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Tuesday, February 18, 2014

MKs Slam BOI Karnit Flug Claims That haredim Pulling Growth Rate Down

Dr. Karnit Flug

Haredi Knesset members slammed comments made by the Bank of Israel governess, according to which rising birth rates among haredim pose a threat to the growth of the Israeli economy.
"In a functioning country, a clerk, no mater how high-ranking, should be fired after making such a severe statement," Shas Chairman MK Aryeh Deri said of Bank of Israeli Governess Dr. Karnit Flug.
Flug recently claimed that an ageing population coupled with the increasing birth rates among haredim and Arabs are exacting a toll on the growth rate of Israel's economy, a trend she warned would increase in severity in upcoming years.

According to the Shas leader "the Bank of Israel governess did something that should not be done, throwing garbage and shame on entire sectors of Israeli society, only to excuse to the state of the economy she is responsible for. It is unconceivable that a public servant will make such horrible statements, even if it is now in fashion to attack the haredim."

Seditious and insidious campaign

United Torah Judaism Knesset members also had harsh words for Flug. "It is a very serious matter when the seditious and insidious campaign against the haredi public has reached the allegedly professional echelon," MK Meir Porush. "It is very sad that as part of the spirit of incitement you can throw all of the country's ills onto the haredi public."

His fellow party member, MK Moshe Gafni sent the governess a clear message: "Before making such statements, I recommend she inquire into how much of the haredi public want to work and what are the obstacles being placed in their way by the government and private employers.

"The government isn't lifting a finger… and has consistently refused to promise benefits through legislation. Even those haredim who do have the proper training and paper work get negative responses from government authorities because they are haredim. Before she points fingers she should check her own backyard."

MK Yaakov Asher, also from United Torah Judaism, said "this isn’t economics – its politics… I would like to remind the governess that the role of the Bank of Israel is to serves the public, not to change the public to better fit the economy. She should examine the bank's policies… and the fact that more and more people are on the threshold of poverty in wake of the never ending budget cuts against the weakest sectors in Israel."

Concerning trends

Governess Flug's comments were made in a conference held by the Israel Bureau of Statistics after growth dropped to 2.8 percent at the end of 2013 - down from a 3.8 percent rate the previous year. The governess claimed that the main reason for the stifled growth was demographic changes in Israel, first and foremost the growth of the haredi and Arabs publics, as well as a rise in life expectancy.

As a result of these trends, Flug claimed the labor force's growth rate will continue to decline in the upcoming years, from 2.2 percent to 1.2 percent. The process will be accented by a decline in birth rates among working populations and a rise in those of the less employed.

Flug stressed that if countermeasures will not be taken, growth will decline because a lack of high-quality manpower.

"These two trends (an ageing population and a growth of the haredi and Arab populations) will take a 1.3 percent toll on Israel's annual growth rate unless very effective policy steps will be put into action."

In a slightly more optimistic tone, Flug noted that a slight improvement has been registered in employment rates among haredi men: "If this trend will continue, it will mitigate the declining growth rate. However, if parallel steps are not taken to improve human capital, the pay off will be low."

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