Israelis dig twice as deep for goods

Press, 13 October 1983, Page 10

Israelis dig twice as deep for goods

NZPA-Reuter Jerusalem

Israelis are paying twice as much for dairy products, bread, cooking oil, meat, and poultry from today in

sweeping new austerity measures adopted to shore up the country’s shaky economy. Some 12 hours after taking office Yitzhak Shamir’s coalition Government of Right-wing and religious parties devalued the shekel 18.7 per cent against the United States dollar, raised petrol prices 23 per cent and halved Government subsidies on basic foods and services.

Shoppers emptied food stores and car owners filled up their tanks at petrol stations as news spread of imminent price rises. Public transport fares, electricity and water rates are soon to be doubled, as well. The measures have touched off sharply conflicting public reactions. The secretary of the powerful Histadrut trade unions federation, Mr Yeruham Meshel, asserted that the economic moves had hit hardest against workers and be said that he would call

for a two-hour general warning strike next week.

The Opposition Labour Party leader, Gad Yaacobi, called on the Finance Minister, Mr Yoram Aridor, to resign, saying that the new steps had been a “180 degree turn” and proved that his previous policy had totally failed. The Budget Director, Mr Yaakov Gadish, said that he had submitted his resignation but a Ministry spokesman said that the Minister was trying to persuade the official to stay on.

Government sources said that several Cabinet members, including the Finance Minister, had demanded even tougher measures such as a devaluation of 30 per cent and a larger cut in public subsidies.

The most controversial element in Mr Aridor’s austerity plan is his announced effort gradually to cut the traditional indexation provision in the national wage system. This automatically reimburses the salaried worker for 80 per cent of the inflation rate, now 130 per cent.

The trade unions have said that there could be no compromise on that arrangement while industrialists and economists have said that inflation could not be curbed unless it were done and salaried incomes cut.

The business community has also called for more cuts in Government spending.

The Tel Aviv Stock Exchange was again ordered closed today for the fourth successive day and officials said that they expected to resume trading on Sunday.

the Government and commercial banks worked out an agreement yesterday to support bank shares by which they will virtually become dollar-linked bonds redeemable after five years. It was the heavy sale of bank shares that touched off near-panic among investors last week. Directors of four Israeli commercial banks called a news conference yesterday and said that they wanted to assure the public their banks were sound investments.