In Israel, what goes up doesn’t necessarily come back down again.
Starting January 1, some things in Israel are going to go up, and it might be a long time until they start going down again.
Here is a partial list:
Government employees, like ministers, members of Knesset, and the prime minister’s salaries are all going up.
Yes friends, the people who are responsible for digging us into this hole are due for an automatic pay increase.
This is thanks to a series of financial steps – including raising taxes – that the government has taken to reduce Israel’s own looming fiscal cliff, which is quickly coming up.
Prime Minister Benjamin Netanyahu’s immediate challenge, should he win the upcoming election [which looks very likely], is to decrease the deficit from its mammoth NIS 38 billion – more than double the planned deficit of NIS 18 billion. That’s a budget deficit of 4.2% of GDP. Netanyahu will have 45 days to submit a new budget, or by law, the country will have to go to elections again. Netanyahu will be forced to make some NIS 14 billion in cuts to government spending and will have no choice but to increase taxes. This is why he called for elections in the first place – knowing that with this kind of necessary austerity budget, there was no way that a serving prime minister could hope to get reelected. So a lot of taxes are going to go up, and public sector wages are going to have to come down [the very public sector wages that Netanyahu spent NIS 15 billion in the first place].
This is not going to be helped by central bank estimates which show that economic growth may slow to 3.3 percent this year down from 4.6 percent in 2011.
Israeli consumer prices are expected to rise 1.8 percent in the next 12 months.
Housing prices are going up. It now takes 126 average salaries to buy an average apartment in Israel, up from 100 in 2008.
While 126 salaries on average are needed in Israel, 55 are required in the US, 54 in the UK, 61 in France, 58 in Holland, and 56 in Ireland.
Real estate prices in the center of the country are going up, but the rest of the country lagging behind.
Starting January 1, electricity prices are going up by between 12%-15%. So are other utilities like water and municipal tax.
Car prices are going up.
Oh wait, something is going down: starting January 1, the salaries of the roughly 416,000 people who make up the Israeli middle class are going to go down.
The average monthly salary in Israel is $2,210 compared with $4,384 in the US, $2,570 in the UK, $2,914 in France, $3,372 in Holland, and $4,028 in Ireland.
See you at the polls.