So you thought that you did great work and you are due to get a big pay raise? Well, think again. According to a report by the The Manufacturers Association of Israel, there is a good chance that your employer is about to cancel any potential pay raise. In an article in Globes: “46% of industrial companies have canceled employee pay hikes planned for 2009, and 40% of companies have canceled bonuses, according to a new survey by the Manufacturers Association of Israel of 50 companies. The firms surveyed ranged from small to large, and included all manufacturing sectors.”

This is just more evidence that the Israeli economic growth has come to a standstill, and the outlook is not all that hot. The good news is that companies are taking these cost cutting steps before things get really bad. What that means is that when things recover, and yes they will recover- this is not the end of the world, Israeli firms will be much more trim and agile and be ready to aggressively gain market share.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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As we have mentioned here more than once, the Israeli economy may not be in as great shape as our leaders have let on. Tonight’s surprise 50 basis point cut, bringing rates down to just 3%, indicates that even the Bank of Israel is worried about a potential economic slowdown or even a recession.

With analysts lowering their ‘09 growth forecasts, Fischer who has until last week remained unrealistically optimistic, appears to have thrown in the towel an admitted that things aren’t all that rosy, and is trying to add liquidity to the Israeli banking system to try and prevent the same type of credit crisis gripping the global banking system.

While I think the local economic slowdown will continue, this aggressive move by the Bank of Israel will help stem the damage to the economy that a prolonged recession could cause.

Please see our Disclaimer HERE.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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