Why Israeli business feels abandoned by its government, and what the CEO can do
Governments around the world have had to tackle the corona virus on two – at times, seemingly contradictory – fronts; the protection the health of its people and protecting their economy.
The former started through trial and error. It would be unwise to criticise the mistakes of some leaders. Who was to know better? But when it comes to the economy, some nailed it from the get go, and some did not. Sadly, Benjamin Netanyahu’s team in Jerusalem is firmly positioned in the second grouping.
A table in an Israeli weekend newspaper surveys 13 countries, including the USA, UK, Germany, Hong Kong and South Korea. All have pumped cash directly to companies and individuals. Keep people employed. Enable them to purchase from shops. So far, that tack has had an effect, without being able to stave off a recession.
The prime Israeli response revolves around handing out loans. Listen to leaders of Israel.Inc, business pundits, head of a Kenesset supervising committee, my clients, C-Class execs I have spoken to and they all repeat the same four points:
- Why loans? They still need to be paid off
- The paperwork is cumbersome
- The banks have not stuck to government interest rates
- The approval process is taking too long.
And after approximately six weeks into the crisis, not one special loan has been approved.
The government has also promised a two-phase grant to self-employed traders. Sounds good. There are tens of thousands of such people in the country, so I do not know them all. However, as a business mentor and coach in the Jerusalem area, not one of my clients is eligible, including myself.
Why? There are four key criteria, each containing a sting. For example, the starting base has to be less than 240,000nis income in 2018. This is not very high, relatively. Fine. Yet, one customer of mine received much more than that, only their expenses were also very high. They will end up with zilch, despite being in a desperate situation.
To make matters worse, the Israeli government has not allocated handouts to employ people. A company told me after laying off 25% of its staff, their is no immediate nor obvious help in sight from the distributor of taxpayers’ money.
As I wrote last week, these policies have been created by senior civil servants and politicians, who generally have never created a business nor even worked in commerce. They are not living under the threat of having their salary cut, as companies try to save themselves. They have not had colleagues sacked, even though unemployment has crossed the 20% barrier. What do they know about what people need?
Let me offer there practical and effective pieces of advice for any CEO reading this.
- Complete you tax returns for 2019 right now. Most of you will be due a rebate. Go and get it now, rather drag out the submission until the second half of the year, as often happens.
- If you want to secure a loan, obtain the help of somebody who knows the system. Do not waste your valuable time, by trying to do it by yourself.
- I have written previously about corona offering business owners a chance to “reset” their company. Actually, it is more than that. For many, matters are so bad that this is when you can realise just how free you are to do what you want. You no longer have to abide by the old rules and restrcitions.
I am sure the Israeli government does care. However, we have Prime Minister in Jerusalem, who has to spend as much time fighting corona as he does in preparing to answer four charges of corruption. The Health Minister is deemed inept by all people I know and all media I read. The Minister of Finance has little clout, as he is about to leave politics.
So who in Israel has time for the small independent businesses, that make up 95% of all commerce, and can really make a difference? So far, nobody has answered the call and that is unacceptable.