Last decade was most successful for trade, services sector

Federation of Israeli Chambers of Commerce chairman Uriel Lynn: But not even one new manufacturing firm has emerged.

By NADAV SHEMER
April 7, 2011 21:39
2 minute read.
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traders24888. (photo credit: Henny Ray Abrams)

 
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Israel’s trade and services sector experienced record growth in the last decade, according to the Federation of Israeli Chambers of Commerce.

Gross product in the sector at the end of 2010 was 74 percent higher than at the beginning of 2001, data released by the FICC on Wednesday showed. By the end of the same period, more than 400,000 additional individuals were employed in the sector than at the beginning, a rise of 44%.

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By definition, the trade and services sector includes trade, banking and finance, transport, storage and communication, hospitality services, personal services and business services including real estate.

The data presented by the FICC showed that in contrast to the record employment growth in trade and services, employment in the manufacturing sector grew by just 5% in the same period, while in the public sector it rose by 33%. In other words, by the end of 2010 about 69% of business-sector employment came from trade and services, as opposed to 21% from manufacturing.

The data were reflective of a trend throughout the developed world, where trade and services sectors have grown as manufacturing has declined, FICC chairman Uriel Lynn told The Jerusalem Post Thursday. Studies have shown that the size of the trade and services sector is directly proportionate to how developed an economy is, he said, citing the United States as an example, where the relative size of the sector is larger than anywhere else in the world.

Lynn said he could not point to even one new manufacturing organization that had emerged in Israel in the last decade. Existing organizations were still growing and increasing their foreign-market penetration, he said, but new organizations were not being established.

“Why is that? First of all because there is a government policy that does not encourage manufacturing as a whole. It encourages only hi-tech and manufacturing organizations that export at least 25 percent of their total volume. So most of the manufacturing that could have developed as a substitute for imports is not being encouraged by the government,” Lynn said.

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“There is much more emphasis on self-reliance” in the Israeli trade and services sector, he said. “People know they have to be successful, [and] if they’re not successful, nobody will help them.”

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