Finance Minister Yigal Cohen-Orgad says he may agree to a Histadrut demand for an interim cost-of-living allowance payment in the next few weeks to compensate wage-earners for the sharp rise of inflation which wiped out their previous COL increment. The next regular payment is not due until January, 1984.
Nevertheless, the Finance Minister, in a recent television interview, painted a gloomy picture of the economy for the immediate future. “Private income and standards of living will go down. To our regret, real salaries will have to fall by some 10 percent during 1984,” he said. He also predicted “pockets of unemployment” because of layoffs in the public and private sectors.
Cohen-Orgad said his first economic priority will be to reduce Israel’s widening balance of payments gap which, if accomplished, he maintained, would result in “a very gradual” decrease of inflation.
But MK Adi Amorai, chairman of the Labor Alignment caucus in the Knesset’s Finance Committee, took sharp issue with Cohen-Orgad’s priorities which he characterized as “fighting yesterday’s battles instead of tomorrow’s.” Amorai agreed with other critics of the government’s economic policies that the danger of “hyper-stagflation” (economic stagnation coupled with high inflation) was too great to concentrate on the balance of payments.
Former Finance Minister Yigael Hurwitz said the sharp rise in the cost-of-living index — 21.1 percent last month — ushered in the economic crisis he had warned against so often in the past.
There was also a dispute over the extent of anticipated unemployment. While some sources are predicting at least 100,000 jobless, Cohen-Orgad believes the figure will not go much above 18,000 Israelis because the lay-offs will affect many of the 80,000 Arab day-workers from the occupied territories.
According to Labor Ministry figures, there are no signs as yet of unemployment among the West Bank workers. Last month, employment agencies in the territory were able to fill only 30 percent of the job openings offered by Israeli firms.
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