OECD Secretary General Angel Gurria and CNN host Richard Quest held a discussion at the "Globes" 2013 Israel Business Conference on Sunday. Quest said that the Israeli economy was thriving, growth was reasonable, and unemployment was not too bad. In any scenario, shouldn’t the OECD be pleased?
"I gave the prime minister the OECD Economic Survey of Israel and it states that Israel's economy is growing by 3.7%, faster than Europe, the OECD, and the US. In 2014-15, Israel will succeed in keeping this growth rate," Gurria said. "We have an unemployment level here that is half the level in the Eurozone, and also lower than in the unemployment rate in the US."
Quest: Israel has an economy which has given the world so many university graduates and entrepreneurs, but your report talks about the need for higher education.
Gurria: "This is not unique to Israel. We're average and we're not proud of this. China, Korea, and Hong Kong top the PISA tests, and in the OECD, northern countries, such as Finland, are at the top of the table. It isn't a matter of how much you spend on education, but how it is spent. How do you get the best teachers so that they will make students improve their performance? Is the teacher's job important enough in society, are they paid enough?"
There have been social protests in Israel in recent years. What does this tell you about the changes needed here?
"Israel is special because of its local problems and security needs. It lacks the social glue that will connect Israeli society. There have been improvements in economic performance, but how do you ensure that all Israelis climb on the wagon and that no one is left behind?"
Question from the audience: Do you have a tip for Israel about haredi (ultra-orthodox) participation in the labor force?
"We directed this question to the Knesset, including the haredi and Arab parties, and we made the issue of social cohesion clear. There were a series of recommendations, and we kept the recommendations in the present report. We're mainly talking about instilling the necessary skill.s and the openness of employers to hiring haredim and Arabs."
What is your one recommendation for the Israeli finance minister?
"We bring to the government the practices of others. You can pat yourselves on the back, but you'll realize a moment later that there is a lot more work to be done. Don’t waste future money from natural gas before it enters the till. This is inter-generational responsibility, concerning is how Israel will look in the future."
Gurria and Minister of Finance Yair Lapid held a joint press conference, where they spoke about the shape of the Israeli economy compared with other OECD member states. Gurria said that Israel "was a source of envy among other members of the organization," explaining, "high growth, low unemployment, and high tech attract more and more investors, while natural gas can change the rules of the game."
Gurria added, "If you use the blessing of natural gas wisely, and neutralize the effect of Dutch disease, you can benefit from the boost and turn Israel into an energy independent country, which has far-reaching consequences. The purpose of growth is to reach everyone, and improve everyone's standard of living. In this regard, there is a lot more work to be done. You can do better, and growth must be invested in narrowing gaps and reducing poverty."
"We will continue to develop the Israeli economy, maintain fiscal stability, encourage an innovative economy, the entry of haredim into the labor market. That is the way to narrow gaps in Israeli society," said Lapid.
Lapid added that the Ministry of Finance was "doing everything" to avoid the need for a tax hike in 2015, but he did not promise not to raise taxes.
Published by Globes [online], Israel business news - www.globes-online.com - on December 9, 2013
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