Gov't productivity program leaves out 82% of factories

Shai Babad  photo: Flash 80

Grants will be available apply only to plants in national priority areas and Jerusalem.

Israeli industrialists are calling on the Ministry of Economy and Industry and the Ministry of Finance to urgently change the criteria for joining the new program for raising productivity in industrial plants through NIS 230 million in grants over three years. Plants classed as small or very small have waited a long time for government assistance in boosting productivity, but the criteria that have been set prevent them from receiving the grant.

The details of the plan were presented recently in a circular signed by Ministry of Economy and Industry director general Shay Rinsky. The circular states that enterprises with a sales turnover of up to NIS 200 million a year will be able to obtain a state grant of up to NIS 3 million in order to upgrade equipment, enhance human capital, promote innovation, make more efficient use of resources and raw materials, etc.

Many small and very small enterprises have been waiting for a long time for the new program, regarding it as an opportunity to streamline production processes with state aid. In the past, many of them found themselves excluded from other state aid programs for manufacturers they did not meet the threshold criteria.

Principles of the productivity plan were established by the public committee for examining the competitiveness of Israeli industry, headed by Ministry of Finance director general Shai Babad. The committee submitted its recommendations to the government earlier this year: a series of programs totaling NIS 1.15 billion aimed at benefiting Israeli industry.

The particulars of the productivity plan and the conditions for participating in it, however, have aroused the anger of the heads of the Association of Craft and Industry in Israel, which represents 40,000 small and very small industrial enterprises, and the industrial lobby in the Knesset, after it was learned that the benefits would be granted only to manufacturers operating in national priority areas and Jerusalem. "This is a mockery," said Association of Craft and Industry president Yossi Alkoby. "With these conditions, 82% of all industry in Israel is ineligible for this program."

According to the Association of Craft and Industry, only 2,800 factories, 18% of the total in Israel, are located in national priority areas and Jerusalem. The Association said that only 1,500 enterprises employing up to 20 employees, a mere 12% of all of Israel's small enterprises, would be able to benefit from the new productivity program.

Knesset industrial lobby chairperson MK Ayelet Nahmias-Verbin allied herself with the Association of Craft and Industry. In a letter to Rinsky, she wrote, "It is hard to describe how much very small industry, which includes most members of the Association of Craft and Industry, is in need of these resources and has been waiting for them in order to increase productivity and improve production capacity. These incentives could have ensured their sustainability - and these are businesses whose importance lies in their very existence."

The Ministry of Economy and Industry and the Ministry of Finance said in response that the plan was formulated in accordance with a government decision that it would apply to national priority areas, and that this was in line with government policy for developing outlying areas.

A government source added, "As far as we are concerned, the periphery comes before the center o fteh country, and we have no intention of apologizing fo that." 

Published by Globes [online], Israel business news - www.globes-online.com - on July 12, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Shai Babad  photo: Flash 80
Shai Babad photo: Flash 80
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