between competing products). After all, without price stickers on items, as soon as you take an item off the shelf it becomes price-less.

The chains want us to live in a fog. That is why they propose that the price be displayed only on the shelf, on an electronic shelf label – which would enable them to raise the price whenever they choose, such as during hours and days when demand for those products grows.

The tycoons have been trying to do away with this law for 23 years. Every time a new economy minister takes over, they talk with the minister and the minister’s people, and they exert pressure. Up to now, all the economy ministers – and there have been very many of them over the past 23 years – have stood up to them and not given in. We’ll mention just one – Naftali Bennett, who in 2014 refused to cancel the full price labeling, despite the pressure that was put on him. But what does Bennett know about economics, competition and prices compared to Barbivai?

I met with her in an attempt to convince her, although I knew it would be in vain. She is dead set on the change, because it plays well in the media, it’s populist and the tycoons can be very persuasive.

They bandy about words like “progress,” “digital,” “scanning” and “display screens” and it’s all very impressive. But if Barbivai had taken the trouble to really study the subject, she would have learned that what matters most for the consumer, for competition and price stability is a price tag on each and every item for sale. This is the only way to let the consumer quickly and easily know the price, and be able to compare between different products and different supermarket chains at home, calmly, when he or she uses that product.

There was one point during our meeting when Barbivai was momentarily thrown. It happened when I told her that the price labeling law was one of the most important factors in halting inflation in 1999, when it declined six months after the law went into effect. Consumer suddenly began to see prices and to pay due attention to them. I also told her that the change she is proposing will cause a new outbreak of inflation, and she will be to blame. Barbivai looked a bit troubled, but that was all.

The new law she is proposing has to obtain a majority in the cabinet and then in the Knesset – where there are surely at least a few politicians, including Haredi ones, who care about people who spend most of their money on food and for whom every shekel counts, and who are also weaker when it comes to technology. They are the ones who will suffer the most from abolishing full item pricing. There is an additional hope: for Finance Minister Avigdor Lieberman to grasp the magnitude of this error and rescue Israeli consumers from Barbivai’s populism.

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