חיסון נגד קורונה לילדים
Health worker holds a vial of a COVID-19 vaccine
Photo: AFP
Prime Minister Naftali Bennett (center) speaks at a government meeting

Israel deliberates its response to Omicron, with economy hanging in balance

Analysis: Much uncertainty remains about the likely effects of the new variant, with or without a lockdown; Israel is preparing to administer a fourth COVID-19 shot to the entire population, as morbidity and hospitalization rates will determine the policies and restrictions in coming weeks

The Media Line |
Updated: 12.27.21, 23:24
Israel is facing the spread of the new COVID-19 variant, Omicron, with a dramatic increase in cases in recent days.
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  • “The fifth wave has begun,” Prime Minister Naftali Bennett told the people in a televised address last week.
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    ישיבת ממשלה במבוא חמה, רמת הגולן
    ישיבת ממשלה במבוא חמה, רמת הגולן
    Prime Minister Naftali Bennett (center) speaks at a government meeting
    (Photo: Gil Eliyahu)
    The latest Health Ministry data shows 1,118 Israelis have been infected with the Omicron variant, with over 1,000 new cases suspected. Since the outbreak of the pandemic, over 8,200 Israelis have died of the virus.
    The virus cabinet convened last Tuesday to discuss further restrictions. The heated debate exposed differences of opinion within the coalition and hampered Bennett’s efforts to take a more stringent approach. Finance Minister Avigdor Liberman was the most vocal opponent of Health Ministry requests for further restrictions, warning that such measures would have a negative impact on the economy and were an overreaction to a variant that, he claimed, was “no worse than the flu.”
    In a world-first, Israel is preparing to administer a fourth COVID-19 shot to adults aged 60 and up. “This will assist us in getting through the Omicron wave that is engulfing the world,” said Bennett at the beginning of the cabinet meeting.
    The decision caused confusion around the country, as doctors and scientists were not unanimous on the matter.
    “We have a lot less data this time; I am not sure on which data the decision was based. I understand the logic behind it – boosting immunity by giving another shot for weaker populations. But I also understand how some may see such a move, without significant data, questionable,” said Prof. Cyrille Cohen, vice dean of the Mina and Everard Goodman Faculty of Life Sciences at Bar-Ilan University.
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    חיסון נגד קורונה לילדים
    חיסון נגד קורונה לילדים
    Health worker holds a vial of a COVID-19 vaccine
    (Photo: AFP)
    “There is no illusion that the vaccine will stop the spread of Omicron,” said Cohen. Another challenge the country is facing is the many people who have not received any vaccination at all and an even larger number of vaccinated people who have not come for their booster shot. Though Israel was once a global leader in vaccination rates, the number has dropped, leaving Israel’s population exposed to increased morbidity.
    Israel’s weak point throughout the crisis has been its lackluster enforcement of social distancing and mask-wearing. An attempt by the Health Ministry to reinstate limitations on large gatherings was shot down by several ministers during the cabinet meeting. But, even when such restrictions were in place, Israelis often found creative ways to circumvent them.
    “A lot of decisions are made, but there is not enough enforcement,” said Cohen, “The lack of enforcement does not incentivize people to vaccinate, because they are not really limited in their activities.”
    The Israeli economy took a major hit since the start of the pandemic in March 2020. Gross domestic product fell, unemployment skyrocketed, and the national deficit increased. In recent months, as most restrictions have been lifted, there has been a remarkable recovery.
    “The economy recovered much more rapidly than anticipated,” said Prof. Elise Brezis, head of the Aharon Meir Center for Banking and Economic Policy at Bar-Ilan University. The outlook, prior to the arrival of Omicron, was optimistic.
    “We anticipate further growth this year and in 2022,” said Shlomo Maoz, an Israeli economist who has held leading positions in both private firms and public service. “The economy is functioning fantastically, far ahead of many countries, and there is a sharp increase in several critical parameters, such as the labor force participation rate and foreign direct investment, which continues to rise.”
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    Mask wearing shoppers at Dizengoff Center in Tel Aviv
    Mask wearing shoppers at Dizengoff Center in Tel Aviv
    Mask wearing shoppers at Dizengoff Center in Tel Aviv
    (Photo: Moti Kimchi)
    The government increased expenditure during the crisis, which resulted in a greater national deficit. As a sign of the economy’s strength, the deficit level has almost returned to pre-pandemic numbers. This is largely driven by Israel’s flourishing high-tech sector, which continued to profit during the pandemic.
    According to Maoz, the record-breaking number of available jobs in the country now is a testament to the good state of the economy. But it is also still a result of the problematic furlough policy adopted by the previous government at the height of the pandemic. The policy kept many people at home, making it more profitable to live off government handouts than work.
    While unemployment has dropped, the average salary in Israel has dropped and so has productivity. The COVID-19 crisis had many economists in the country believing productivity levels would rise, as less productive employees were ejected from a thinned workforce.
    “These numbers influence the Finance Ministry,” Brezis explained. “There are real questions and there is concern that the Health Ministry is completely overshooting, as there is a lot unknown about the micron at this point.”
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    מתחמי הבילוי בראשון לציון
    מתחמי הבילוי בראשון לציון
    (Photo: Tal Shimoni)
    Reports coming out of the cabinet meeting, experts at the Health Ministry presented models that show mass infections in the country in a matter of weeks. If infection by the virus forces people to self-quarantine, high morbidity rates will affect the workforce and the economy, even without a government-mandated lockdown.
    It remains to be seen whether the government will adopt a differential policy toward employees who are vaccinated and get sick and not compensate unvaccinated workers. As with many conundrums during the global crisis, decisions have often been impromptu and just as often have been reversed or revised as the picture quickly changed.
    “The decision-making process is not linear,” said Brezis, “What will happen is often not what was decided; it takes time until the correct decision is reached.” Brezis believes vaccinated people will likely be compensated for work time lost due to infection. Israeli politicians have thus far hesitated to adopt policies that discriminate among people based on their vaccination status.
    In face of a new and yet unknown variant, there is renewed talk of massive restrictions. Israel’s speedy economic recuperation makes it less likely to suffer, even if Finance Ministry officials cringe at the mention of such measures.
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    בדיקות קורונה בנתב"ג
    בדיקות קורונה בנתב"ג
    Coronavirus testing station at Ben Gurion Airport
    (Photo: AFP)
    “Israel will enter such a situation as a very strong country,” said Maoz. “The damage will be limited.” Israel’s dependency on high-tech service exports makes it less susceptible to the effects of lockdowns. The engine behind the booming economy can work from home and continue to generate revenue, largely undisturbed.
    During three lockdowns, the government handed out several financial bonuses to all citizens. Liberman is not likely to approve similar moves, in an attempt to keep the positive numbers steady.
    “Increasing government expenditure is wrong; it will lead to inflation and more problems,” said Brezis. “Israel’s policy may be less generous but there will be helpful for people who will be badly hurt from another crisis.”
    What will determine the policy in the coming weeks is the morbidity and hospitalization rates. The more the health system inches toward reaching its maximum capacity, the easier it will be for the government to adopt stringent measures. This may push financial considerations aside, but only temporarily, as the subsequent fallout will have to be dealt with.

    Written by Keren Setton and republished with permission from The Media Line.
    First published: 23:20, 12.27.21
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