The Ministry of Finance, the Ministry of the Economy, the Histadrut (General Federation of Labor in Israel) and the Israel Manufacturers Association announced the setting up of a fund for enterprises in distress today. The task of the new fund will be to provide financial assistance to eneterprises in the periphery that get into financial difficulties and to attempt to prevent their closure.
The fund already has NIS 100 million collected from the recuperation pay (a regular salary component) of public sector workers following the global economic crisis of 2008. The money, amounting to half the recuperation pay of public sector workers, was collected in 2009 as part of a package deal struck by previous Histadrut chairman Ofer Eini and Manufacturers Association president Shraga Brosh. A similar amount was supposed to have been collected in 2010, but disagreements over how the fund should be run delayed its operation, until Minister of Finance Moshe Kahlon recently told officials at his ministry to expedite matters.
In the coming months, government companies and agencies will transfer to the fund money they have deducted from employees’ salaries, which will bring the fund to about NIS 300 million.
The money will be distributed to companies in financial difficulties according to criteria set by the government ministries, the Histadrut and the Manufacturers Association. To be eligible, a company has to be in the periphery or in an area defined as a national priority area, and have at least twenty employees. It must also have an external investor prepared to inject cash, or owners who will do so, in order to save it.
The receipt of money from the fund will be subject to streamlining at the company and a recovery plan. The fund will be headed by Ministry of Finance director general Shai Babad, and it will operate through the Small and Medium Business Agency at the Ministry of the Economy.
A senior government official told “Globes” today, “There is no absolute certainty that the new fund will succeed where aid funds set up in the past have failed. We have to try. We put together relevant criteria, and tried to learn from past mistakes.”
Minister of Finance Moshe Kahlon said, “As a result of the fund’s operations, layoffs of hundreds of workers in areas where every job is of supreme importance will be prevented. We will help enterprises with problems to formulate recovery plans that will put them back on their feet so that they will not get into repeated difficulties.”
Published by Globes [online], Israel business news – www.globes-online.com – on February 1, 2016
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