Netanyahu bids to forge joint economic rescue plan

'100 days team' meets with Histadrut, bankers, industrialists.

Netanyahu 298.88 (photo credit: Ariel Jerozlimski)
Netanyahu 298.88
(photo credit: Ariel Jerozlimski)
Prime Minister-designate Binyamin Netanyahu and his "100 days team" met Thursday with representatives of the Histadrut, banks and industry to establish an economic action plan for the protection of jobs and the survival of factories. "We all want to save jobs and rescue factories, as well as help companies and citizens, during this difficult economic period," Netanyahu said. "The key is to join forces." In a meeting with Histadrut chairman Ofer Eini and Association of Economic Organizations chairman Shraga Brosh, Netanyahu said the government, the Histadrut and employers should make a joint effort to formulate a plan to rescue the economy. "The only way to rescue the economy is by joining forces and acting together," Eini said. Meanwhile, Netanyahu's associates met with banking and corporate leaders to discuss formulating an economic action plan to protect jobs and ensure the survival of factories, in particular in outlying areas. The plan formulated by Netanyahu's team focuses on recommendations to ease the credit crunch, the corporate-bond crisis and help the periphery. Participants at the meeting included Mizrahi Tefahot Bank president and CEO Eli Yones, Bank Leumi chairman Eitan Raff, Bank Hapoalim chairman Dan Dankner, Discount Bank chairman Shlomo Zohar and First International Bank president and CEO Smadar Barber-Zadok. "We wanted to hear from the bankers about ways to help factories in risk and how we can protect work places," said Izzy Tapuhi, of the 100-days team, who is slated to become director-general of the Prime Minister's Office. "Our aim is to put together a joint plan to help the survival of companies, the banking system and jobs." One of the proposals discussed at the meeting was increasing state guarantees to the banks and greater state input to help companies and factories survive. Economists at Direct Investment House expect the rate of unemployment to increase from 6.1 percent in 2008 to 8.5% this year and 10% in 2010. The forecast is more pessimistic than the latest outlook by the Bank of Israel, according to which the unemployment rate will surge to 7.8% this year. "In recent months, employers have taken creative steps to avert layoffs," Direct Investment House in a report published Thursday. "These steps have prevented unemployment figures to drop further down, although they represent a form of layoffs. "For example, a switch to a four-day week is equal to cutting 20% of the workforce. In spite of the acrobatic steps, the economy has in recent months been hit by a big wave of layoffs, in particular in January, during which 20,000 workers lost their jobs." Economists at Direct Investment House cut their growth forecast for the economy for this year from zero growth to negative growth of -1% on expectations that the economy will fall into a deeper recession in the second half of this year. In a report Thursday, Leo Leiderman, chief economist at Bank Hapoalim, said the new government might have to enforce budget cuts and raise taxes if tax revenues fall steeper than expected. In the December to February period, tax revenues dropped 19% compared with the same period a year ago, the report said. Netanyahu has been reiterating his intention to cut taxes this year, despite opposition by the Bank of Israel and the Finance Ministry. Leiderman expects exports of trade and services to drop by 10% this year as industrial production and exports in developed countries fall to unprecedented levels.