Budget cuts will deepen unemployment and poverty

Netanyahu and Steinitz forcing workers to pay debts caused by tax benefits to tycoons

The budget cuts announced by the government at the end of July come with worrying news of a rise in unemployment. Instead of taking steps to encourage economic activity and create jobs, the government is adopting a policy of austerity and cuts which will merely deepen the recession and increase unemployment. This is a slap in the face for the social protest movement which for over a year has been demanding social justice and a halt to the privatization and retrenchment of public services.

After years in which Netanyahu granted enormous tax breaks to local and international firms, he faces a huge hole in the state budget. Now the workers and the poor are being told to finance this deficit. And today, statistics were released showing that unemployment in June rose to 7.2%. According to the data, during the last six months no jobs were created in the manufacturing sector; thus it can be expected that government ministry budget cuts will lead to further unemployment.

The plan, approved by the government, does not promise the creation of even a single job. The increasing risk of unemployment is not addressed. There is no program for dealing with the housing crisis, which led Moshe Silman to suicide last month. Not a single cent is allocated to social security. The costs of this plan will be borne entirely by the workers and the poor. The increase in VAT, the cuts to health services, employment, education and the prevention of violence – all these steps compel the workers to bear the costs of the economic crisis.

Meanwhile, company tax remains 25% – the lowest rate of all western states. In fact, large companies pay tax at a real rate of just 3%-7%.

Netanyahu claimed that the Israeli economy is robust and that his economic policies prevent crises like those experienced by Spain and Greece, but this illusion has been burst. Today, the government has informed us that the situation is perilous, and that without drastic steps, Israel is liable to collapse.

It is an open secret that Netanyahu and Finance Minister Steinitz have known for months that Israel’s economy is heading towards recession, and they repeatedly postponed the required steps using one excuse or another. Their main concerns were populist considerations should the general elections be brought forward. Now, when supreme economist Bank of Israel Governor Stanley Fischer warns of an economic fall, and rating agencies threaten to lower Israel’s rating, the government rapidly adopts a policy of austerity and cuts which will lead the economy to a serious recession and undermine the job market.

Raising costs and direct taxation is a recipe for the destruction of the economy and society. The market may be free, but the workers are enslaved and poor. Not only is Netanyahu freezing any moves towards peace and exacerbating confrontations with the Palestinians by such steps as granting Ariel College university status for which, it seems, there is plenty of money. Now he is also leading Israel towards international isolation and a painful economic crisis.

The social protest movement cannot continue to demand that this cruel government correct the error of its ways. It is now clear that during times of apparent prosperity and times of crisis alike, the policy does not change: serve the tycoons and whip the workers into compliance.

The Workers Advice Center (WAC-Maan), which organizes Jewish and Arab workers, calls on all those who demand an alternative economic and social policy to join us as we march the streets on Saturday August 4, calling:

We will not pay for the benefits you gave the tycoons!

The solution to the crisis must not be at the workers’ expense!

For further information, contact WAC spokesperson Nir Nader: 050-6839443

אודות Wac-Maan