According to "The Financial Times," since customers and employees are being drafted or are seeking safety in Israel, demand has crashed and businesses have closed.
A strange email begging for funds to keep Israel's Atlas Hotels afloat was recently sent to the company's devoted clients.
Atlas has welcomed 1,000 displaced people into its 16
boutique hotels in response to Hamas's horrific October 7 attack in southern
Israel. The government initiated a whip-round because it was unable to cover
the expenses.
Operations manager Lipmann
stated, "We asked for help from suppliers, contacts abroad, our employees,
and the Atlas A-list — our best customers." He went on to say that the
message was very clear: And the business will fail if we can't support
ourselves."
Israel's $488 billion economy has been rocked by its war
against Hamas, which has caused thousands of firms to fail, strained
governmental budgets, and thrown entire sectors into turmoil.
Benjamin Netanyahu, the prime minister, has promised to
establish a "economy under arms" and to provide enormous financial
transfers to regions and businesses in danger, similar to what was done during
the Covid-19 pandemic.
He said that they are
opening the taps and pumping money to everyone who needs it," he declared and
his guidance is clear." And they have built a very strong economy over the
last ten years, and they will pay any price this war exacts on them
financially, no questions asked."
While many business leaders felt the aid package did not go
far enough, some welcomed it. Some claimed the measures did not assist large
corporations, while others criticised the eligibility requirements as being
unduly stringent.
The head of the Manufacturers' Association of Israel, Ron
Tomer, declared, "The government is abandoning its people." He went
on saying that they're going to get a nasty shock in their next pay
packets," referring to the fact that many were not receiving full
compensation for lost wages.
According to Lipmann, Atlas Hotels is still awaiting
government assistance. "When I'm trying to help people, I would expect the
country to support me," he continued saying that however, he doubts that they'll
have a safety net."
The violent incursion by Hamas, which left over 1,400 dead
according to officials, has left Israel in shock. It responded by invading Gaza
on foot and launching a ceaseless bombardment that, according to the enclave's
health ministry, has killed about 10,022 Palestinians.
As Israel prepared for war, about 350,000 reservists, or 8%
of the labour force, were called up.
In the meantime, 126,000 civilians from Israel's north and
south have been moved to try and protect them from mortar attacks by Hizbollah,
the Iranian-backed militant group in Lebanon, and Hamas missiles.
Persistent public support for the war is evident in polls.
However, its scope is pushing Israel into uncharted waters. The most similar
event was the 2014 Gaza war, when Israeli forces invaded the impoverished strip
for 49 days with a much smaller number of reservists.
However, the conflict still has a chilling effect on
business, especially in the construction industry.
"Municipalities have closed down a lot of building
sites," Tomer stated. "They oppose having Palestinian employees
there. People are reportedly offended by the image of Arab labourers carrying
bulky equipment.
There is already a growing body of evidence showing how
detrimental the war was to economic growth. According to a Central Bureau of
Statistics survey of Israeli businesses, more than half reported revenue losses
of at least 50%, and one in three had closed or were operating at less than 20%
of their initial capacity.
The south, which is closest to Gaza, saw even worse
outcomes, with two thirds of businesses closing or drastically reducing
operations.
According to the labour ministry, 764,000 Israelis, or 18%
of the workforce, are not working because they were evacuated from their towns,
called up for reserve duty, and to taking care of their children at home due to school
closures.
Under the new provisions, among other things, the government
will cover up to 22% of a company's fixed costs and 75% of its wage bill in
order to support businesses whose monthly revenues have decreased by more than
25% as a result of the war.
However, experts worry that if Israel's economic prospects continue to deteriorate, this might not be sufficient.
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