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Israel Minister Presents Three-year Austerity Program to Cabinet

A second special session of the Israeli Cabinet has been scheduled to study the three-year austerity program for Israel proposed by Finance Minister Pinhas Sapir to set the country’s economy on an even keel and eliminate its $500, 000, 000 a year unfavorable trade balance.

The Cabinet considered the Sapir plan at its regular meeting yesterday and again, in special session, last night. Representatives of the Mapam Party were said to be hostile to several of the measures proposed by the finance minister and representatives of Achdut Avodah, another member of the coalition which is closely aligned with the Mapai Party in an alignment, were said to be hesitant. Indications were that adoption of the program would only follow protracted and difficult negotiations.

The Sapir program, as outlined to the Cabinet, seeks stabilization of the country’s economy over the next three years chiefly by improving the efficiency of industry and by curbing the inflationary spiral by binding wages to productivity. Mr. Sapir reportedly warned the Cabinet that unless the Government took a firm position towards both industry and labor and fully implemented all phases of his plan, Israel’s economic situation would continue to deteriorate and unemployment would grow. Mr. Sapir’s program, as presented to the Cabinet in the two sessions yesterday, was based on the following key points:

1. No wage increases over the next three years unless tied to increased productivity.

2. Payment of the cost-of-living allowance to be fixed only once a year over the next three years instead of every six months, as in the past.

3.Israel legislation to prevent strikes such as those which recently tied up the Ashdod and ports and seriously interfered with Israel’s exports.

4.Engagement of industry to increase its productivity and penalization of industry for failing to increase its efficiency and its output.

Today, the Haaretz, a newspaper which represents centrist views, and the English-language Jerusalem Post editorially supported Mr. Sapir’s program as the route to a viable Israeli economy. At the same time, Al Ha’Mishmar, organ of the Mapam Party, attacked the finance minister, accusing him of sacrificing the interests of the workers without demanding equivalent sacrifices from industry and big business.

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