The [many] ups and [few] downs of 2013

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.

Money

0 thoughts on “The [many] ups and [few] downs of 2013

  1. that electricity is going up say by 15%, just in one year lets be clear folks…this we can’t blame on Netanyahu…This, one of the last ? mega-monopolies on Israel, need to be taken down by us folks!
    I wonder what would people feel or think in Israel had only 1 restaurant chain, only 1 pay TV, only 1 phone mobile provider, one bottled water…, only one ….you get the picture. What would be the prices of these comodities, services ? …nothing less but astronomic.
    how come folks we accept one electrical company? even if it is called ‘israeli electric company’ ? (a nice name to disguise a monopoly). Countries manyfold larger then Israel have 4-5-6 political parties….and say between 100-200 electrical companies—-and we ? 20+ parties and ONE electrical company.
    This one cost you more money folks then you can imagine. Get rid of the this ‘blocking’ monopoly. Blocking, as it is not interested in developments which reduce costs, redice oil / gas dependency…cause this will diminish their power….
    Get rid of it. soon. It will be the largest pay increase you could get this decade.

  2. Disagree.

    1. Electricity prices have gone up not because of wages in the company. Have you heard of that little revolution gone down south? That place called Egypt? Well, it cut down our natural gas supplies, making IEC rush to provide us Israelis electricity with very expensive oil instead. Just bear in mind that had this company been private, it’s owner, sitting comfortably on the beach in Palma de Majorca, would not have necessarily agreed that electricity must be provided, no matter what. He after all works for profit, not for the citizens. He’d first make sure that he’d have a profit, and Israelis could shut down a/c’s in the meantime and sweat some bit, couldn’t they?
    YES indeed, competition in the electricity sector is a bless, but make no mistake – Israel can’t afford to be dependent on the mercy of the free market for electricity reliability. If a company goes bankrupt, we can’t temporarily buy electricity from our neighbours, the way EU or US states do. Privatisation should be done smartly, and in the mean time we should be able to appreciate our electrical independence.

    Secondly, the budget deficit should not be blamed by public sector salaries. Remember who the salary rises are most aimed at? The MD intern who diagnoses you in hospital in his 23rd hour of shift, a nurse who sticks a needle in your child’s hand and is being paid just above the minimum wage, social workers, teachers, policemen. If there’s anyone more deserving of a raise it’s them. Raises aren’t demonic. I imagine there must be some undeserving bureaucrats but that doesn’t mean the entire public sector is undeserving as a whole.

    Lastly, the budget deficit could partially be covered if two things occur. First, that the wealthiest one percent in Israel would actually pay income tax the same way the wealthiest 10% do. How fortunate are those that could declare their wages as stock options, and pay 20% tax instead of income tax. Second, to completely cut down support for Yeshivot and unemployed Haredim.
    But this wouldn’t happen, as both the ultra wealthy and the ultra orthodox are Netanyahu’s allies.
    I’m still optimistic though. This country has gone through worse.

  3. Hi Tal,
    I did not attack the rest of the public sector working class….and I agree largely with your comments on that … my point is solely IEC…I think, there is a huge space for improvment there, to put it mildly. Not even in IEC, I don’t think that the problem is overpaid employees, managers or even the ‘secret Haifa meetings’ in January ??? to set the prices for ‘the coming year’….which is sick by itself :-( … I think we loose much more on lack of innovations in this sector, like green energy or better say the lack of it. Europran countries are already at around 15% by wind & sun…I don’t know if one should laugh or cry…..I’d rather do the later….if we have something plenty, that is sun. You canÄt control the ‘micro’ sun stations….ie IEC is not interested. Other ‘new technologies’ are more then 10 years around us….we should have cut our oil/ gas dependencies by large % by now.
    That we need(ed) gas from Egypt at all in 2012 is a scandal, an industrial schigandal.
    The same way many of us produce hot water, many of us would cover for all of us for electricity. This is a REVOLUTION which will NEVER occur from within. No monopoly have ever sidelined itself, constraint known, neighbours can’t / will not supply us. Beeing a hightech nation, I suppose we should even be able to export electricity, should we want to.
    I know, I know the IEC lobby in Israel is probabely as powerfull as NRA in the US. But let me be crystal clear, I don’t envy the eventually overpaid bosses of IEC…in the lack of free markets…but believe me, depending on ONE…is not just the prices…G’d forbid, it could eventually turn into a bad bad nightmare ….exactly on your dearest point, reliability. I can’t see that one is more reliable then a few or many and innovation never occurs in any industry where there is no competition. MMMJJInever. higher national priorities then reduce costs or make advances in this sector. IEC time will come. I hope sooner tWehen later.

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