Lapid, Bennett split on intervening against lay-offs

Business headlines have been dominated in recent weeks by news of significant layoffs from major companies in Israel.

NOVEMBER 21, 2013 17:09

Lapid and Bennett at Knesset swear in 370 (photo credit: Marc Israel Sellem/The Jerusalem Post) — Lapid and Bennett at Knesset swear in 370

(photo credit: Marc Israel Sellem/The Jerusalem Post)

Finance Minister Yair Lapid and Economy and Trade Minister Naftali Bennett publicly parted ways Thursday on what role the government should play in the face of a wave of layoffs.

Business headlines have been dominated in recent weeks by news of significant layoffs from major companies in Israel, with firms such as Teva, Office Depot, Israel Chemicals, Cisco, Logic and Ceragon, among others, shedding or prepared to shed workers.

Bank of Israel Governor Karnit Flug warned on Tuesday that in the coming year, the unemployment rate would likely rise from its 20- year low of 6.1 percent in the third quarter.

Lapid and Bennett, political allies who usually see eye-to-eye on economic issues, each addressing the Manufacturer’s Association of Israel conference in Eilat, tackled the problem from opposite angles, with Lapid promising intervention and Bennett simply chalking the issue up to creative destruction in the free market.

“It is unacceptable that the state gives tax benefits and the company maintains good relations with us, but when the time comes to fire workers they tell us, ‘don’t interfere, it’s none of your business,’” Lapid said. “My job is to watch over the workers in the economy, and I will take advantage of every weapon in the arsenal to do so.”

He had spent a large part of Wednesday, he said, trying to ensure that the 780 Office Depot employees who lost their jobs when it closed this week had someplace to go.

After consulting with Lapid and requesting state aid, Retail 3000 put an offer on Office Depot’s assets, and promised to keep 500 of the employees on for at least a year should the deal go through.

Bennett, on the other hand, reminded the conference that Israel’s unemployment was enviable in comparison to many Western economies.

“The employment rate is high, let’s not get confused,” he said. “There are companies that fail to innovate and don’t survive... The problem is not the lack of employment, but that a couple can work, do everything by the book, according to the compact, the unwritten contract between the public and the state, and is unable to succeed.”

Low wages and high prices conspired against such working families. The solution, he posited, was innovation, the same innovation that would keep companies alive and their employees secure.

The only way companies can survive, he continued, was through lobbying the government for protectionist policies and regulation.

“We must choose the path of innovation,” he said.