Business leaders, the Histadrut (General Federation of Labor in Israel), and the Ministry of Finance yesterday reached agreement on a compensation mechanism for enterprises and employees located within 40 kilometers of the Gaza Strip and which were affected by Operation Cast Lead. The cease-fire in the campaign paved the way for the agreement, because the Ministry of Finance can now estimate damages without having to worry whether Hamas would extend the range of its rockets, which would have increased the number of enterprises affected.
Last week, agreement was reached for compensation for small businesses and the self-employed, but disagreement remained over compensation for large companies. The Manufacturers Association of Israel and the Histadrut demanded 145% salary compensation for all employees of large companies affected by the campaign, who could not go to work. This was the level of compensation given to employees affected by the Second Lebanon War in 2006. This compensation would have covered both absenteeism and lost productivity.
The Ministry of Finance initially offered 100% salary compensation for absentee employees in Sderot and 80% compensation for employees of companies farther away from the Gaza Strip. The ministry argued that most of companies' decline in output was due to the economic crisis, not the military campaign. It also noted that the Treasury has less money than in 2006.
The parties reached agreement on this issue, and it was closer to the position of the Manufacturers Association and the Histadrut. Large companies will receive 132% salary compensation for absentee employees, 12.5% less than their original demand. Employers will pay salaries, and will receive compensation for the government.
The absenteeism covered will only apply to areas where the IDF Home Front Command forbid a company to open (of which there were only a few cases), or if one parent had to stay home with children up to the age of 14 because schools were closed.
Small businesses and the self-employed will be compensated for the drop in business turnover compared with the corresponding period of 2007.
Published by Globes [online], Israel business news - www.globes-online.com - on January 20, 2009
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