The fear of elections: "Political uncertainty will cause severe damage to the business sector" | Israel today

Israel is on its way to a fifth election in three years, and this is happening at a bad timing economically.

Inflation has peaked in more than a decade, housing prices are rising at double-digit levels, teachers and kindergarten teachers are intensifying their justified struggle and hurting many parents' agendas, and social outrage is intensifying.

A great many question marks are hovering these days over many moves planned by the current government and which touch the pockets of hundreds of thousands of citizens.

The immediate questions that arise are what will happen to the minimum wage that affects more than a million citizens in the country, which has not yet risen from its meager level - NIS 5,300 per month, what will happen to teachers' wage agreements and when will their strike end, and will Finance Minister Lieberman approve tax cuts? About the fuel as promised only yesterday?

There are still no clear answers to these questions, but the guiding principle is whether the move requires legislation or not.

Movements that require legislation such as raising the minimum wage require agreement between the coalition and the opposition, which is not currently on the horizon.

So it is very possible that this very important move will get stuck.

In fact, the fall of the government has reduced the chance of signing the wage agreement with the teachers, meaning the chance of stopping school remains high.

The signing of teachers' pay agreements, which are currently being debated, does not require legislation, but it depends on the desire of the Ministry of Finance and the Minister of Finance to reach a compromise and reach agreements with the other side.

From the speech of Lieberman at a conference of the Israel Democracy Institute, it can be understood that the gaps between the parties are still huge, and that there is no progress in the negotiations. The seller. And what about the excise tax? As for the excise tax, Lieberman said, "We have been working for a week on extending in four months the excise tax, gasoline and diesel - instead of half a shekel increase to the shekel.

It's good for industry and citizens.

If we lower the price, it will affect inflation, reduce production and make the cost of living easier.

"Despite the election campaign, I, as the Minister of Finance, intend to focus on that first."

On the one hand, the approval of the tax cut on fuel does not require legislation, but the problem is that the move could be interpreted as an "election economy" and as a result face legal difficulties, as soon the current government will become a transitional government. Past experience shows that the move is likely to be approved, since it is a relief to the cost of living that makes it difficult for citizens.

Which is better: political uncertainty, or a paralyzed government?

On the one hand, the election campaign brings a lot of uncertainty to businesses, the booming real estate industry and other areas of the world of economics, but in the case of a paralyzed minority government, with no ability to pass budgets or reforms, it is not at all certain what is better.

Even in the most optimistic scenario, when a new government is formed by the end of December, the budget for 2023 will only be in March next year.

If this does not happen for some reason, the economy will be run according to a continuous budget, that is - the budgets of government ministries will be based on the last approved budget, 2022, regardless of the rate of population growth or new needs that have arisen.

In this method the state was run for two years prior to the formation of the change government, during which four elections were held and there was no budget.

Conduct within the follow-up budget means not only lower expenditures of government ministries, but also non-promotion of various reforms.

The consequences of operating for more than two years without a budget can be seen even more today: if import and agriculture reforms had been promoted two years ago, the cost of living might have moderated slightly today;

If the government had already removed barriers that hindered the increase in supply in the real estate market, apartment prices would not have skyrocketed at a double-digit rate today, and more and more.

"The worst thing is managing the economy according to a continuous budget. When there is no budget - it is one big chaos, because there is no adjustment in the 1/12 budget to the needs of the economy, the economy and society," says Dubi Amitai, chairman of the business sector presidency. ".

Amitai adds that the fall of the government, along with the lack of a state budget, combined with uncertainty in the international arena, will lead to serious damage to the business sector, and those who will be harmed by this are the consumer public.

"The decision to go to the polls - which is likely to bring us to 2023 without a budget, combined with economic uncertainty in the international arena - will cause severe damage to the business sector, most of which is just now recovering from the corona and struggling to regrow it.

"The fall of the government will intensify the uncertainty in the economy and weaken the functional continuity of government ministries, which radiates to the entire economy and hinders vital and very significant changes.

"For example, activities to reduce regulation, use government tools and incentives to encourage investment and government support for business sector activity in human capital training, and more," concludes Amitai.

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