Prime Minister Benjamin Netanyahu is pressuring Minister of Finance Moshe Kahlon to introduce compulsory labor relations arbitration arrangements as part of the upcoming Economic Arrangements bill, and to take more active measures to ease the regulatory burden. According to sources close to Netanyahu, he is disappointed with the format of the budget presented to him, and believes that it does not achieve the goals he wishes to promote.
During a recent meeting with the Ministry of Finance leadership in his office, Netanyahu addressed those present, saying, "Do you know how to achieve 5% growth? There's only one way to do it: a compulsory arbitration law." Addressing Kahlon personally, Netanyahu added, "Moshe, you and I have already worked a lot together. We're not naive. Let's pass this bill."
As of now, Kahlon has not responded to Netanyahu's appeal on this issue. In the past, however, he vetoed Netanyahu's initiative to include a commitment to a compulsory arbitration bill.
Red line for workers' committees
Compulsory arbitration arrangements are a red line for workers' committees and Histadrut (General Federation of Labor in Israel) chairman Avi Nissenkorn, because they force the committees to go to arbitration as a precondition for exercising the right to strike. Netanyahu was already unsuccessful three years ago in promoting compulsory arbitration proposal, and tried to bring the issue up again in the coalition negotiations for forming the present government.
Kahlon has said in the past that he supports the workers' committee's right to strike, and that he is maintaining good working relations with Nissenkorn, who will soon stand for reelection. Nissenkorn has threatened in the past to "declare war" if the initiative is moved forward, which he calls "anti-democratic."
The main issue raised by Netanyahu at the meeting was relieving the regulatory burden. As part of the upcoming Economic Arrangements bill, the Ministry of Finance is proposing a series of measures designed to reduce regulation and put Israel in a better position on the Doing Business Index. According to those present, however, Netanyahu was not impressed by the measures presented, saying that a sword was needed to cut the Gordian Knot of Israeli regulation. Netanyahu spoke in this context about his intention to discuss with the Attorney General a proposal to impose binding restrictions on government ministries to prevent them from instituting new rules and regulations before they have fulfilled their part of the cabinet resolution for reducing the regulatory burden.
Participants in the meeting also told "Globes" that Netanyahu appeared disappointed with the budget framework presented by the heads of the Budget Division and the plan to raise the deficit framework to 2.9%. Bank of Israel Deputy Governor Prof. Nadine Baudot-Trajtenberg said that it would be difficult to justify raising the deficit target to 2.9% when labor market employment was high, unemployment was low,, and interest payments on the government debt totaled NIS 39 billion a year.
Ministry of Finance Accounting General Michal Abadi-Boiangiu repeated the views she expressed in the preceding meeting, saying that the 2.8% budget deficit target should be retained and not raised, because maintaining the ratio of debt to GDP was extremely important for Israel's credit rating. She explained that keeping to the deficit target made the ratio stable, and that Israel should stay on the safe side in this matter. Abadi-Boiangiu noted that the debt ratio was also affected by market factors, such as the Consumer Price Index and commodity prices, and it was therefore preferable to use cautious forecasts.
National Economic Council head Prof. Avi Simhon said that the deficit target did not matter; what was important was whether the budget supported growth.
Published by Globes [online], Israel business news - www.globes-online.com - on July 26, 2016
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