A request by industry for a free hand to raise prices up to five percent was rejected yesterday by Finance Minister Pinhas Sapir and Minister of Commerce and Industry Haim Barlev. The rejection does not preclude price rises but makes all increases subject to scrutiny by the government price authority. Industry spokesman Mark Mosevics, president of the Manufacturers Association, had asked that only increases above five percent be subject to review by the price authority.
Mosevics argued that unless industrialists received incentives, Israel’s export trade would be adversely affected. Wages are due to rise by 16 percent over the next two years apart from the new minimum wage provisions. Some unions are already bidding for 50 percent raises. The price authority, however, does not recognize increases in wages as one of the criteria which determines the justification for price increases. This policy is intended to discourage employers from granting excessive wage hikes and then use them as a pretext for demanding higher prices for their goods.
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