ישראל נאמן | Lectures, Articles, Tours: Israel | Mideast onTarget | Elliot Chodoff & Yisrael Ne'eman | Media Hysteria Misses the Point on the Economic Front

Media Hysteria Misses the Point on the Economic Front

30 December 2002

By Yisrael Ne’eman

Every so often the media needs to cause hysteria among the population.  After all how does one sell more newspapers or increase TV viewing if people have only sunk into a permanent low level of panic.  It can unhappily be noted that the average week with shootings and terror attacks (especially if they are across the 1967 borders) but no massive loss of life no longer serves as a blood pressure gauge for the average Israeli.  Sad but true.  Iraqi scuds with non-conventional warheads can supply the much needed media apoplexy or one can talk of an economic collapse.

The latter topic was the big issue at the end of last week, especially when the Governor of the Bank of Israel (like the US Federal Reserve), David Klein, was interviewed in Ma’ariv and did not rule out as completely unrealistic a major Israeli bank collapse sometime in the future.  The press went wild relating to a comment with little basis in reality.  It is apparent Klein skills in handling interviews is deficient.  The comment was highlighted all weekend and Sunday causing serious bank stock loses and the dollar exchange to rise beyond 4.8 to the shekel.

What was not analyzed was Klein’s discussion for at least partial restructuring of the economy.  With a population of 6.5 million and 4 million of working age only 2.5 million Israelis are employed, an extremely low percentage when compared with western economies.  As is well known many Israelis ‘choose’ not to work.  80% of ultra-orthodox (haredi) men study in yeshivas, most with government funding.  Former Labor finance minister Baiga Shochat estimates the number at 70,000 (other more ‘official’ estimates are about half).  There are numerous reports by industrialists, farmers and the ministry of labor concerning tens of thousands who refuse to work for minimum wage or more because their welfare benefits are superior to the wages being offered.

There are estimates of 300,000 foreign workers in Israel, most being paid less than minimum wage.  Klein wants them paid proper wages with benefits in order to force employers to seek out Israeli workers and not make a killing off cheap labor.  Welfare payments must (and apparently will) be cut to force people back into the market.  Yeshiva stipends, made in special payments to hold coalition agreements together, will be slashed if there will be a national unity government after the elections.  All this is contingent on a subsidiary 2003 budget.

Klein speaks of rerouting 300,000 Israelis into the workforce, a basic plan to replace the foreigners.  The plan is not complicated, at least on the employment level.  If only 62.5% of working age Israelis are employed at the moment he wants to raise the level to 70% with a workforce of 2.8 million. 

As for the exorbitant salaries of senior officials in government or public companies he recommends a salary cap using the example of the IDF tradition.  In short he explains his answer as not only financial but social and for the good of a society under pressure and needing a bit more economic justice.

And that was the real story, not some ill placed remark about the banks, but then the media is also under financial pressure during a deep recession.