Finance Minister Yair Lapid and Economy and Trade Minister Naftali Bennett on Monday established an interministerial panel to explore policies that would bring down the cost of living and remove trade barriers.
Finance Ministry deputy budget director Yonatan Regev and Economy and Trade Ministry director Amit Lang will lead the team, and aim to produce a set of recommendations within six months.
“In the last decade, while real GDP has increased 24 percent, the real wage has gone up just two percent,” Lapid said. “The middle class is asking itself why it is not seeing anything from all the wealth it is creating. We are committed to bringing down the cost of living, product by product, shop by shop, until we do so.”
Fifty percent of Israeli workers earn less that NIS 6,600 a month, Bennett said, making it difficult to swallow the high prices. “It’s expensive in Israel,” he continued, “and people are leaving Israel simply because it’s too expensive here.”
A central objective was reducing import barriers; the first proposal brought before the team would aim to make it tougher for the state to impose levies on active importers.
“We’ll ensure that before a hasty decision to protect local manufacturing, they will take into account considerations affecting cost of living and the interests of consumers,” he said. For example, the government would have to consult with the Antitrust commissioner before applying new import duties.
Israel’s economy faces problems, in part, due to its size, high levels of market concentration, information gaps, regulatory gaps and exclusivity agreements and other issues that reduce competition. Difficulties in doing business keep new competitors out of the market.
In the World Bank’s annual Doing Business Index, which ranks how easy it is, bureaucratically, to get a business going, Israel dropped two places – to 38 – between 2012 and 2013.
Another area of focus: improving e-commerce. While giants like Amazon have upended consumerism in the United States and parts of Europe, Israel’s size and geographic isolation have impeded similar developments here.
Last week, a Bank of Israel report showed that the country was still a largely cash-oriented society. While Israelis withdrew NIS 205 billion in cash from ATMs in 2012, they spent only NIS 139b. on credit cards.
The team also put products that should be under price supervision on its agenda. On Sunday, the Agriculture Ministry’s Price Supervisor Uri Tzuk-Bar recommended that prices of 5% fat white cheese and 38% fat sweet cream should be regulated, and should be significantly lowered, though the decision is subject to a public hearing.
“There is no reason for the price gap between products that we all consume [here, and their prices] abroad to reach hundreds of percentage points,” Bennett said.
The ministers promised to fast-track the team’s policies once they were complete.
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