MK Moshe Gafni: 'Economic Gap in Israel is Growing'

First session of IDI's Hurvitz Conference on Economy and Society highlights Ministry of Finance strategic plan, need for improved public transportation, increased housing supply and better education and employment opportunities for Arabs, ultra-Orthodox

The Israel Democracy Institute's Eli Hurvitz Conference on Economy and Society launched today with a session focused on, "Long-term Vision: The Strategic Plan of the Ministry Of Finance." The ministry's two-year strategic plan was first revealed at the conference by Director-General Shai Babad, who said the plan is based on two pillars or goals: Reducing inequality and increasing growth and productivity.

To achieve these goals, the ministry will focus on 1) increasing the housing supply; 2) enhancing access, quantity and quality of public transportation to help tackle the current infrastructure crisis; 3) creating a better and more streamlined regulatory environment to encourage business; 4) integrating greater innovation and simpler electronic processes for entrepreneurs; 5) reducing economic gaps; 6) exposing Israeli businesses to greater international competition; 7) investing more in those with socioeconomic disadvantages; and 8) lowering the cost of living, among others.

Comments and responses:
MK Moshe Gafni, Chairman of Knesset Finance Committee: "The gap is not narrowing. In fact, it is growing."

Udi Adiri, Head of the Energy Division in the Ministry of Finance: "By 2030, Israel's goal is to have a 40 percent increase in public transportation, with 25 percent more people using it."

MK Prof. Manuel Trajtenberg, Israeli economist and former chair of the Planning and Budgeting Committee of the Council for Higher Education: "Our economy is going through a slow down – and this is not a cyclical matter. We have tapped into the full potential of the drivers of economic growth. … We are limping." He called on the government to provide housing options for all range of customers in Israel, to invest more in education, then commenting on the need to reform the political system for the sake of the economy. "We have a disease in Israel: political instability," he said.

Shraga Brosh, President of Manufacturer's Association of Israel: "We are currently in a dramatically anti-business environment in Israel. … We are regressing just as the world markets are thriving."

Alan Feld, Founder and Managing Partner of Vintage Investment Partners said that Israel does not invest enough in its university research. He noted that at Johns Hopkins University in Maryland there is an annual research budget of $2.2 million for around 11,000 students, whereas in Israel we invest around $700 million for 190,000 students, which is less than one-third.
"Universities should serve as fertile ground for innovation in Israel," said Feld.

In conclusion, Prof. Avi Simhon, the Prime Minister's Senior Economic Advisor, noted that Israel should be concerned about its future due to disparities between its three major sectors: Jewish (non-Orthodox) individuals, the ultra-Orthodox and the Arab population.

In 2009, the majority of those who were active in the labor market were non-Orthodox Jews. By 2029, non-Orthodox Jews will constitute less than 50 percent of the total sum of people joining the labor force.

"The earning capacity of these groups is very different," said Simhon. "If today, Israel is 15 percent under the average OECD level in GDP per capita, this is going to be 29 percent. Almost double."

 The first session took place following opening remarks by IDI President Yohanan Plesner, Conference Chair Eugene Kandel and Minister Zeev Elkin.

"We at IDI are determined to work together with the government, private sector and general society in order to maintain the ideals of a democratic nation," said Plesner. "If we want to maintain our relative advantage over the dictatorships around us … we need our democracy to be standing tall."

Kandel said, "The public wants results," and said currently there are very few elements that are outcome-oriented. "Even Israelis need to make the distinction between processes and outcomes."

Elkin said that everyone knows that in Israel we deal with an element of instability, but he does not think there is any simple solution to this problem. He said he believes that the instability is partially reflective of the unique situation in Israel, which is multicultural, multiethnic and has citizens of multiple religions.

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About the Eli Hurvitz Conference on Economy and Society
The Eli Hurvitz Conference on Economy and Society (formerly the Caesarea Forum) will take place May 24-25, 2016 at the Dan Hotel (Lehi St 32, Jerusalem, 97856) and bring together leading economists, government ministers and officials, prominent business people, public servants, academic experts, and other top representatives from the public and private sectors. In total, there will be 70 people sitting around the able, engaging in deep, quality discussions and delving into the most important related topics on the public agenda.

This year, the conference will focus on the challenges of government and the economy, and the influence that political stability has on the ability of the government to advance reforms and impact the performance of the business sector and the effectiveness of civil service. It will also look at the right way to integrate innovation into the government ministries, the dynamic and rapid changes of the functioning of the workforce, the collapse of the financial market, the result of people retiring at older ages, and the role business press plays in Israel.