Large-scale dismissals of State employes and civil servants is the price Israel is paying for economic recovery. The Treasury this week proposed a budget of $21.2 billion for the next fiscal year which incorporates a $500 million reduction in government expenditures.
If it is adopted, another 5,000 civil servants will be fired in addition to the 6,500 laid off earlier as a result of a Cabinet decision last July on measures to stabilize the economy. Only 900 of them were employed by the government. The rest worked for a variety of public institutions.
Government spokesmen said the lay-offs caused less social unrest than feared because the terminated employes received generous severance pay. The overall economic program proposed by the Treasury envisions the reduction of the government and civil service work force by 10,000.
Treasury officials said today that the number of lay-offs next year will depend on the extent of cuts in defense, education and health ministry spending.
Premier Shimon Peres maintains these three ministries have absorbed all the cuts they can. He has asked Finance Minister Yitzhak Modai to look elsewhere for further economies. Health Minister Mordechai Gur and Welfare Minister Moshe Katzav went on television last night with the same argument. Modai maintains the cuts must be made or the economic recovery program will fail. Senior economists tend to support him.
In addition to budget cuts, the Shekel is in for further devaluation. It stands presently at 1,500 to $1.
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