Treasury Disputes Intel's Promise to Hire for Grant

Industry and Trade Ministry believes Intel's figures are bloated, not reflective of actual workforce estimates.

Intel's promise to hire another 260 workers in exchange for a $200 million grant is not an accurate picture of the growth of the company's workforce, says the Finance Ministry. The company has been gradually laying off staff over the years, it claims.

Intel and the Industry and Trade Ministry have hashed out a deal that would give the chipmaker $200 million to expand its Kiryat Gat plant. The Finance Ministry opposes the deal.

Intel building in Kiryat Gat - Alberto Denkberg
Alberto Denkberg

The agreement doesn't actually ensure that Intel will create new jobs after receiving the grant, says the Finance Ministry - the number of people employed at the factory will drop only a few years after it's expanded, it alleges.

Plus, corporate tax rates are expected to drop, and that should be considered another government benefit for Intel, say the sources.

The ministry is conducting another evaluation on whether the grant is economically worthwhile.

Intel is negotiating for a grant to help it expand its Kiryat Gat chipmaking factory, at a cost of $2.7 billion.

It had initially requested $400 million from the government and said it would hire 400 new workers in exchange.

The Industry and Trade Ministry had determined that granting Intel that sum - equal to $1 million per worker - would be good for the economy, but the Finance Ministry disagreed with the finding and criticized the other ministry's working methods.

Intel negotiated with the Industry and Trade Ministry, which ultimately agreed to give it $200 million for hiring 260 new workers - equal to $770,000 per new employee.

Intel also will agree not to fire 350 workers it had planned to lay off if it doesn't receive the grant.

However, Finance Ministry officials say the figure of 260 new employees isn't entirely accurate because Intel's workforce has been gradually shrinking - the company streamlines every time it develops a new generation of chips, said ministry sources.

Therefore, one should look at the average number of Intel employees over the next several years, not just during the one or two years after the company receives the grant.

Finance Ministry officials also expressed surprise that Industry and Trade Minister Benjamin Ben-Eliezer had gone around them, going straight to the Prime Minister's Office, which hadn't been handling the matter.

Finance Minister Yuval Steinitz is expected to issue a decision on the matter by the end of the month.