First Tremors of What Might Become a Severe Economic Recession

Israel is feeling the first tremors of what may become a severe economic recession as the government, struggling to cope with inflation and growing deficits, has delayed providing funds to local municipalities.

Employes of the Haifa municipality, who went on strike two days ago to protest the non-payment of their October salaries, were joined today by Tel Aviv municipal employes. The League of Local Town Councils is threatening a nationwide one-day strike next week unless government funds are forthcoming to pay salaries.

High school teachers all over the country sent their pupils home at 10 o’clock this morning after learning from their banks that their October pay, due November I, had not been credited to their accounts. Teachers are paid by the local municipalities.

In Tel Aviv, those employes whose checks are paid through the Bank Leumi returned to their jobs after the bank agreed to loan the city sufficient funds to cover its payroll. But the two other major banks, Bank Hapoalim and the Israel Discount Bank, refused to advance more cash, and workers paid through those institutions walked off the job. The employes include hospital administrators and sanitation workers.

The Tel Aviv and Haifa town councils and those of a number of Arab municipalities have already warned the Interior Ministry that they will not be able to function unless the monthly sums due them are paid.

UNEMPLOYMENT AT FIVE-YEAR HIGH

The bad economic news was compounded by reports that unemployment in Israel has reached a five-year high of 90,000, five percent of the work force. More bankruptcies are feared. Last week Maof, a charter airline, and the once giant Ata textile combine went into receivership.

Meanwhile, the Bank of Israel believes Israel’s economy will get worse before it becomes better and that the country already is in an economic recession. A survey by the bank of 113 Israeli companies engaged in manufacturing, construction, commerce and transportation, detected a slowdown, particularly in the commerce and construction branches in the third quarter of the year. However, the bank predicts on increase of exports as a result of decreasing local demands.

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