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The team did not set any guiding principles

2020-05-10T23:12:05.064Z


Eran Bar-Tal


The nature of the move could be debated, which gives immediate approval to all employers to take out their employees, but the advisory staff appointed by the Minister of Economy and Industry immediately proposes to quit. According to him, spending on the workforce has created a sense of insecurity among workers who, during their "vacation", were still afraid, If they ever return to their jobs. 

They claim that the state will spend the same amount if you compensate the workers for the IAA, or do it through the employers, who will return them to work. But this claim is not entirely clear, as the state took a few days from the IAA and also set a maximum limit for payment. The state's partial compensation for workers does not resemble the situation where the employer lowers the wages of its employees, sometimes by tens of percent. 

It is interesting to note that the workers who were posted to the USSR are workers who earn relatively low wages. As expected, the economy adjusts to the compensation offered by the state, and thus employers did not take out expensive workers, who were significantly injured, but the cheaper workers, whose vacation leave did not hurt them significantly. 

The key step the advisory team has proposed to restore activity is to increase credit - repayment of all loans, add state-guaranteed guarantees and deferral of taxes and bills - property taxes, electricity and water. But sweeping rejection is also an ineffective allocation - not everyone really needs it. They also state the obvious - the state has failed to provide the loans with such a guarantee, with only a 15% guarantee for loans which it calls a "state guarantee".

The banks understood the message and did not make it to the businesses that needed it, but to high-credit businesses that could raise loans even without the state, only that they enjoyed the low interest rates. In effect, the state has allocated resources inefficiently and perhaps unfairly. It would have been good for the advisory staff to have set key principles for the government's fair intervention and would have adhered to its recommendations. If he had established proven market principles, he would certainly not have offered to encourage a local industry at the expense of competition or to guarantee state guarantees or to grant grants to risky businesses without making economic justification. 

For further opinions of Eran Bar-Tal

Source: israelhayom

All news articles on 2020-05-10

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