Israeli has survived two election campaigns in 2019 and still there is no end in sight and the formation of a stable government. Meanwhile, the economy seems to be surviving, almost in spite of everything.

True, unemployment has risen slightly. As ever, there has been a mild threat regarding the level of Israel’s international credit rating. And the governor of the Bank of Israel declared yesterday that:

The next government will face a significant challenge in the budget deficit and low productivity in the Israeli economy.

Exactly how much needs to be cut is up for debate. Estimates over the summer centred around 14 – 15 billion shekels – over US$3.5 billion.

So let’s just try to give that sum a little bit of perspective.

In Israel’s first government, just 16 ministers were appointed. By March 2019, that number had almost doubled to 31. Not everyone has a portfolio, but that is the price of having a secure coalition government.

Hmmm. We are told that the annual cost of a government minister’s bureau is about 5 million shekels. Assume just five of those ministers are redundant, than that is a saving of around 25 million shekels per annum. Add on the overheads and you are probably looking at an “investment” of taxpayers’ money at around 130 million shekels.

More perspective? Earlier this year, Zvi Eckstein, a former deputy governor of the Bank of Israel, and labor economics researcher, Sergei Sumkin, published a report. They concluded that: –

Israel’s bureaucratic red tape is costing the state NIS 14 billion ($3.9 b) a year; 1% of its gross domestic product (GDP).

That 14 billion seems to be a very familiar number, no?

I recall a meeting from many years ago, when I was working in the Ministry of Health as a junior economist. We were tasked to come up with ideas for how to cut the budget. The discussion was long and varied. Nobody was interested in my thoughts about reducing the number of civil servants…..let alone the ministerial aides.