Economic plan positive ‘if’ implemented - analysis

The NIS 90 billion plan provides a strong safety net for the country’s citizens; not a short-term safety net, but one that will last for another year.

A bank employee counts Israeli Shekel notes for the camera at a bank branch in Tel Aviv (photo credit: REUTERS)
A bank employee counts Israeli Shekel notes for the camera at a bank branch in Tel Aviv
(photo credit: REUTERS)
For the hundreds of thousands of people out of work, and the tens of thousands more whose businesses have been decimated by COVID-19, one of the most painful aspects of the crisis is uncertainty.
The uncertainty about where the money will come from to pay the rent, the mortgage, the car payments, the kids’ tuition, even the shopping bill.
For salaried workers who have lost their jobs outright or were sent out on forced nonpaid leave, the terrifying fear is what happens when those unemployment benefits run out.
And for business owners who somehow have been able to stay afloat until now – perhaps with the help of government grants disbursed in May – the incapacitating thought is what happens when that money ends, and the clients don’t return because, as a result of the pandemic, they simply can’t.
To those uncertainties, the economic plan that the government is in the process of approving – it approved part on Sunday, and is expected to approve the rest on Monday – provides a partial solution.
To salaried workers no longer working, the plan says their unemployment benefits will not run out in another month, but will continue until next June. And to business owners whose turnover is down by at least 40%, the message is that they will get grants that should help cover business overhead and expenses every two months also until next June.
That’s the good news: The NIS 90 billion plan provides a strong safety net for the country’s citizens; not a short-term safety net, but one that will last for another year. Those payments should go a long way toward relieving the angst and anxiety that hundreds of thousands of people facing financial insecurity are feeling. These payments provide a much-needed horizon.
One of the plan’s downsides, however, is that it focuses on the immediate life raft and gives short shrift to repairing the damaged ship. The plan does expand professional retraining for some 50,000 people, with the hope that people who lost jobs during the virus can come back into the job market with skills better equipped to deal with a 21st-century economy. But more is needed in that direction and in charting how to rebuild and recalibrate the economy after the storm.
Nevertheless, the plan is a step in the right direction, and an indication that the government has internalized that the pandemic is not going to disappear with the summer’s heat, that Israel will not magically be able to defeat it, and that COVID-19 – and its economic fallout – will be here for months on end.
If during March and April the government’s economic policy was characterized by trying to put a Band-Aid on problems in the hope that this soon would all be behind us, now the understanding is that the phrase “living in the shadow of corona” means not only social distancing, masks and personal hygiene, but also that the government is going to have to provide massive financial assistance over the long term in a way that goes against the grain of the fiscal conservatives in the government.
But there is one major caveat to the plan actually working, and that is that it is implemented. The plan looks impressive on paper, but will it be enacted?
The last four months have been a chronicle of Prime Minister Benjamin Netanyahu and the government promising payments that – because of lack of oversight or technical and bureaucratic foul-ups – simply did not arrive. The Treasury recently admitted that of the NIS 30b. they had planned to disperse by the end of June, only NIS 14b. in payments were actually made.
In other words, the government talked a good game, promised a great deal of relief, but it failed to deliver.
And that failure to deliver was the trigger for the large demonstration in Tel Aviv on Saturday night of economic victims of the virus that took place after the plan was rolled out. One would have thought that less than 48 hours after the economic plan was announced, there would be nothing to demonstrate. That the protest went ahead and attracted as large a crowd as it did in the midst of a new outbreak of the virus sends a sharp message to Netanyahu, Alternate Prime Minister Benny Gantz and Finance Minister Israel Katz: We don’t trust you; we have no confidence in your ability to deliver on your promises.
Netanyahu and Katz told the public weeks ago that the money was going to be available in a matter of days. It wasn’t, and as a result, along with economic woes, many simply lost faith in government promises.
The government, by actually delivering this time, could help alleviate two serious ills presently besetting the country: the immediate economic despair of hundreds of thousands of people, and the public’s lack of trust and faith in its elected officials during a period when that trust is so badly needed.