One-fifth of Israeli workers currently furloughed from their jobs have no interest in returning to the workforce, Finance Ministry Director-General Keren Turner-Eyal announced on Tuesday.
Speaking at a meeting of the Knesset Finance Committee, Turner-Eyal said that the government's financial aid plan, which extends unemployment benefits through June 2021, incentivizes many citizens not to work.
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Turner-Eyal said that employees refusing to return to work from furlough would be considered employees who resign willingly, and therefore be entitled to unemployment benefits for only three months from the day they inform their employers of their decision.
Turner-Eyal took a stance against the idea of Israel adopting Germany's model, which allows partial unemployment benefits to be paid concurrently to an employee's salary or wages, arguing that the Germans themselves were not satisfied with the plan and that it could cost Israeli taxpayers "billions," as some employers would cut back on workers' hours.
Another possibility under consideration in the Treasury is to issue grants to workers who return to their jobs at reduced salaries or wages. Such grants would cover the pay gap and could be issued by the National Insurance Institute.
As of mid-August, there were 414 unemployed Israelis, a slight drop from July. This equates to 10.4% unemployment, less than a third of the unemployment rate at the peak of the coronavirus crisis in April of this year, when it stood at 35%.
Turner-Eyal said that 45,000 businesses had applied for 2.6 billion shekels ($764 million) worth of grants to subsidize bringing employees back on board, but that as of Tuesday, only 13% of those grants (350 million shekels or $103 million) had been paid out.
In addition, Turner-Eyal opposed another lockdown, saying, "We need to avoid that. We need to adopt different steps [for different locations] in order for the economy to recover."
As for Israel's budget deficit, Turner-Eyal predicted that it would reach 13.4% by the end of 2020, but could be bigger if the government opted for another lockdown. Currently, the national deficit stands at 8.1%, nearly three times what it was prior to the coronavirus pandemic.
Turner-Eyal also objected to a proposal from Professor Avi Simhon, an economic advisor to Prime Minister Benjamin Netanyahu, to drop VAT to 12%, a reduction of close to one-thirdd.
"Most economists think that this is not the time to lower VAT," she said.
Also on Tuesday, the Finance Ministry published date indicating that the housing market slowed down in July. According to a report from the ministry's chief economist, home sales for July stood at 9,700, 7% fewer than in July of 2019 and 17% fewer than in June 2020.
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