The Start-Up Crisis
One of the major sources of criticism for Prime Minister Benjamin Netanyahu and his handling of the coronavirus has specifically revolved around his handling of the economic toll the crisis has taken on the country. Currently, the Israeli unemployment rate sits at 21%, leaving over 800,000 Israelis out of work, an increase of over 600,000 since before COVID-19. And, despite the government’s numerous stimulus plans and the state’s unemployment benefits, there are still thousands of Israelis struggling to put food on their tables, especially the self-employed.
Israel is famously known as the “Start Up Nation” for having the largest number of startups per capita in the world, around one startup per 1,400 people. In fact, according to a 2019 study 13% of the Israeli workforce is self employed. However, what was once considered a badge of glory for the country, and a testament to its innovative atmosphere, is now a major dilemma in the midst of the national pandemic. Self-employed citizens make up about 20% of the unemployed in Israel. This is significant because self-employed individuals are not eligible for unemployment benefits according to the National Insurance Institute of Israel website, which means that not only was 13% of the Israeli economy out of work from one sector alone, but the unemployed of that sector, roughly 175,000 people, were not receiving significant financial support for months. What they did receive was small government payments as part of a larger country wide stimulus plan, which has been widely criticised as insufficient and inefficient, as the structure of the plan involved giving small amounts of money to a large group of people without evaluating the needs of the recipients. In a statement about the plan, Roee Cohen, the head of Lahav, Israel’s Chamber of Independent Organizations and Businesses, said “It is a surreal decision to give money to people who don’t need it, instead of people who are crying out. The self-employed sector is bleeding. Enough with the cheap populism...The streets are on fire. We need real solutions.”
As of now, in response to the above issue of the self-employed citizens’ lack of appropriate support, among other issues with the previous stimulus plan, a new plan has been drafted that provides significant financial help to those who really need it. Additionally, the plan called for the expansion of unemployment benefits to the self-employed, which is a good start to a more structured economic recovery plan, but it was still called a “short term solution” by Former Bank of Israel deputy governor Nadine Baudot-Trajtenberg, who has criticized Israel’s handling of the crisis. In a recent interview, Nadine said that the Prime Minister “is just an opening of the purse. We haven’t seen a program”, and that for long term success, we need a sufficient real plan in place. Otherwise, circumstances will only relatively improve for short amounts of time, and thousands of Israelis will still be met with challenges like paying their bills and food insecurity. “Everybody now is pretty aware that we’re going to be living with this crisis for at least a year,” she said. “The virus is not going anywhere”, and the design of the policies must be thought through “a lot more than what the government has done.”