Unemployment in Israel
Israel, Economics, 12/23/1997

"Bibi go home," shouted hundreds of unemployed Israelis as the prime minister, Benjamin Netanyahu visited their town of Ofakim Monday. Netanyahu thought his visit to the town would ease the latest congestion as hundreds of workers were laid off from their work in nearby factories. But the angry reception he received proved otherwise.

Residents of the development towns, like Ofakim, were a bit more hopeful during the former government of the Labor Party which reorganized the table of national priorities and diverted huge sums of money from a settlement budget in the Occupied Territories to development towns in Israel. Netanyahu's visit was a chance for them to express how disappointed they are at the government most of them voted for after they believed the Likud's "secure peace" slogan during the elections.

The same people who demonstrated against Netanyahu Monday had greeted his political foe, opposition Labor Party chairman Ehud Barak, with chants like ³Barak to power.² Following this reception, Barak¹s companion on this visit, Knesset member Shlomo Ben Ami said that were elections to be held tomorrow, the tables would be turned in Ofakim and the development towns.

Barak had nothing practical to promise the unemployed but he did something even more useful. He simply "reminded" them of what should be done the next day during Netanyahu's visit. ³Tomorrow, when you see Netanyahu, remind him of what he promised when he came here after they closed down the Oman factory, and what is left of all his promises. Show him that Ofakim residents are not stupid.²

On top of Netanyahu's political crisis that stemmed from lack of progress in the peace process, unemployment in Israel has become an extra reason for him to worry. Last month's statistics showed the unemployment rate has risen to 12 percent and could rise even more in the coming few months with more and more factories laying off workers and opting for alternative sorts of operations. Textile factories in Israel have lately opted to open branches in Jordan where the labor force is cheaper and tax incentives offered by the Jordanian authorities are more encouraging than those of the Israeli government.

But the main reason for the rising unemployment in Israel is the fact that at least 250,000 foreign workers from the Far East have not only replaced Jewish workers from Israel but also Palestinian workers who have been denied entry into Israel from the Occupied Territories or, alternatively, from the Palestine National Authority areas. Before Israel's policy of total closure of the Palestinian territories, an average of 80,000 workers used to cross the pre-1967 border line to work in Israel. If unofficial workers, or illegal workers are to be added to this sum, the number of Palestinian workers in Israel in normal days goes up to 120,000. But after the closure was introduced, industry poles in Israel decided to import workers from the Far East and from Romania. And because those foreign workers are paid very low wages, more and more of them were brought in to work and eventually replaced dozens of thousands of Jewish workers as well.

Netanyahu instructed the director general of his office, Moshe Leon, to put together a plan which will bring hundreds of additional jobs to the development town of Ofakim within a month. On the day of his visit, a number of factories and companies said they would absorb some 80 workers but their move is not expected to solve the mounting unemployment crisis, which seems to be badly in need of a nationwide governmental plan and not individual initiatives.

Minister of Labor and Social Affairs, Eli Yishai, criticized the lack of cooperation by the prime minister's office and the Finance Ministry with his ministry and said that what is needed is not a busload of director generals but implementation of decisions taken by his ministry to control the unemployment growth rate. "We are tired of promises. The person who is holding up the execution of the plan is the minister of finance, who, like an eel, evades every solution and does not allow any plan to be carried out.²

Despite the crucial role Netanyahu plays in his government, the blame seems to be directed more toward the finance minister, who, according to some political analysts, might end up being the scapegoat for Netanyahu's economic failure. In last Sunday's cabinet session, finance minister Ya'acov Ne'eman came under fire from almost every minister. Health minister Yehoshua Matza complained that he has approached Ne'eman for more than six months with problems in the health budget but the minister did nothing to solve those problems. He warned the government ministers of a situation where the unemployed and the poor will not be able to use the health care system.

Matza was joined by Foreign Minister David Levy, who also spoke harshly against the government and its prime minister. Levy warned that Israel is standing before a huge social uprising.

Minister of Tourism Moshe Katzav also warned of social upheaval. ³The government must take action immediately to deal thoroughly with closed factories and unemployment. The situation is disgraceful. I fear social deterioration. We must not be oblivious. I have never felt such serious social distress,² he said.

Previous Stories:
  Europe refuses to deliver Israeli settlements crops   (11/28/1997)
  Qatar conference: gloomy expectations   (11/10/1997)
  Textile factories leave Israel for Jordan, Egypt   (7/15/1997)

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