The publication of the Finance Ministry’s long-awaited plan to encourage businesses to bring employees back to work has been met with a distinctly mixed response, including from within the government itself.
The NIS 6 billion proposal published by Finance Minister Israel Katz on Tuesday aims to provide employers with grants worth NIS 7,500 for every employee on unpaid leave who returns to the workplace after June 1. For employees who recommenced work after May 1, employers will receive NIS 3,500 per worker.
The proposal is expected to be approved by the government on Sunday, before requiring the Knesset to approve an amendment to the basic law on the state economy.
Likud MK Nir Barkat, who was previously announced as Israel’s finance minister-in-waiting by Prime Minister Benjamin Netanyahu, described the proposed program as “distorted” and “wasting public money.”
Instead, he said, impacted businesses must be eligible for compensation without strings attached and the latest funds should be “given to Israeli citizens to encourage consumption,” thereby assisting the growth of businesses and their ability to bring back workers.
While the plan was detailed as a joint effort between Katz and Netanyahu, former Jerusalem mayor Barkat said it represented “further proof that the Finance Ministry’s budget department needs to be dismantled and rebuilt.”
Manufacturers Association president Dr. Ron Tomer also expressed his dissatisfaction with the proposal, stating that he had made it clear to Netanyahu and other ministers the proposal should not be approved as it currently stands.
The proposal, Tomer said, sends a “very negative message” to employers who worked hard to prevent their employees being placed on unpaid leave at all, or returned their employees to the workforce sooner rather than later.
“The proposed route could result in the opposite result and drive a significant wave of layoffs in companies suffering a sharp decline in orders and liquidity due to the crisis, and will discover that the Israeli government does not intend to compensate them at all,” Tomer said.
Warning that hundreds of thousands of employees could lose their jobs, Tomer called on the government to develop a “central compensation plan” based on reduced economic activity and to adopt the “German model” of partial government participation in workers’ wages.
Former Bank of Israel deputy governor Zvi Eckstein, however, described the plan developed by the Finance Ministry as the “right policy.”
Eckstein, speaking to Army Radio on Wednesday morning, said the model correctly “gives maximal power to the unemployed facing the employers” and represents the correct “utilization of the money” given the need to quickly return as many employees as possible to the workforce.
Should the plan advance as is currently proposed, the grants will be paid by the Israel Tax Authority to employers from July in four installments over four months, and will depend on employers and employees informing the Israeli Employment Service regarding their return to work.
“I am pleased to announce the launch of the program to support employment that I have developed,” said Katz, launching the plan. “This is a simple, implementable and effective grant designed to bring back more than one million unemployed individuals to the workforce as soon as possible, to lead the economy to rapid growth.”
Figures published by the Employment Service on Wednesday showed more than 202,300 employees have returned to the workforce since restrictions were first eased on April 19. During the same period, approximately 103,000 new unemployment benefit applications have been submitted.