January 2, 2005


More Israelis Make Do With Less: Sharon's government cut welfare to save money and get people working. But unemployment is high and poverty rising. (Ken Ellingwood, January 2, 2005, LA Times)

Reform advocates say Israel is overdue in restructuring its increasingly expensive welfare system, which has a remarkably broad safety net born of the country's collectivist past, from health insurance and unemployment protection to paid parental leave. Echoing the U.S. debate over welfare reform, they argue that aid recipients stand a better chance of breaking out of poverty by working and that doing so will strengthen the society.

But critics charge that the cuts have been draconian. With unemployment surpassing 10%, they argue, job openings are too sparse to accommodate a big influx of workers. Many aid recipients have been unable to find jobs that are stable or pay enough to carry them above the poverty threshold of $1,000 a month for a family of four, advocates for the poor say.

"They're finding work two hours a day, four hours a day. They're finding themselves working but making less than they were with welfare benefits — a dead end," said Barbara Epstein, who runs Community Advocacy, a storefront aid office.

The debate over cutting benefits has sharpened since a government report on poverty was released in November, showing that more than one in five Israelis, or 1.4 million people, were poor in 2003. That rate was 8% higher than a year earlier.

A separate study by the National Council for the Child published last week found that nearly a third of Israeli children live below the poverty line. It also found a drop in the number of youngsters whose families received income assistance.

Experts say the figures point to a worrisome rise in the ranks of the working poor. The November report "proved very clearly that the impact of the economic crisis and cuts in social expenditures and benefits resulted in poverty," said John Gal, a social-welfare expert at Hebrew University in Jerusalem.

The campaign to reshape the welfare system is the latest sign of the sometimes-painful shift away from the egalitarian ideal prevalent during Israel's early decades toward a national ethos based on private enterprise and individual initiative.

Officials with Prime Minister Ariel Sharon's government say that getting people to work will help break a "poverty trap" that has ensnared up to three generations of Israeli families.

"It's not just essential reductions of public expenses. But it's a change in behavior we should encourage," said Iris Ginsburg, director of the employment and welfare division in the Foreign Ministry's budget office.

Netanyahu, a former prime minister, oversaw the cuts as part of an austerity package after he became finance minister in March 2003. He has called the economic reforms, which include trimming the number of public employees and salaries and privatizing government-owned companies, a "social revolution."

Since July 2003, income subsidies have stopped for 4,000 families and were reduced by an average of 30% for 95,000 other households, according to the government's National Insurance Institute.

Netanyahu defends the reductions, noting that 100,000 Israelis have joined the workforce since the reforms began, despite the lingering effects of recession.

"This revolution will continue to increase growth and also to get people out of the poverty cycle," Netanyahu said in Herzliya. "There's no other way to do this, only through work."

In December, the government picked four foreign companies, one of them American, to run regional employment centers in the test phase of a program under which unemployed Israelis will have to receive job training to continue getting income-assurance allowances. The centers will offer vocational training plus guidance in the nuts and bolts of getting a job, including writing resumes and dressing properly. The centers also will provide child care for job-seekers.

The firms will be paid on a performance-based model under which they must cut spending on government-paid allowances by at least 35%. In two years, Israeli officials hope to save $45 million, which they plan to plow back into the program.

But introducing for-profit companies into Israel's welfare system unsettles advocates for the poor, who fear the privatization of the safety net.

The economic reforms are more important to the future of Osrael than any of the issues involved in the shape, size, and governance of Palestine.

Posted by Orrin Judd at January 2, 2005 9:01 AM

Likud's opposition, as mild as it may have been to this point, to even some small askpects of the soical welfare system put in by Labor over Israel's first 25 years of existance is an unstated but key part of the reason why so many in Europe and on the left in the United States turned against Isreal with such a vengance when Begin and the party first achived power in the mid-1970s.

It actually was a foretelling of the demonization Reagan and GWB would get for their own economic policies in the United States by many of those same people, though Likud's leaders were never given the Reagan-Bush "idiot" label, but were tarred with the "evil" brush used on Nixon, and currently being applied to Cheney, Rumsfeld and Rove (and that's because the "idiot" tag doesn't mesh with the smart-but-evil-Jews control the world sterotype of the Euro-statists and American far left/Buchananite right).

Posted by: John at January 2, 2005 11:41 AM

OJ's comment is exactly right. Unfortunately, other than Netanyahu, Likud doesn't care much about these issues.

Posted by: David Cohen at January 2, 2005 12:20 PM

The current system is the product of proportional representation more than anything else. The religious parties, which serve as eloquent proof that religious Jews are capable of being at least as venal and corrupt as the religious of any other denomination, trade their votes in the Knesset for a panoply of subsidies to which they would otherwise not be entitled.

When Bibi was PM, the conservative Republican head of the House Appropriations subcommittee dealing with foreign aid proposed phasing out the economic aid to Israel. Bibi's response was something along the lines of 'Please don't throw me into that brier patch.' Bibi wanted the subsidy gone and Callahan was happy to help. They agreed on a phaseout plan over a 10 year period. Bibi used the phaseout to weaken the religious parties and end some of the more ridiculous statist crap that was the legacy of decades of Labor misrule.

When Clinton's stooges got Barak into power, the phaseout was put on hold.

Bibi is a graduate of Wharton and Sloan and his father is the leading historian of the Spanish Inquisition. It is a little tough to call him 'stupid.'

Posted by: Bart at January 2, 2005 12:26 PM