IES director: '130,000 will lose jobs by year's end'

In Finance C'tee, Farhi says jobless toll "too heavy" for market; MK Gafni warns of "collapse."

Gafni 248.88 (photo credit: Ariel Jerozlimski)
Gafni 248.88
(photo credit: Ariel Jerozlimski)
The government, the Histadrut and employer organizations intend to formulate a joint economic rescue package to prevent the expected layoffs of 130,000 workers, Finance Minister Yuval Steinitz said Wednesday. "We are in the process of formulating an economic plan that we hope will be presented for approval over the next few weeks," he said at his first roundtable meeting with Histadrut chairman Ofer Eini and Economic Organizations chairman Shraga Brosh. They agreed to cooperate to formulate solutions for the employment problem and to restore economic growth. Joint working teams will be set up to discuss the details of the economic plan, which will be presented within the next two to three weeks, they said. The Employment Service warned Wednesday that the wave of layoffs was expected to continue, costing the jobs of another 130,000 workers until the end of the year. "Over the last six months, 100,000 workers were laid off," Employment Service director-general Yossi Farhi told the Knesset Finance Committee on Wednesday. "We estimate that another 130,000 employees will lose their jobs by end of the year, which could bring the total number of job seekers to 300,000, up from the current 230,000. Over the last few months an average of 20,000 workers a month lost their jobs, compared with 10,000 a month, on average, in the May-to-October period last year." On Tuesday, the Industry, Trade and Labor Ministry reported that since the beginning of the crisis in September, more than 60,000 workers have lost their jobs. In the first quarter of this year, an average of 15,000 were laid off a month, which was 2.5 times higher than the monthly average in the last quarter of 2008. The ministry said the unemployment rate, which rose to 6.8% in January, would rise to at least 7.5% for the first quarter. Industry, Trade and Labor Minister Binyamin Ben-Eliezer on Wednesday met with Farhi and others to work out an emergency plan to find solutions for the employment crisis. Also speaking at the Knesset Finance Committee meeting, Eini called upon the government to make a distinction between preparations for the state budget 2009-2010, to be presented in July, and economic plans for solving the crisis, which need to be immediate. "I made this distinction in the coalition agreement, where it was determined that within 30 days we would, together with employers, formulate solutions to solve the crisis," he said. "Unfortunately, the Finance Ministry is focusing more on the budget plans, and we will examine over the next few weeks if the Treasury is changing its stance." "A few months ago we suggested the establishment of a fund in which every employee and employer would contribute half a working day's pay, together with governmental input, to avert layoffs and the closure of factories," Eini said. "The proposal could be implemented independent of the state budget." Eini said the main problem of the economic crisis was employment, especially in outlying areas. "There needs to be a special focus on the periphery since workers laid off in outlying areas have no alternative for work," he said. Over the last couple of months, 1,800 workers had been laid off at factories in Kiryat Shmona, Eini said. At the Finance Committee meeting, Brosh listed employer demands to deal with the crisis. He called for an amendment to the Government Procurement Law, which would give preference to buying from local manufacturers and industrialists. "The amendment to the law could generate deals with local manufacturers at a volume of NIS 4 billion and add 10,000 jobs annually," Brosh said. The government is the largest buyer in the local economy with annual purchases of NIS 40b. Brosh said the government should implement a negative income-tax policy, increase the Chief Scientist research and development budget by NIS 500 million and accelerate the implementation of five to six infrastructure projects at an investment of NIS 5b. "We have been acting as if the global crisis could just pass over our heads, but clearly this is not the case," Knesset Finance Committee chairman Moshe Gafni said. "Unemployment is a problem that needs urgent attention. There is a new government, but until now the problem has not been dealt with intensively. We will work closely with the Finance Ministry and cooperate as much as possible to establish an economic policy to help the economy emerge from the crisis."