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Half-price closure: Paralyzing the economy during the holidays is economically better
In the background of the talk of renewing the closures, the question of timing also arises.
We went out to check: despite the difficulty of celebrating the holidays again only with the nuclear family, in terms of costs to the economy, the Tishrei holidays this year provide an opportunity to close at a bargain price compared to previous closures
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Taub Institute
Sonia Gorodisky
Wednesday, 04 August 2021, 17:08 Updated: 17:39
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It started with "how to beat an epidemic" and continued with the promise that no closures would be imposed, but as the corona current wave data becomes clear, the question of whether another closure will be imposed seems to give way to the question of when it will be imposed and under what conditions.
Closing on Tishrei holidays has a heavy family price, certainly when even last year we had to celebrate most of the holidays under closures and restrictions, both on commerce and on staying away from home. But from a purely economic point of view, the dispersal of the holidays this year gives the government an opportunity to impose a "closure at a bargain price" ... The
cost of the full closure in September could cost the economy about NIS 4 billion (excluding VAT and business compensation, as paid by the state in closures earlier), so estimates
Professor Benjamin burden, head of economics at the Taub center
. this is a relatively low cost compared to previous closures for several reasons - the High holidays, the economy's adjustment closures failure to preserve the public on the guidelines.
Due to the holidays in September there are only 10 full working days (not including of course "bridges"), and another 5 working days in which there is a partial activity (the week of Sukkot).
This means that if the government is forced to impose a full closure on the economy in October, its cost to the economy will double and stand at about NIS 8 billion.
"There is no doubt that it is better to close more on holidays. If it is not in September, it is a double cost. These are rough estimates that depend on the guidelines that will be given. This is a loss of product as a result - for example closed restaurants Finance on the issue of closures in a conversation with Walla!
Money.
"" The economy has adapted and the loss due to the corona is stabilizing and is mainly due to inactivity in the tourism industry and in the leisure culture industries whose activity is limited.
Therefore, the marginal addition of a full closure is small, "he adds.
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To the full article
Memories of Tishrei 2020 - Police officers enforce closure on Ayalon lanes (Photo: Reuven Castro)
Less cost, also thanks to the "yachts"
Professor Bentel's estimate is largely based on an estimate of the cost of the third closure at the end of December last year, which stood at NIS 2.5 billion. However, Bentel estimates that since the economy has adapted even more in terms of its ability to function under closure conditions - many businesses have learned to work remotely.
In addition, Bentel estimates that the loosening of discipline that is recorded from closure to closure also has an effect. "According to various indicators that show what the public really did, for example, the Google tracking that shows the movement of people, the effectiveness of the closures was much weaker. People practice and know how to get around and still lead a reasonable life despite the closure."
For comparison, the price tag attached to the first closure was about NIS 10 billion a week, when the public was subject to instructions and most of the economy was disabled and unskilled for remote work. Bentel's assessment of the cost of the closure does not, of course, include government assistance to the economy - payments of social security contributions, assistance to businesses and grants - but relates net to the loss of GDP to the economy.
Sora store in Bilu Center.
End of the third closure, February 2021 (Photo: Reuven Castro)
The fact that these are holidays is an advantage, but not a solution
Of course, there are also higher estimates, mainly because they try to include in the calculation not only the direct loss to the economy, but also the payment of VAT and compensation to businesses that will remain closed.
"Entering another closure may have a significant economic cost. The cost to the national economy of each week of closure is estimated at NIS 3 billion, "estimates
Chen Herzog, BDO's chief economist
.
Experience shows that the economic impact of closure is unequal, and affects different sectors of the economy differently. The main victims are small and medium-sized businesses, employees In the trade and services sectors, there are workers in the periphery and in the tourism and hospitality industries
. In our view, this is an economically ineffective policy and the challenge for the new government is to formulate an effective economic policy to deal with the economic cost of the corona crisis.
In order to reduce the cost to the national economy and avoid widening gaps - employment and continued business activity should be encouraged under the Corona restrictions instead of bringing about a collapsing closure of the economy.
The fact that September is a holiday month in which some of the business activity is disabled will not alone lead to the solution of the economic problem of the closure.
A national plan and budget must be formulated for a national plan to adopt economic activity even during periods of closures, to assist businesses and employees in the transition to the digital worlds, to utilize the remaining month until the opening of studies to close gaps in digital infrastructure and communication in the education system.
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