Prices stay high as unemployment soars, fueling economic crisis - analysis
Israelis pay as if they live in a wealthy country, and receive average or below average goods and services.
By HAGAY HACOHENPeople walk at the Mamilla Mall near Jerusalem's Old City on May 3, 2020.(photo credit: NATI SHOHAT/FLASH90)
The Economy Ministry recently launched shoppingIL, a Google platform with 270 stores that feature “Made In Israel” products, calling on consumers to shop locally and support their brothers and sisters who are out of work due to COVID-19.While such efforts were likely well-meaning, and small businesses were badly harmed financially due to the country’s two lockdowns, it is more expensive to shop Israeli.The only things for which Israelis pay less than residents of other OECD countries are mobile and Internet communications (-25%). In all other aspects, from food to housing to education, Israelis pay more – 37%, 52% and 8%, respectively. The Agriculture Ministry, for example, usually views its interests as being aligned with those of farmers, not consumers. In this light, recent television news reports lamented that homegrown tomatoes and cucumbers are not clearly labeled as Israeli-made. The result is that the less aware consumer is paying Israeli prices for a Turkish-grown vegetable.Foreign vegetables tend to be cheaper when imported, and the Israeli market can’t be self-sufficient due to the small size of the country and the great demand of its people. Yet, food chains sell vegetables at their “Israeli” prices – meaning, they import a Turkish tomato for a low price and pass it off at a high one. Milk and eggs are a whopping 99% more than the European Union average, TheMarker reported on Tuesday. Earlier this year, when the country suffered from a butter shortage, it was solved only when cheap, imported butter was allowed into Israel.In a recent debate over who should compensate Israeli workers ordered to enter COVID-19-imposed quarantine, the state or their employers, Dubi Amitai, chairman of the Business Sector Presidency trade association, claimed the state should cover full costs. Finance Minister Israel Katz has been unable to pass any legislation on the matter.One example of how the large chains are able to cash in on well-meaning policies during the COVID-19 slump is how Fox Group was legally eligible to get NIS 19 million from the state due to a policy that wished to support companies in employing workers.Fox said it would keep its employees, but announced that with the influx of cash it would give its shareholders NIS 49 million, which led to public rage. Eventually, Fox declined state money.Fox isn’t the only large actor in the market whose goal is to maximize profits even during a pandemic that has put its customers out of work.During lockdowns, and ahead of Jewish holidays, large chains up food prices – even during coronavirus.With an expected 6% decline in growth this year, the average Israeli still pays 28% more than any other OECD citizen, when the calculations are made in reference to the wealth of the nation. Simply put, Israelis pay as though they live in a wealthy country, and receive average or below-average goods and services.During the previous decade, prices constantly went up, which means people’s money is worth less than ever before in an era when there is not so much money.Under Prime Minister Benjamin Netanyahu, the taxes imposed on consumers and self-employed workers are NIS 20 billion per year. The cost of water increased by 7%, and the cost of electric power by 15%, economist Yaron Zelekha wrote last month in a piece published by the Hebrew daily Haaretz.During the wave of protests there is a sign that appears and reappears in photos and videos: “Netanyahu, I have no money.”The coronavirus crisis has meant a spike in unemployed and underemployed. Prices continue to surge at the same time.
