Let's start with the good news: the Hebrew year ends with exceptional economic achievements in the macro arena.
GDP increased by 6.8% in the second quarter of this year - the highest growth rate in the West. The unemployment rate dropped to 4.1% - the economy returned to almost full employment, and is very close to the figures in the period before the Corona crisis at the end of 2019. And of course, the deficit in the government budget, which since The month of June became a surplus - something not seen since 1987.
So much for the macro data, which the politicians are proud of, quite rightly.
The data proves that the Israeli economy recovered from the corona in an amazing way compared to other developed countries.
But if in the macro view things look wonderful, and the finance officials are asked by their colleagues from abroad how Israel managed the corona crisis so well, then in the micro view things look different. Israel's economy ends the year marked by an increase in the cost of living, and most household expenses grew up
A jump in the hills
Apartment prices jumped by 18% - which makes buying an apartment for young couples without parental support an impossible task.
Rents increased by about 5.1% on the national average (this is an average rate of increase, when most tenants are under an existing contract, and they have not yet experienced the increase).
Food prices increased by about 6% (including the food products that are controlled by the state), the price of electricity jumped by 12.3% in the last year and just last August by 8.6%.
The initial monthly repayment for those who take out a new mortgage jumped by 20.4% (from NIS 4,314 to NIS 5,193 - the calculation is by the Association of Mortgage Consultants).
We note that thanks to the actions of the government and the drop in the price of oil, the price of fuel remained unchanged compared to the corresponding period last year.
Compared to the price increases mentioned, the average wage in the economy increased by only 1.3% to 11,970 NIS gross per month.
This means that the purchasing power of the public has eroded in the last year, because the increase in prices in the economy was higher than the increase in the average wage in the economy.
Assuming we haven't started eating less, it seems that household debt has increased.
Unfortunately, both the Bank of Israel and the Central Bureau of Statistics do not have up-to-date data regarding the amount of our deficit in the bank.
According to the Bank of Israel, in the first quarter of 2022 the household debt balance continued to grow by approximately NIS 28 billion (4%), both in housing debt and non-housing debt, to a level of approximately NIS 720 billion.
The balance of non-housing debt (loans + overdraft) of households continued to grow in the first quarter of the year at a rate of about 3.3% to a level of about NIS 222 billion, after its decrease in 2020 against the background of the Corona crisis.
And we will dwell a little longer on the cost of living in the aspect of widening social gaps.
Despite the fears of the "bursting of the high-tech bubble", the average salary in this industry jumped by more than 8% in the last year to the level of NIS 27,000.
Hi-tech, by the way, was responsible for a large part of the state's income from taxes, which so nicely closed the deficit in the state coffers that opened up during the Corona period and reached its peak at an astronomical number of 174 billion shekels in February 2021.
So far it sounds wonderful - the rate of wage increase in high-tech was higher than the rate of inflation (4.6% per year), but only 383,000 workers are employed in high-tech as of today.
On the other hand, about 650,000 workers earn a minimum wage that is still only NIS 5,300.
Despite the increase in prices in the economy, the minimum wage in Israel has not been updated since December 2017.
It's time for an upgraded minimum wage
I have a good time.
This ancient parable of the Russian poet Ivan Krylov may remind the function of the government of change when it comes to raising the minimum wage.
With the exception of the people of the economic right, everyone believed that the minimum wage must be raised - inflation is rising, years have passed since the last update, and the time has come.
The details of the package deal that includes the minimum wage clause were agreed between the Histadrut, the Treasury and the employers' organizations;
The solemn announcement ceremony was successful, but what?
Nothing happened.
When in one government sit the representatives of the liberal economic right, socialists from the economic left and people of the center, and each pulls in his direction - the "cart" does not move.
The "historic" package deal was not approved.
The members of the Labor Party and Meretz fought and argued that the increase in the package deal is moderate and too low (to the level of NIS 6,000 within three years), and therefore this outline should not be agreed to.
The insistence was so principled that they agreed to take the risk that the package deal would not go through at all, as indeed it did.
Now some of the opponents of the package deal at the time are trying to minimize the damage, and claim that raising the minimum wage was not urgent because there are not many people who receive such a wage today.
From now on we will pay more.
Shopping at the supermarket, photo: Gideon Markowitz
Can the housing crisis be solved?
Quite a bit has been written about the housing crisis in Israel.
18% per year, almost doubling prices in the last decade.
This is a lot, even in an international comparison.
It is not for nothing that the number of households living in rent in Israel is significantly higher than the average in the OECD.
A serious plan is needed to address the real estate crisis in Israel, a plan that has not been presented so far. The solutions that the government has proposed so far have been "cosmetic", such as various lotteries, but it turns out that it is not possible to discount the apartments only for one population, because this only increases the demand.
The government housing program should be achieved in cooperation with those who are going to build the buildings - the contractors.
"The outgoing government did not seriously sit down with us about its plans," they say.
The contractors propose to reach a "package agreement" between the Boni Ha'aretz Contractors Association, the Center for Local Government and the government.
The details of the program do not sound far-fetched, but it is already a matter for the professionals.
In conclusion, we will note that both in the area of lowering the cost of living and in the area of real estate, the government has taken important steps, the results of which we have not yet seen and some of which have not been completed, such as the import reform and the agricultural reform. long, some projects are stuck and it takes many months to issue a building permit. Time will tell if the steps taken will have an effect.
were we wrong
We will fix it!
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