Ex-Bank of Israel chief: Gov’t needs to provide safety net for unemployed

“The Finance Ministry needs to operate a safety net for employees and self-employed who will reach unemployment,” Karnit Flug said in an interview.

 Governor of the Bank of Israel, Karnit Flug speaks at the Bank of England conference 'Independence 20 Years On' at the Fishmonger's Hall in London, Britain September 29, 2017.  (photo credit: REUTERS/AFOLABI SOTUNDE)
Governor of the Bank of Israel, Karnit Flug speaks at the Bank of England conference 'Independence 20 Years On' at the Fishmonger's Hall in London, Britain September 29, 2017.
(photo credit: REUTERS/AFOLABI SOTUNDE)

The government needs to create a safety net for people who will become unemployed due to the continued spread of the Omicron variant of the coronavirus, former governor of the Bank of Israel Karnit Flug said this week.

“The Finance Ministry needs to operate a safety net for employees and self-employed people who will become unemployed,” she said in an interview. “Most workers do not currently have an effective safety net because they have already exhausted the quota of unemployment days in the previous round [of COVID-19].”

The principles for compensation, she said, should be differential and focused on industries experiencing significant damage, not just across the board.

“Self-employed people and the public should be given certainty by setting criteria for compensation,” Flug added. “Uncertainty has an adverse effect. If the current wave lasts more than two months, it should be stated now that the state will help those affected.”

Flug said the rise in the cost of living in Israel is partially due to regulatory barriers on imports as well as a lack of competition and unique costs caused by the need for kosher certification and security requirements.

HOUSING GOES up in the new neighborhood of Ramat Beit Shemesh Bet, 2019.  (credit: HADAS PARUSH/FLASH90)HOUSING GOES up in the new neighborhood of Ramat Beit Shemesh Bet, 2019. (credit: HADAS PARUSH/FLASH90)

Regarding the cost of housing, Flug said that previous governments failed to provide incentives for construction companies to build homes designated for rent. “The cost of housing is a huge burden on young families,” she said.

Flug spent almost her entire career at the Bank of Israel, previously serving as deputy governor and director of the bank’s research department, a position she held for a decade prior to succeeding Stanley Fischer as acting governor in July 2013. In 2019, she joined the Israel Democracy Institute (IDI) as vice president for research in the fields of government and economics.

“The solution is to increase the supply of housing by opening up more state land for construction,” the former banker said. “The government must find solutions, including assistance in the field of public housing, which does not suffice today. But even if all of this is done, it will take time.”