Correspondents' Correspondence

...The first section of the economic stabilization scheme was presented before Peres and Likud Leader Yitz-chak Shamir "rotated" their offices...

...And Peres, as the Prime Minister, went out of his way to mollify the trade unions in order to gain their acceptance, if not approval, of the plan...

...The expectation, nevertheless, is that the Cabinet will shortly adopt the Nissim proposal with only minor alterations— the most probable being a restoration of exemptions for the war wounded...

...Other Third World nations are about to feel the sting of labor-saving technology in the heretofore labor intensive textile, garment and shoe industries...

...Without such a budget reduction, there can be no capital for investment and the resumption of economic growth...

...It has taken place as well in a large segment of the Labor movement's young elite, especially the academics...

...The new program had not yet been officially published when the trade unions and the manufacturers' association began railing against it...

...Even without the details of the latest public opinion poll, it has been obvious that employment is the main reason for the massive outflow...

...At the same time, all exemptions and reductions—from those for individual war invalids to those for development industries in border areas—would be abolished, so that everybody in each category would have to pay the same rate...

...While Labor Leader and Vice-Prime Minister Shimon Peres appeared somewhat less violently critical of (Likud) Finance Minister Moshe Nissim's proposal than the rest of the Labor Cabinet members, the party as a whole was solidly opposed to it...

...Producer-customer proximity has become especially important in the semiconductor industry...

...The displacement of semi- and unskilled labor by automation poses a challenge to the fragile economies of such countries as Malaysia, the Philippines and Singapore, with their heavy reliance on electronics for jobs and exports...

...Newly released figures for November showed the cost of living index up 2.9 percent, oneof the biggest increases for any single month since the economic program launched in the summer of 1985 put an end to triple-digit inflation...

...Immigration has gone down to a trickle ever since the early '80s, when the Soviet Union cut the number of Jews permitted to leave the USSR to a few score per month...

...A promising first step has been the blending of novel techniques with traditional enterprises...

...Imports of durable goods jumped 66 per cent, and the trade deficit for the first 10 months of 1986 hit $2.2 billion, compared with $1.8 billion in the same period the previous year...

...The ILO has documented impressive successes in the introduction of microelectronics, biotechnology and synthetic materials into Third World agriculture, rural industry and small business...

...It was against this background that the new economic program developed by the Ministry of Finance was announced in mid-December...

...The manufacturers screamed that the reforms would neither lower production costs nor make Israeli exports more competitive...

...Developing countries thus have no choice but to import and apply innovative technologies themselves, Bhalla points out, if they are to retain their economic health and a role in international markets...

...The fact that the trade unions are dominated by the Labor Party of course made things much easier...

...Worse still, in the 19-35 age bracket 19 per cent answered the general emigration question positively...

...The statistics have not been kind...

...More serious, however, is the criticism of the manufacturers and of most neutral economists: They argue that the program contains no meaningful provision for a promised $500 million cut in government expenditures...

...Together these sectors account for 97 per cent of current manufactured exports in India, 73 per cent in Egypt, over 40 per cent in Hong Kong, South Korea and Singapore, and more than 20 per cent in Argentina, Brazil and Mexico...

...Bhalla, chief of the ILO's technology and employment branch here in Geneva...

...In the government itself, the program initially seemed to split the Likud-Labor coalition along party lines, but the situation turned out to be more fractious than that...

...Shamir and Nissim, by contrast, have practically presented the unions with a fait accompli...

...Many of them have in the last years become advisers to senior ministers, and their influence has rubbed off on then-bosses...

...The Asian worker who can wire 120 integrated circuits for semiconductor chips in one hour is therefore being phased out in favor of equipment that can wire 640 circuits simultaneously—and that might just as well be set up where the demand is...

...Moreover, although the unions claim the lowest income groups would get hurt, in fact the lower-middle salaried workers would probably be the biggest losers—and that includes the masses of union functionaries...

...Man and Machine Geneva—An explosive growth in new technologies is about to end the Western export of manufacturing jobs to poor countries...

...Part of the problem seems to be tactical...

...In that event, Israel could soon find itself searching for yet another "new economic program.''—Eliahu Salpeter...

...Some 9 per cent of a representative sample of the total Jewish population said they havecontemplated, or are willing to contemplate, leaving the country...

...The unions screamed that abolition of the exemptions would hurt almost every w age earner, would reduce the income of the poor and would make the rich even richer...

...Automation has now reached the point where it competes successfully with even the lowest wages...

...Technological blending provides a substitute for skills that are usually scarce in developing countries...

...The main points of the program call f or reducing the top income tax rate (which in Israel extends to the very middle income groups) from 60 to 45 per cent, for replacing the corporate tax maximums that run from 41 to 61 per cent with a single maximum of 45 per cent, and for raising the level of tax-free income from $400 per month to $550...

...The government would give up all the regulations and special legal devices it has employed to insure itself preferential treatment in the capital markets, thereby forcing the state to compete for loans with business enterprise on an equal footing...

...Perhaps more important, by spreading benefits and encouraging the participation of a wide segment of the local population, it offers a precious opportunity for social progress.—Thomas Land...

...Setting up shop in developing countries endowed with an abundant supply of relatively cheap labor already is no longer the attractive proposition for Western enterprises it once was, the ILO found...

...This generational difference has been paralleled by another important shift of outlook among younger participants in high levels of the government bureaucracy: These people have ceased to believe in the benevolence, not to mention omnipotence, of state intervention in the national economy...

...But more troubling for Israelis were the results of a public opinion poll about emigration...

...On the other hand, there was hardly unanimous support on the Likud side: At least the Minister of Construction and the Minister of Social Welfare were also firmly against the plan...

...Neither the search for a safe haven from persecution in Eastern Europe or the Arab countries, nor the quest for a homeland to fulfill nationalistic aspirations is an overriding consideration in the case of many who were born in freedom and into Hebrew culture...

...The change is not merely a reflection of the fact that during the past 10 years the Right-wing Likud first replaced and then began to share power with the Socialists...

...And the circuit assembly process, once performed almost exclusively by hand in Southeast Asia, can today be carried out more economically by machines, notes A.S...

...Both groups insisted the new measures would not lead to the growth of Israel's economy...

...Emigration has risen sharply meanwhile, from several thousand a year to over 30,000 annually...

...Israel Looks Inward Tel Aviv — In recent weeks the main focus of attention here has shifted from concern over Israel's involvement in the Iran-contra affair to the domestic scene...

...Most of those willing to emigrate gave as their reasons the employment situation and economic conditions...

...Why did this broad opposition suddenly crystallize, obliging the Finance Minister to postpone a Cabinet vote on the program...

...This, plus the possibility of maintaining competitive production closer to markets, is expected to convince many companies to pull up stakes in the Third World and return to home base...

...They want greater personal and professional fulfillment, or simply a better life, a higher standard of living...

...The "ingathering of exiles, "of Jews from the Diaspora, has after all been a central tenet of the Jewish State, almost a raison d'etre for its establishment...

...Moreover, the change is likely to stimulate technological advancement in the Third World and a concomitant measure of social progress, according to a new study done by the United Nations' International Labor Organization (ILO...

...Furthermore, employees would have to pay full tax rates for overtime income, for savings and pension plans, and for all other benefits they receive from their employers...

...Talking to young Israelis in New York or Los Angeles, one soon becomes aware that what attracted their fathers to Israel is often no longer compelling for them...

...Emigration has always been a very sensitive issue in Israel...