PM’s Speech at the Annual General Assembly of the Manufacturer’s Association Conference
Photo by GPO 

Honorable Minister of Finance, Roni Bar-On,
Honorable President of the Manufacturer’s Association, Shraga Brosh,
Honorable Members of Knesset, Eli Aflalo and Shai Hermesh,
Honorable Head of the New Histadrut, Ofer Eini,
Honorable Chairman of the National Economic Council, Prof. Emanuel Trajtenberg,
Honorable Heads of the Coordination Bureau of the Economic Organizations,
Members of the Manufacturer’s Association,
Dear Friends,

I am pleased to be at this meeting, which is intended to summarize a year of socio-economic activity in the State of Israel, and of course also to express our gratitude and appreciation to the President of the Manufacturer’s Association, Shraga Brosh.  Shraga, congratulations on your election.  I think that this election, as with the previous one, is a good choice.  I know that you are doing this work out of a profound sense of commitment, not only for the development of industry, but also to strengthen the economy of Israel out of a deep belief that strengthening industry also strengthens the Israeli economy.  I wish you a very successful tenure both for industry and the Israeli economy, as your first term was.  Good luck.

I cannot begin my speech today without referring to what is currently occurring in the southern part of the country.  Two days ago, soldiers of the IDF and fighters of the security forces carried out a bold operation in Gaza, during which many terrorists were injured, members of Hamas, and they suffered heavy losses.  This operation was precise and sophisticated, and was meant to harm those who for many days have been attempting to harm the citizens of the South.  They absorbed a blow, and this will not be the final blow that they will absorb as a result of the continued and intolerable firing of Qassam missiles at residents of the southern part of the country. 

There is no need to say how much work was invested in this operation, what enormous effort, courage, imagination and detailed planning by the IDF and the GSS in order to reach those responsible for terror in order to stop the intolerable firing on the residents of the South.  I know that in such circumstances as these, it is very easy to get carried away with rhetoric, but this is not our style, nor is this the way of this Government.  We do not seek to fight in the Gaza Strip, we do not want to harm its residents, we have no special desire to kill even one resident of the Gaza Strip, but we cannot and will not tolerate this unceasing firing on the citizens of Israel which emanates from Gaza.  We will continue to act wisely, with courage and with maximal precision, in order to allow us to harm those who wish to harm us, rather than the uninvolved citizens who become victims of the radicalism, cruelty, hatred and incitement of the heads of the terrorist organizations in the Gaza Strip.  They do not discriminate between women, children and uninvolved citizens; they want to harm each and every one of us.  Although it is sometimes very difficult to restrain ourselves, we will continue to act in a manner which will allow us to reach the terrorists – those who fire, those who send them and those who equip them – so that they will be punished.

Only today, we read that 75% of the children residing in Sderot suffer from anxiety.  I know that often we look at the numbers of physically injured, and say to ourselves: “Thank G-d that in yesterday’s insane barrage or in today’s, none of our civilians were killed.  However, anyone who is familiar with what is occurring in the southern part of the country knows of the heavy psychological cost, of the profound emotional distress that burdens the lives of these residents – the parents and the children – in a manner which undermines their peace of mind and strips them of their zest for life.  We cannot accept this reality as a routine with which we must live.  We can also say to ourselves openly and impartially that there is no simple answer to stop this completely; there is no mysterious button somewhere, some magical formula that we can enact and everything will end in the blink of an eye. 

However, we know that this must be fought, and in the South war is being waged on a daily basis, and in which some of the bravest and most courageous of the soldiers of the IDF and the GSS participating.  This war will be unceasing, and there will be a moment in which the balance of this war will lead to the firing in the South not being what it is today, and I believe that, eventually, they will be forced to adapt to completely different norms other than those which motivate them today.

I know that the hearts of the people of the State of Israel are with the residents of the South.  I know that there is no simple path, certainly not through speeches, to calm the residents of the South and reduce the concerns, pain and anxiety they deal with day after day.  We will do what needs to be done in the right balance, with suitable concern, and primarily we will continue to fight the Jihad and the Hamas and all those who join them, without compromise, without wavering and without pity.

Now, allow me to say a few words on matters which are more encouraging.  We are reaching the end of one of the best and most successful years that the Israeli economy has ever experienced.  It seems to me that at the opening of the 60th year of the State of Israel’s existence, we can compliment ourselves.  The Israeli economy is in excellent condition; in many ways, it is better than ever.  I know that the past few days have weighed on many, first and foremost our exporters; the decrease in the value of the dollar vis-à-vis the shekel.  I have heard what you have to say; I have discussed this with the President of the Association; I have consulted with the Governor of the Bank of Israel; and I listened attentively during the past several days to the opinion of the Minister of Finance, in whom I have complete trust and whom I hold in high esteem.

In November, we decided on a series of appropriate and balanced steps, the purpose of which was to provide answers to the distress temporarily caused by the decrease in the value of the dollar, and its influence on the profitability of our exports.  I certainly hope, as does everyone, that this situation is temporary; we will continue joint discussions to ensure that the answers the Government proposes will provide balanced responses to the recent distress, and I say to you that the strength of Israeli industry will eventually preserve its achievements and ensure its success, even if – for a certain period – the exchange rates do not ensure the same profitability we have been used to over the past several years. 

In 2007, the growth rate of the economy stood at at least 5.3%.  This is the fourth consecutive year in which it was above 5%.  Average growth in OECD countries is 2.7%.  In the 60 years of this country’s existence, the population of Israel has increased ten-fold and the product per capita by six.  In other words, the effective GDP has increased by a factor of 60, if we take into account the population growth.  This is an amazing achievement, certainly for a country which, for many years, absorbed massive waves of immigration, and still continued to maintain the growth rates which have made it one of the most successful countries in the global economy today.

This year, we again saw a surplus in the balance of payments, a surplus which indicates progress towards full economic independence.  The labor market is flourishing.  In the third quarter of 2007, unemployment decreased to 7.3%, and according to the data for the fourth quarter, it reached a rate of 6.9%.  This is the lowest unemployment rate in over a decade.  Together with the decrease in unemployment, there has been a growing increase in the rate of participation in the labor market.  In other words, the employment rate has significantly increased.  We are speaking of unemployment of around 7%, when the average unemployment rate in OECD countries is 6.6%.  We are in that neighborhood, while maintaining a growth rate and impressive foreign investments.  All this, despite the conditions in the Middle East, which does not experience the stable, natural and tranquil reality which characterizes other regions of the world.  This is without referring to debt-product ratio, which up until four years ago was 102%, and which has decreased to below 82% in 2007.  There is no doubt that the significant portion of these achievements is the result of the impressive performance of Israeli industry, and for this Israeli industry – and you, Israeli industrialists – deserve special respect and administration.  Well done.

The vision we present to ourselves today for the coming years in clear.  We strive to continue these trends which I mentioned – the rise in the rate of participation in the labor force, the reduction of unemployment, increasing the rate of growth to approximately 6% of sustainable growth, during which the Government will make a serious attempt to ensure that the fruits of growth are distributed in a more balanced manner between sectors of the Israeli society.  Therefore, we have adopted a three-year plan through 2010, which for the first time, did not make do with only defining economic goals, but also “speaks” specifically about quantitative targets which can be examined every year, and throughout the year, in order to be sure that, at the end of the year, we will not have to provide excuses, but rather we can praise our achievements.

The first target is that of employment.  Our purpose is to reach, by the year 2010, a rate of employment between the ages of 25 and 64 of 71.7%.  Meeting this target will lead to the entry of over 90,000 additional employees to the labor force, and will increase the rate of employment in the State of Israel to the average level of OECD countries, which we have been invited to join.  I believe that within a short period of time, we will complete the necessary plans to make our joining the OECD official.

The second important target is that of reducing poverty.  We are speaking of increasing the income of the lowest fifth of Israeli society by 10% above the growth rate of product per capita.  We must make a tremendous effort to ensure that the per capita income in the State of Israel – which currently approaches $23,000 with a purchasing power approaching $30,000 – is not a figure which masks great social distress.  Our problem is how to ensure a more correct balance, while ensuring that the average numbers do not lead us astray and hide the fact that there are hundreds of thousands of people in Israel who experience great distress; that there are hundreds of thousands of children who live under the poverty line; that there are hundreds of thousands of children who live in danger.  Until now, we did not know how to provide them the appropriate answers while building our social services, in order to deal with their distress.  We are doing so now. 

It is certainly possible to come and say that the answers we are providing cannot dramatically change reality overnight, but for the first time we are investing hundreds of millions of shekels which were not previously invested in at-risk children.  We are currently investing immense sums of money, which was not done in the past, in treating children up to the age of six, in order to ensure that our children reach school at a completely different level of preparedness, with early diagnoses regarding abilities, skills, possibilities, disabilities and limitations.  This year, we are investing an additional NIS 1.9 billion in education, something we have not previously done, and this is part of a long-term investment of billions.

We have seriously taken upon ourselves this mission of changing the social balance, so that the entire Israeli society can enjoy the fruits of the economic success we have been experiencing over the past several years, and which should be distributed properly, in a fair and just manner for all sectors and all areas of residence of Israeli society.  We are in the center of the country, and we cannot help but admire the strength and vibrancy, but when we spread our wings northward and southward, we see a very different reality – one that cannot continue.  It must be changed.  We will invest essential resources to change it, and I believe we will change it in the coming years in a manner in which the periphery will become an inseparable part of the fabric of the real, vibrant, developing and growing life of Israeli society.

We will continue the effort, without hesitation and undeterred, to advance the diplomatic negotiations, in order to attempt to reach, in the coming year, understandings with the Palestinian Authority, which will lead to a peace agreement between us.  I cannot promise that it will happen in the next year; I can only commit that I will do everything in order that it does happen.  I know that this is a path strewn with obstacles – significant obstacles – which are a result of the large gaps which exist between us and the Palestinians regarding our understanding of a peaceful life, territorial realities and other issues which lie at the heart of the conflict between us.  There are also political difficulties.  I have decided that I will not allow the political difficulties to stand in the way of the Government in trying to reach an agreement.  It is not simple; it is not a simple temptation; but there are moments in which a man must tell himself that there are things more important than politics.  The diplomatic negotiations are more important than politics because they are the foundation and basis for the future of this country, for the future of this people and for the hope that our children and grandchildren so long for.

The economic ranking we have enjoyed in the recent past is the result not only of the impressive performance of the Israeli economy, nor of the frequent contacts of the Ministry of Finance and its Minister with the heads of the global economy and the heads of those companies which rate countries in the world.  It is also the result of the high regard that our country and Government receive from the political and economic international community because we are making a genuine and serious effort to bring the entire Middle East, and ourselves and the Palestinians, to a new reality of cooperation, calm and free of violence.

We will continue thus, and I hope that at the next General Assembly of the Association we can look back and, alongside the economic accomplishments, mark progress in the political process and the personal security of the residents of the State of Israel.

Thank you.