Netanyahu, Eini meeting to avoid strike ends in deadlock

Dun & Bradstreet Israel: More businesses at risk of closure as prices rise.

By SHARON WROBEL
February 16, 2011 06:36
3 minute read.
PM Netanyahu at the weekly cabinet meeting

Netanyahu leaning 311. (photo credit: Emile Salman)

Talks between Prime Minister Binyamin Netanyahu and Histadrut labor federation chairman Ofer Eini to address the recent prices rises ended without an agreement Tuesday.

Together with Finance Minister Yuval Steinitz, Finance Ministry director- general Haim Shani and budget director Udi Nissan, they discussed the price cuts the government announced last Thursday in a bid to avert a general strike next week. Last Thursday, the Histadrut declared a labor dispute to protest price hikes of basic goods such bread, water and fuel.

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The government said it would raise the minimum wage and lower the price of water, public transportation and gasoline.

“The meeting ended with no results,” the Histadrut said Tuesday in a press statement. “The measures introduced by the government do not go far enough to ease the impact of rising prices on the entire public.

What the government is offering is only a drop in the ocean that will affect a very small segment of the public.

“We presented our position and a number of problematic points regarding the government’s package, but we still need to receive the answers. We will meet with Steinitz on Thursday, after which we will discuss how to proceed with the labor dispute.”

The Histadrut is also opposed to the government’s intention to finance the measures through budget cuts of about 2 percent to government ministries.

“The government is just taking from one pocket so it can put it in another at the expense of the public’s right to education, health, welfare and other public services,” the Histadrut said.

The increase in commodity prices is putting more businesses at risk of closure, Dun & Bradstreet Israel reported Tuesday.

The business climate worsened in January as the proportion of companies at high risk increased 0.25% to 13.7%, from 13.45% in December, the report said. Out of the 450,000 active businesses in the economy, about 60,300 are at high risk, it said.

These businesses suffer from liquidity problems, bounced checks and large losses in revenues and profits, which will threaten their existence if the situation does not improve within the next six months, Dun & Bradstreet Israel said.

“The increase in the high-risk business index can be directly attributed to the surge in commodity prices, which is pushing small businesses operating in highly competitive sectors out of the market,” the report said. “We expect the impact of the price increases to spread to more sectors in the economy.”

Businesses in the construction sector were affected the most, with the proportion of companies at high risk of closure up 1.11% to 14.9% in January, compared with 13.78% in December.

The next most-risky sector was transportation, which is affected by the rise in gasoline prices, with the proportion of companies at high risk of closure up 0.46% to 12.23% in January, compared with 11.77% in December.

In the clothing industry, 18.57% of businesses were at risk of closure in January, up 0.26% compared with December.

“The impact of the surge in cotton prices has not yet been fully felt, and a deterioration in the industry in the short-term is expected,” Dun & Bradstreet Israel reported. “The fashion industry is one of the most competitive sectors in Israel. As a result of the rise in cotton prices and a fall in profits, small- and medium-sized stores are poised to collapse or will be forced to significantly cut back on their activities in the short-term.”

The rise in food prices worldwide has not yet hit businesses in the industry, such as stores, cafes and restaurants, the report said. But ultimately global price hikes will raise food production costs, erode household income and lead to tightening of monetary policies worldwide, it said.

“Domestic food prices will rise by 5% to 10%, leading to a deterioration in the condition of businesses operating in the food industry in the coming months,” Dun & Bradstreet Israel said.


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