Electronics Assn. chief sees wave of high-tech layoffs

Elisha Yanai: "If Netanyahu, Lapid, Bennett, and Flug don’t act, we expect to see thousands of layoffs in high tech because of the strength of the shekel.

"The Bank of Israel must begin acting differently regarding the dollar. It's unacceptable that the shekel should strengthen at night and on weekends without any real activity just because the Bank of Israel is not in the picture in these hours. The bank must initiate a full-scale war today to weaken the shekel," Israel Association of Electronic & Software Industries chairman Elisha Yanai told "Globes" on Wednesday. "If Netanyahu, Lapid, Bennett, and Flug don’t act, we expect to see thousands of layoffs in high tech because of the strength of the shekel. In the past year, thousands of high-tech employees have been laid off, and the decision-makers' helplessness on the matter will cause catastrophe to Israel's high-tech industry."

In the face of the shekel's strength, Yanai called on Minister of Finance Yair Lapid, Minister of the Economy Naftali Bennett, and Governor of the Bank of Israel Dr. Karnit Flug to open a united front against speculators and intervene massively in the foreign currency market in an effort to weaken the shekel. They should take actions "similar to the measures taken in other countries, such as Switzerland, Italy, Chile, and the Czech Republic," he said, "In Japan, the prime minister has announced a war against the strong yen, and has intervened in the market on a huge scale, despite criticism by his G8 colleagues. These measures weakened the yen by 35%. The Ministry of Finance and the Bank of Israel must make a joint statement on the matter."

Yanai believes that the economic ministries and the Bank of Israel should also consider levying a tax on speculation, a step already taken in Brazil and which resulted in a 30% depreciation of the real, greatly helping exporters. "The government should convert part of its dollar debt into shekels through large-scale swap deals, to create demand for foreign currency alongside the weakening of the shekel. It can partly amend the law to collect taxes in dollars from entities like Iscar and Waze that have been sold to foreign companies. Taxes paid in shekel creates an absurd situation because the companies convert the dollars into shekels creating unnecessary supply. The Ministry of Finance can and should use the dollar for it and other ministries' needs abroad," he said.

Yanai warned that if the shekel continues to strengthen it will raise the operating costs of multinationals in Israel. "Profits from high tech will plummet to the point of harming its competitiveness in global markets. 70% of high tech exports are made in dollar-linked contracts, and most multinationals operating in Israel are headquartered in the US. The companies' biggest costs are raw materials and labor, and these costs are steadily rising because of the shekel's appreciation. These companies' costs in Israel are approaching their costs in the US," he said.

At a meeting with top exporters and Israel Export and International Cooperation Institute officials on Wednesday, Bennett said, "The shekel-dollar exchange rate does not ease exporters' lives, but it isn't everything. Tighter environmental legislation in recent years will result in all us breathing cleaner air, and we'll all have time for that because Israeli industry won't exist anymore." The remark was in response to criticism by Minister of Environmental Protection Amir Peretz who called on Bennett to stop waving cucumbers and start saving factories.

Bennett said that he would continue to meet manufacturers in an effort to draw up an specialized action plan to meet their needs. "Exporters are harmed by impossible regulation, from municipal bylaws through proportional and inconsistent environmental legislation, which harms their competitiveness in the world."

Published by Globes [online], Israel business news - www.globes-online.com - on December 12, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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