To begin with, unemployment fell by 0.3% in January while exports rose and imports of raw materials grew by a smaller margin. The shekel shows signs of beginning to strengthen. And perhaps best of all, the markets have shown a strongly positive reaction to the appointment of Binyamin Netanyahu as Finance Minister in the new government.
Netanyahu has spent the five days since his appointment making all the right noises and showing every sign of understanding how to get Israel out of its recession. In fact, out of all his statements and ideas, only one small item bothers me.
When he officially took over the ministry yesterday, he indicated that he would lay-off about 30,000 civil service workers. That amounts to adding an additional 1% to the unemployment totals. That is a drastic move that is mostly unwelcome when government policy is to fight unemployment.
To be sure, there is lots of waste in the civil service, and positions do need to be greatly trimmed. But let us not forget that three weeks before Netanyahu's announcement, the out-going finance minister, Silvan Shalom, agreed without a fight to a 10% wage increase for senior management at the Israel Electric Corporation - already the highest paid civil servants in the country, earning about eight times the national average salary.
Netanyahu understands the need for austerity. He supports an 8-10 billion shekel cut in the 2003 budget and a realignment of government spending and investment priorities. He supports liberalization of foreign currency regulations, and even their outright elimination. He supports privatization of government-owned companies. And he supports trimming the waste from the civil service.
But I wonder whether it is necessary to cut 30,000 jobs rather than a more manageable 5000-8000. The savings that would accrue by cutting the rest could be gained by cutting the salaries of the highest paid civil servants to a more reasonable level. Instead of earning NIS 68,000 a month, the directors of the Israel Electric Corporation should be earning about a third of that. Instead of the average salary at Israel Electric being in the 16,000 shekel range, it should be in line with the national average, which is about one third that amount. Instead of members of Knesset earning NIS 30,000 a month, they should be earning about one third to one half that amount. The same goes for cabinet ministers, ministry employees (particularly in the Defense Ministry) and employees of government corporations.
One of the major problems in the Israeli business culture is that employees believe the job serves them. Instead, workers - especially those in service industries or in the civil service - should have the attitude that they serve the public. Until now, government bureaucrats generally get their jobs as sinecures, positions where they enjoy the perks and high salaries while they indulge in long lunch breaks and longer coffee breaks, and then decide to go on prolonged strikes every year or so.
If the civil service paid salaries in line with similar positions in the private sector, the people holding those jobs would be there because of a sincere desire to help others - not themselves. This could lead to higher quality civil servants, and higher quality government service, while at the same time, putting a serious dent in government expenditures.
And it would mean that the government would not have to lay off 30,000 people while civil service bosses continue raking in huge salaries before even larger benefits.
Binyamin Netanyahu is a smart leader who has a pretty good idea of how to get the economy back on the right track. But in order to make his vision complete, he must inject an additional measure of logic into his thinking. Cuts need to be made in the civil service. But those cuts should be aimed at waste, rather than at people, and the first place that waste can be found is in the astronomical salaries senior management take home from their sinecure jobs.
Copyright 2003. All rights reserved. Yehuda Poch is a journalist living in Israel. Reproduction in electronic or print format by permission of the author only.
