Afternoon Tea in Jerusalem Blog

Life in Israel

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Israeli commercial life and society

In addition to my work as a business coach, one of my interests is blogging about life in Israel. This is a country full of contrasts – over eight million citizens living in an area the size of Wales. You can see snow and the lowest place on the globe in the same day. Although surrounded by geopolitical extremes, Israel has achieved a decade of high economic growth. My work brings me in contact with an array of new companies, exciting technologies and dynamic characters. Sitting back with a relaxing cup of strong tea (with milk), you realise just how much there is to appreciate in the Holyland. Large or small operations, private sector or non profit, my clients provide experiences from which others can learn and benefit.

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The Israeli economy starts its new year, in September

The Jewish calendar ends up placing its new year around about the second or third week of September. In Israel, a country of 8.7 million people of whom 75% are Jewish, this is always a time for reflection on changes in its economy.

According to the country’s Central Bureau of Statistics in Jerusalem:

  • The average income per household stands at 18,671 nis ($5,300) a month before taxes, one of the leaders in the region.
  • Most Israelis own their homes, with 67.6% living in an apartment they own and 39.9% paying mortgage.
  • 88% of Israelis said they were very satisfied or satisfied with their lives. Some 1.1 million (21%) feel stressed always or often. 34% said they have a hard time covering their monthly expenses.

Moving from the individual to the national level, there seems to have been a downturn in the growth figures in the second quarter of 2017. However, given the low rate of unemployment (under 5%) and the encouraging performance of exports. growth for 2017 should still come in at around a healthy 3%.

So where are the weaknesses?

First of all, much of the growth is led by a continued sharp expansion in personal consumption. There was a 6.5% in the last quarter alone. In laymen’s terms this means that the economy is being powered by the consumer and not by the creation of new wealth (through production).

Next, vested interests still dominate key sectors of the economy. I have written in the past about how the powerful unions at the docks ensure that the costs of imports are forced upwards. This week an exposure on the cost of kosher authorisation determined that this was a 2.4 billion nis annual ‘market’ (US$0.7 billion). This includes the supervision of slaughter houses, restaurants, imports and much more.

The key players here are the various rabbinical houses in the public sector or those affiliated with political parties. There is a strong whiff of ‘jobs for the boys’. A relatively new orthodox organisation called Tsohar is trying to challenge these closed practices. If it were to succeed, this could allow food prices to drop by anything up to 10%.

And finally there are the 120 members of the Kenesset, the Israeli Parliament. If you are not a minister, you are allocated a budget of 94,000 nis annually to do what you want, so long as it helps connect you with potential voters. However, there is no law that says you have to detail where that money goes. And if you are one of the few, like Miki Zohar, who overspent, there are no emphatic sanctions.

Thus, individual parliamentarians spend tens of thousands of shekels on Facebook advertising, sms announcements, surveys, entertainment and much more. A near carte blanche, where there is little transparency. It is like clerks in a company having ready access to the petty cash box.

And as we all know, except for those who do not want to admit it, when the petty cash box becomes open territory, the rest of the establishment becomes the victim in all kinds of other ways. A pathetic slippery slope. Sad for the other 8.7 million people.

Bidding all my readers a SHANA TOVA and a happy new year.

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