66 Friday, Jahum 10, 1986
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Austerity Erodes Wages
Jerusalem (JTA) — The result , another devaluation is imminent
of Israel's austerity economic are groundless.
The finance minister contendect
program is the erosion of wages.
According to figures released at that the government's economic
year's end by the Central Bureau policy did not cause the recent
of Statistics, the gross wages of rash of financial difficulties in
civil service workers were down . various companies -though he ad-
22 percent in the second half of mitted that the economic program
1985 compared to the first half. did not help the companies. He
The erosion for wage-earners in predicted that the slump in the
building industry will not get any
other sectors was 17 percent.
In the past few months, the real worse. But he saw little hope for
value of wages has been lowered textiles except as an export in-
to the levels of 1977. Those of pub- dustry ecause the economic .
lic employees sank to the 1967 program allows for no growth in
levels. In some quarters these de- •the domestic market.
Modai stated flatly that if prices
velopments are hailed as a sign of
the successful battle against in- rise as a result of the withdrawal
flation. Housewives and other of government subsidies, he -
takera dim view. They say wage would encourage ,competing im- -
earners have made the greatest ports to keep them down. He said
sacrifice to make the economic the tax burden has shifted from
program work. Private. consump- wage-earners to the self-
employed.
tion is down by two percent.
He plans income tax reforms
The focus of the new plan was to
freeze the shekel-dollar exchange which will lower taxes and in-
rate at 1,500 shekels to $1. Ag- tends to change the structure of
reement was reached with His- the national insurance plan so it
tadrut on wages while the man- will reflect the recipients' income.
According to Patt, however, the
ufacturers agreed to government
price controls. The government proposed budget for the next fiscal -
therefore was able to cut its year is as bad as the current one
budget, less by reducing programs which he said increased un-
than by slashing price subsidies employment, plunged the
and imposing new taxes. But in- economy into a deep recession,
terest rates_ were _kept at a rela- endangered high-tech industry
and investments and decreased
tively high level.
As a result of the agreement exports.
Patt charged that instead of
with Histadrut, wages will im-
using recent economic aid from
prove in'the next few months.
Meanwhile, they are about to the U.S. to introduce tax reform,
bid goodbye to the old shekel and the government raised taxes.
welcome the new. As ofJan. 1, the
old 1,000 shekel note will be re-
placed by a new one shekel coin
worth about 66 cents, or 1.5 to the
dollar. This does not represent an Research Fund
upward valuation of the shekel; it
Jerusalem (JTA) — Israel and
is simply a matter of removing
Britain may soon set up a $50
three zeroes.
Meanwhile, Finance Minister million joint research fund for sci-
Yitzhak Modai offered an op- entific research.
Sir DaVid Phillips, chairman of
timistic assessment of the gov-
ernment's economic program dur- the advisory board of the British
ing the past year and an upbeat Research Councils, the British
preview of the economic climate government's foremost science
in 1986. But his Likud colleague, adviser, said here that he would
Minister of Science and Develop- "warmly recommend" increasing
ment Gideon, Patt, strongly dis- Britain's scientific cooperation
with Israel. He told Israel's Minis-
sented.
. Patt was sharply critical of the ter of Science and. Development,
•austerity economic policies en- Gideon Patt, that his-govern-
gineered in large measure by ment's reply to the proposed joint
Modai and claimed their per- research fund could be executed
ceived success was only arithme- "within a week."
Until now, Anglo-Israeli scien-
tidy psychological. He warned
that the inflationary spiral, pre- tific cooperation has been limited
sently under tight control, may to exchange visits by several sci-
entists each year.
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Modai confidently predicted an
inflation rate, of between 20-30
percent in 1986 — compared to
the triple digit rate lessthan a Legal Meeting.
year ago and sawa monthly rise of Set For Israel
the consumer price index not ex-
ceeding 1 2 percent.
New York -- Justice Harry
The rate for December .1985,
Blackmun of the U.S. Supreme
will probably be just over one per- Court will deliver the keynote ad-
cent. The 'country has reached an dress during the Fourth Interni-
economic cool-down with an infla- lional Legal Conference in
tion rata similar to that of several Jerusalem on March 13. -
European countries, Modai said.
The conference is sponsored by
He said the Treasury intends the Hebrew University's Faculty
gradually to eliminate price con- of Law, New 'York University's
trols, though it will retain them in School of Law and the Lawyers
such sensitive areas as rents and Division of the American Friends
the prices of fruits and vegetables. of the Hebrew University.
Modai held out the promise of "a --Judge Meir Shamgar, president
shekel as \stable as the dollar," of the Supreme court of Israel, is
implying indirectly that rumors also one of the participants.
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