We are all traumatized. An entire country is grieving and hurting. During this period, additional existential anxiety was added to the lives of Israelis – workers who were laid off or placed on unpaid leave and employers who encountered difficulties.
Hundreds of thousands of families expect the state to help them cope with the economic crisis, and to stand by them to enable them to return to work or continue working. Employers also expect assistance that will make it possible to reduce costs on the one hand and avoid laying off employees or putting them on unpaid leave on the other. Unfortunately, it seems that the country's leaders have not yet taken the time to deal with this. The economic plan adopted by the government provides compensation to employers whose income has declined, and unemployment benefits to those who have been placed on unpaid leave or laid off for the months of October, November and December.
If the war continues, the economy will not recover, and it will be necessary to extend it to the first months of 2024, and new legislation will be required to do so. Meanwhile, uncertainty is hurting both workers and employers, who cannot plan their steps wisely.
At the same time, there is another issue that has not yet been discussed by the government: the policy implemented so far gives employers free rein to fire employees, and does not encourage employment. The assistance given to employers for salary expenses is not contingent on maintaining employees' jobs. Therefore, those whose organization was financially harmed by the war turned to reducing manpower and put workers on unpaid leave. There is no incentive to bring workers back. The significance of unpaid leave for an employee is loss of income, damage to the sense of security and economic stability, loss of social rights such as pensions and compensation, and most seriously – almost complete disconnection from the workplace, which reduces the chances of returning to it in the future.
It doesn't have to be this way. If the government provides incentives to employers in difficulties to employ their workers part-time, the damage to the economy will be less severe and lasting. Some will be able to reinstate employees who have been placed on unpaid leave, assuming that over time their job rates will increase. In such a situation, employees will maintain a sense of belonging and commitment to employers and their social rights will be preserved, while employers will be able to move businesses easily after the crisis passes. The entire economy will recover faster, and will not be dragged into a deep and prolonged recession.
If the government provides incentives to employers in difficulties to employ their workers part-time, the damage to the economy will be less severe and lasting. Some will be able to reinstate employees who have been placed on unpaid leave, assuming that over time their job rates increase
The outline we propose is a mechanism for direct assistance to employers: the employer will pay the employee the salary according to the rate at which he returns to work, and the state will indemnify the employee through reimbursement that will be transferred to the employer at 70% for the extent of the disabled position. That is, about the difference between the previous salary and the reduced salary.
According to our analysis, if 20 per cent are returned on part-time unpaid leave two months earlier than they would have been without government indemnity, the total savings to the state will be about NIS 147 million.
If decision makers adopt the mechanism, it will be a way to restart the wheels of the economy, get through the crisis, reduce the harm to employers and employees, and strengthen the resilience of Israeli society.
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