Vision to Reality: The Reut Blog

The failure of the “Agreed Payment Holiday” policy demonstrates the need for partnership between sectors as a tool for implementing changes in the labor market.

Writing in The Marker, Vice President of the Manufacturers’ Association, Ginal Ruby, criticizes the “Agreed Payment Holiday” policy which as been adopted by the Ministry of Finance due to the economic crisis.

The Ministry of Finance attempted to implement a policy of increasing employment flexibility like in Europe in which, instead of being fired, employees take leave from work while still being supported by the state. The logic of the policy is, according to Ginal, to keep the ‘job’. “Employees keep their jobs, employers keep their workers and business flexibility, and the state prevents the decline in personal consumption and the social and economic costs that accompany high unemployment”.

The policy in Israel was activated despite opposition from the business sector. Although it is the primary need of the industrial sector, the policy was restricted to the periphery and large factories and did not allow the possibility of matching the pattern of a shortened work week. According to Ginal, this destroyed the policy’s effectiveness and led to only two companies taking advantage of its benefits. The policy thus failed to fulfill its purpose to prevent widespread layoffs in the industry.

Failure of the policy shows that:

• The unique context of Israel’s labor market cannot be ignored – the Ministry of Finance switched a successful tool used in the world without adjustment to Israel’s unique characteristsics.
• Cooperation between employers and employees is essential – the Ministry of Finance set the policy without consideration of the business sector needs.

The failure of the policy also demonstrates the importance of the “roundtable” as an institution that allows a partnership between the government, workers and employers, In our work at Reut, we examine how this institution can facilitate the implementation of models from around the world (in particular the Flexicurity model) in Israel through an ongoing dialogue between the main players in the public space.