Cabinet delays passing economic plan over inequality objections

The plan warned that the government needed to be proactive if it wanted to avoid major economic problems further down the line.

June 22, 2015 01:22
2 minute read.
Moshe Kahlon

Kulanu leader Moshe Kahlon. (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)

The cabinet on Sunday postponed the passage of a 15-year socioeconomic plan after Welfare and Social Services Minister Haim Katz (Likud) announced that he would oppose any plan that did not set goals related to closing social gaps.

The plan, which was presented by Eugene Kandel, the head of the National Economic Council in the Prime Minister’s Office, laid out the strategic economic vision for the country over the next 15 years and included recommendations for developing the North and laying fiber optic cables for highspeed data communication.

The plan warned that the government needed to be proactive if it wanted to avoid major economic problems further down the line.

The research estimated that failure to integrate Arabs and ultra-Orthodox citizens into the job market would open up an annual NIS 100 billion deficit by 2050; that only 14 percent of Israeli workers were considered “highly productive”; and the growing need for engineers in the hi-tech sector faces major shortages, according to TheMarker.

The housing crisis could be expected to get far worse without serious changes as demand grows, and Israel could become the country with the most low-earning workers in the OECD if adjustments aren’t made. The 50 percent of the country’s youth that would not earn an academic degree would have a hard time finding good jobs, and the aging population would weigh the economy down, it added.

The plan focused on increasing competition, cutting red tape and investing in physical capital such as transport and Internet infrastructure and human capital such as education and training.

Prime Minister Benjamin Netanyahu, for his part, welcomed the plan as a step toward stability, saying at the start of the cabinet meeting that “it is important to have a continuous path and not a path that changes with every changing of the government.”

But Katz said the plan did not focus enough on reducing inequality.

“A socioeconomic strategic plan designed to provide a solution for the next 15 years must also include a target of reducing gaps and caring for disadvantaged populations,” Katz said.

A plan cannot discuss the foundations of funding for households without referring to those households that do not make enough money to reach the tax threshold for savings plans such as pension and provident funds, he added.

“We cannot correct a situation of lack of equal opportunity between the children of Israel only during their mature years. Rather, we need to act to change the situation already in early childhood in order to prevent the formation of these gaps at all,” said Katz.

“If we do not prevent the problems at the right stage there will be no real change in the situation of those who need it the most,” he concluded.

Meanwhile, Finance Minister Moshe Kahlon prepared to present the first steps of his housing reform plans to the housing cabinet Monday.

Those plans include incentives to split big apartments into several smaller units and convert residential buildings used as office space back to apartments.

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