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Taub Center study: Countries implementing Flexicurity policies exhibit considerably better socioeconomic outcomes than Israel

  • Flexicurity countries are also characterized by higher rates of employment and lower rates of poverty and income inequality than Israel.
  • The Taub Center study examines how Flexicurity works and suggests policy directions for implementation in Israel as part of a comprehensive labor reform.

In their new study, “Labor Market Reform in Israel and the Flexicurity Option,” which will be published in the Taub Center’s upcoming State of the Nation Report 2014, researchers Prof. Dan Ben-David and Liora Bowers focus on a set of labor market policies known as Flexicurity.  Such policies provide relatively high levels of hiring and firing flexibility to employers alongside providing a financial safety net and employability for workers.

Combining some of the developed world’s lowest productivity levels with its highest rates of poverty and income inequality, Israel is situated on socioeconomic trajectories that are unsustainable in the long run.  The country is in need of extensive education and labor market reforms.  The Ben-David and Bowers study focuses on employment, and examines the issue of Flexicurity and its applicability to Israel.  This is a system currently in place, in various forms, in the Nordic countries of Denmark, Norway, Finland and Sweden, along with the Netherlands (together, the “Flexicurity countries”).

The study highlights the range of flexibility in the labor market and financial and employability security among different country groupings (Figure 1).

E Flexicurity Fig 1

While the Flexicurity countries and the Continental countries (Austria, Belgium, Germany, and France) both provide a strong financial safety net for individuals during transition periods, the Flexicurity countries invest more heavily in active labor market policies to help the unemployed reenter the labor market, and also grant substantially more hiring and firing flexibility to employers.  Nonetheless, both country groupings perform similarly well on socioeconomic indicators such as wages, productivity, employment, poverty and inequality – demonstrating that no one set of policy prescriptions is ideal for all countries.  It is important to note, however, that both the Flexicurity and Continental country groupings have much better economic and social outcomes than Israel (as can be seen in Figures 2 – 6).

E Flexicurity Fig 2 E Flexicurity Fig 3 E Flexicurity Fig 4

E Flexicurity Fig 5 E Flexicurity Fig 6

The Taub Center study also determined the share of Israeli workers in each economic sector, and provides a breakdown between workers who are covered under collective bargaining agreements and those who are not (Figure 7).  Sectors where employees have high job protection include the public sector, water and electricity, and portions of manufacturing and banking.

E Flexicurity Fig 7

One possible proxy for employment flexibility is the share of employees covered by collective agreements.  In Israel, an estimated 50 percent of employees are covered by such agreements.  As shown in Figure 8, there is a positive relationship between coverage rate of employees and hourly wages.  On the lower left side of the figure, with the lowest rates of collective agreement coverage and lowest average hourly wages are workers in hotels and restaurants.  Close by are the agriculture and construction sectors, also with low coverage rates and low hourly wages.  At the top far right of the diagram are the electricity and water workers.  This sector comprises a relatively small number of workers; nearly all are covered by collective agreements and their average wages are the highest of all the sectors.

E Flexicurity Fig 8

While the positive link between collective agreement coverage and hourly wages appears to be quite strong, this relationship should nonetheless be qualified.  For example, hourly wages are also linked to education levels and there tends to be a positive relationship between number of years of education and coverage rates as well as between the share of academics in each sector and coverage rates.  On the other hand, it is not obvious that this link is due to higher productivity, since Israeli collective bargaining agreements invariably contain clauses providing for higher wages to individuals with academic degrees – whether or not the academic education received is even related to their work and actually increases productivity.

Flexicurity policies reflect an attempt at finding a win-win arrangement between workers, employers and policymakers.  Productivity improvements need to be a fundamental facet of Flexicurity policies, since higher productivity paves the way for higher living standards that make it possible for the government to incur the substantial budgetary costs that accompany implementation of such policies.  Therefore, such a solution needs to encompass flexibility in the labor market, along with financial support for the unemployed (limited in time) and continuous training provided by the government and employers.

The requirements for success of the Flexicurity model are flexible labor markets, lifelong learning for employees, active labor market policies and social security systems that provide financial support during transition periods.  Moving Israel towards a Flexicurity model entails various benefits as well as challenges.  It would be highly beneficial to implement policies that would improve the country’s competitiveness, including substantially spurring its currently low labor productivity.  Improvements in the social welfare system that would be reflected in lower rates of poverty and income inequality are particularly essential to the model, given Israel’s weak performance in this area – though there is concern about the possible adverse effects on employment if these changes are not part of a comprehensive policy.

Various aspects of Flexicurity policy could be applied in Israel and could yield considerable socioeconomic improvements.  According to Ben-David and Bowers, for Flexicurity to succeed, both the public and private sectors should be more aligned with regards to employment flexibility.  This would require greater flexibility in the public sector, including such practices as: facilitation of hiring from outside the public sector and greater mobility between the public and private sectors; decentralization of human resources management to provide departments and managers with greater discretion; and a closer connection between individual performance and their compensation and promotion.  To more closely align with much of the private sector, the public sector (and parts of the inflexible private sector, such as banking/insurance), also need to move away from the norm of lifelong employment and rigid dismissal and tenure policies.

The Taub Center study makes it clear that for Israel, applying key elements of Flexicurity means much greater expenditure on welfare alongside the initiation of new labor activation programs, such as a revamped “Wisconsin program” meant to train and connect the unemployed with new opportunities.   The researchers add that “ensuring the continued availability of childcare, which is relatively accessible in Israel – and growing due to the expansion of universal preschool starting age three – is an important contributor to labor market participation.”

The Flexicurity model’s generous income support benefits create adverse incentives for prompt re-entry into the labor market.  Ben-David and Bowers note that it is possible to counter these disincentives with activation policies and monitoring systems.  They state that “in Israel, policies such as a more substantial negative income tax could help provide incentives to work.  Much better enforcement of existing labor laws (notably on minimum wage, working hours and discrimination) is imperative to encourage labor market participation by and provide security for lower-skilled workers.”

Another key principle of the Flexicurity system is the obligation of the government, employers and individuals to lifelong learning.  The Taub Center researchers point out that “employment contracts stipulating continued learning, and government-supported career guidance, training and education opportunities are an important policy response to increased job insecurity.”

In summary, while implementation of the full Flexicurity system is not a politically feasible or economically viable option for Israel, there are certainly facets of the system that the country can and should implement.  The overarching policy goal should be to enhance productivity, growth and employment while providing a serious social safety net for Israelis that offers adequate financial peace of mind during job transitions, in which they are assisted in improving their job skills.  These policy options are indeed possible, but their implementation will require an extensive and systemic reassessment of Israel’s national priorities.

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Gal Ben Dor, Director of Marketing and Communications 054-464-2333.

Taub Center Conference on Strategic Planning and Long-Term Thinking in Policymaking

Main findings and quotes from the Taub Center 2014 Conference on “Strategic Planning and Long-Term Thinking in Policymaking”

  • Prof. Dan Ben-David presented findings from his research, including new and particularly concerning data showing that since international testing began, Israel’s ranking in terms of pupil achievement in core studies has steadily deteriorated. Over the past 15 years, Israeli pupils consistently ranked at the bottom of the list of countries (Table 1). In addition, since 1999, Israel has had the highest achievement gaps in the Western world between pupils of different groups, and as Ben-David notes, “it is no surprise that Israel’s large educational gaps later manifest themselves in some of the highest inequality rates in the West.”
  • Prof. Momi Dahan critiqued the way that decisions are reached: “Israelis invest more effort in the process of buying a kettle than we do in designing policy. The future we desire is relatively obvious, but we’re not doing what we need to do in order to make it happen.”
  • Prof. Omer Moav criticized policymakers who, in his opinion, make decisions that are economically irrational.  Such policymakers include Minister of Finance Yair Lapid, MK Shelly Yachimovich, MK Tamar Zandberg and MK Stav Shafir: “Stav Shafir says that in order to ease the housing problem, we must regulate rent prices – but the impact of such a policy would be to reduce rent prices to below the equilibrium level. The fact is that everywhere that rent control has been implemented, it has led to a shortage of housing, poor construction and neglect of properties.”
  • Prof. Steven Popper spoke based on his experience of working with the Israeli government: “The institutions of government created in an earlier era, when Israel was founded, are not necessarily well-suited to challenges the country faces today.”
  • Minister Silvan Shalom: “If we pay less for electricity, water and gas – that will truly fight against the high cost of living.  Effective planning can help lower the price of goods.”
  • MK Avishay Braverman, Chair of the Knesset Economic Affairs Committee, criticized the government: “Israel is a corrupt society. Each minister works only for himself and each minister wants to be Prime Minister in a flash.  Long-term planning is of no interest to them, and instead, they compete to see who will be the first to have the best gimmick.” He said that “elected officials operate according to what looks appealing in the media, and not for the public good.”
  • MK Orly Levi-Abekasis, Chair of the Knesset Committee on the Rights of the Child, argued that the government failed to identify long-term failures in the housing market, even though the data was clearly visible.  She said, “We cannot consider policy for the long-term if we do not first look at today’s reality in comparison to the past.”
  • Mr. Ron Huldai, Mayor of Tel Aviv-Jaffa, said: “In Israel, things happen when there is a crisis. Widening the Ayalon Highway, cleaning up the Yarkon, the municipal sewage system – all are plans that began due to crisis.” He criticized the central government, arguing that the ministers are not selected based on their success in the role, and thus have no incentive to improve outcomes.

The Israeli Context: Findings and Key Issues

The conference opened with presentations by three of the most senior economists in Israel – Prof. Omer Moav, Prof. Momi Dahan, and Prof. Dan Ben-David. This unique session did not focus on their world views, which differ greatly from one another.  Instead, the three economists presented a unified call to the country’s leadership to establish strategic, long-term plans that will determine the future of Israel, to outline the stages that are necessary to achieve these goals, and to propose how they intend to move Israel in this direction.  In addition, they called for actions to be based on facts, rather than on intuition or widespread public opinion that is often mistaken.

Prof. Dan Ben-David, Taub Center Executive Director, presented findings on long-term social and economic trajectories in the areas of economic growth, inequality, employment, education, and transportation infrastructure.  In the words of Prof. Ben-David, “the government must understand the extent of the continuing trends of the last 40 years and internalize that these are unsustainable. There is an urgent need for serious, professional solutions for these issues.”  Prof. Ben-David presented some of the worrying findings that emerge from his research, for example, that the rates of disposable income inequality in Israel are amongst the highest in the world.  A new finding by Ben-David that is especially concerning is that since international testing began, Israel’s ranking in terms of pupil achievement in core studies has steadily deteriorated.  Over the past 15 years, Israeli pupils consistently ranked at the bottom of the list of countries (Table 1).  In addition, since 1999, Israel has had the highest achievement gaps in the Western world between pupils of different groups, and as Ben-David notes, “it is no surprise that Israel’s large educational gaps later manifest themselves in some of the highest inequality rates in the West.”

Prof. Momi Dahan focused on the work of the government.  In his words, “Israelis invest more effort in the process of buying a kettle than we do in designing policy.  The future we desire is relatively obvious, but we’re not doing what we need to do to make it happen.”  Dahan went through a series of steps for creating policy, ranging from planning for the future to following up on the policy with research and evaluation.  He noted that policymakers today do not receive policy alternatives, which has a critical influence on the functioning of Israel’s democracy.  He gave the example of the “Zero Value Added Tax” (VAT) plan for housing, noting that it was proposed without any groundwork, such that even the costs and benefits are unknown.  In closing, Prof. Dahan said that policy should be made in a manner similar to consumer behavior: policy makers should examine several alternatives via assessing costs and needs.

Prof. Omer Moav also spoke about the importance of understanding the facts when making decisions.  “We all want a country with greater welfare and fewer gaps between groups,” he said, “but in the public discourse, there is confusion between means and ends, and there is no one checking that the means are moving us towards the ends.”  For example, he said, raising the minimum wage is, on the surface, a step that advances welfare.  In practice, however, it could lead to a rise in unemployment and in the cost of living.  Prof. Moav distinguished between those who “create value” and those who “live off the value of others.”  Among the latter, he pointed to farmers who have a monopoly on certain crops and who avoid potential competition by blocking imports. He also singled out worker’s committees as well as public sector tenure, which prevents advancement for the benefit of the public. Prof. Moav also criticized the voices calling for government regulation of rental prices: “Stav Shafir says that in order to ease the housing problem, we must regulate rent prices – but the impact of such a policy would be to reduce rent prices to below the equilibrium level. The fact is that everywhere that rent control has been implemented, it has led to a shortage of housing, poor construction and neglect of properties.”  In his words, “if we were to adopt the approach of protecting jobs, even at the expense of societal welfare, there would be no rise in the standard of living.  The rise in the standard of living is made possible through progress – and blocking progress is what harms welfare.”

Guest Speaker

Keynote speaker Prof. Steven Popper of the RAND Corporation provided an international perspective, including examples from other countries on the importance of long-term planning and the need to rely on facts in strategic decision-making. He opened with the question “How can we make the Israeli government think in a simple and focused way?”

Prof. Popper spoke about goal-setting as a first and critical step in strategy formation, and noted that establishing measurement and evaluation criteria for strategy is important.  He also discussed the importance of a planning process that is not dependent only on internal government knowledge, but which is also aided by external advisors and is flexible and adaptive.

Regarding Israel, Prof. Popper urged local policymakers to adopt an international approach to strategic planning, which can help them make decisions quickly on the basis of long-term goals, analysis and assessment. In his words, “The institutions of government created in an earlier era, when Israel was founded, are not necessarily well-suited to the challenges the country faces today.”  He also noted that adaptation and efficiency do not come from improvising in the short term.

Popper identified several challenges to strategic planning in Israel today, among them: a tendency to be reactive and not proactive; difficulties in coordination across government ministries; insufficient use of research; inadequate outcomes measurement and evaluation of policy; and policy formation for an extremely heterogeneous society. Despite the many challenges, Prof. Popper reminded the audience of recent positive developments due to the government’s efforts of October 2012, among which are the establishment of a strategic planning department in the Prime Minister’s office and attempts to increase demand for strategic planning within government bodies. “In the past, Israel saw itself as a unique phenomenon, but today the government and policymakers are hungry for international comparison and to understand Israel’s performance in the global context,” he concluded.

Planning in Practice

The participants in the policymakers’ session discussed the topic of strategic planning and long-term thinking in policy formation, relying on the findings that were presented at the conference as well as on their rich understanding of the field.

MK Silvan Shalom, Minister of National Infrastructure, Energy and Water, Minister of Development of the Negev and Galil, and Minister of Regional Cooperation, said: “Sometimes we make decisions that appear to be short-term, but often they are actually long-term decisions, because the projects themselves are for the long term.” He used the example of water, where Israel has a long-term plan and, thanks to desalinization efforts, the country does not suffer from a water shortage today despite the low rain fall of the past few years.  Minister Shalom linked long-term planning to the issue of energy – the building of power plants, desalinization plants, and the like – and the ability of the government to provide services for its citizens.  He said that “if we pay less for electricity, water and gas – that will truly fight against the high cost of living.  Effective planning can help lower the price of goods.”

MK Prof. Avishay Braverman, Chair of the Knesset Economic Affairs Committee, was critical of the way information is provided to the public: “People say – look, low unemployment, reasonable debt to GDP ratio, growth is good.  But the question is who benefits from this growth?  For years, they have lied to us by highlighting the average wage.  Only now have they remembered to examine the median wage, which shows that the situation is not so bright.”  He declared emphatically that “Israel is a corrupt society,” and he criticized elected officials who operate according to what looks appealing in the media, and not for the public good.  He claimed, for example, that “gas in Israel is a monopoly – the price is much higher than in other countries.”  Relating to long-term planning, Braverman said that “every minister works only for himself, every minister wants to be the Prime Minister in a flash.”  To address this situation, he suggested “less legislation and more norms. Knesset members pass legislation and they become famous, but they fail to consider the long term. We need people who aren’t just thinking about the next office they will run for.”

MK Orly Levi-Abekasis, Chair of the Knesset Committee on the Rights of the Child, sniped at her government colleague, Minister Silvan Shalom: “According to Minister Shalom, we can shut down the Taub Center because the situation is wonderful.  In the world that I live in, the reality is much different.”  In her talk, she addressed the importance of comparative data in policy planning, and said that “when I try to deal with a particular subject, such as public housing, and I want data, I request it from the Knesset research department.  But it turns out that there are tremendous gaps between the data from the Knesset research department and data from the Ministry of Finance or the State Comptroller’s office.”  She added that “the people in the Ministry of Finance don’t do their homework – it is absurd and bizarre.”  Regarding the issue of housing, Levi-Abekasis said, “We cannot consider policy for the long term if we do not first look at today’s reality in comparison to the past.  In a 2006 Taub Center study, there was discussion of failures in the mortgage market and recommended options for addressing them, so don’t tell me that we could not have predicted what happened.”

Jerusalem Mayor Nir Barkat described the vision for the city of Jerusalem that was outlined during his administration.  Barkat explained how he utilized strategic planning to strengthen the city in three core areas in which it has a relative advantage: culture and tourism, life sciences research, and development of remote service centers.  In Barkat’s words, “even before we get to budget discussions, there are plans.  Every division must present plans that have the power to impact, that can be measured and that are attainable.  On a quarterly basis, we convene and examine what succeeded and what didn’t – we then create an interim summary and make adjustments as needed.”

Mayor Ron Huldai, Mayor of Tel Aviv-Jaffa, stated that “in Israel, things happen when there is a crisis. Widening the Ayalon Highway, cleaning up the Yarkon, the municipal sewage system – all are plans that began due to crisis.”  He criticized the central government, arguing that the ministers are not selected based on their success in the role, and thus have no need to try to improve outcomes.  A key point in Huldai’s talk was the importance of decentralization of government. In his words, “all of the authority is in the hands of the State, while all the ability to implement is in the hands of the local authorities.  Therefore, it is very important to transfer authority over to the local government.”

Prof. Nathan Sussman, Director of Research at the Bank of Israel and a professor at Hebrew University, noted the importance of the banks’ credibility in the public eye in order to ensure their long-term stability.  He said that at the Bank of Israel “we follow and monitor the government budget from the perspective of five to six years into the future.” He also spoke of the important trends that are sure to have a significant impact in the coming decade: the aging of the population, sources of capital that will spur the economy over the next decade, changes in the savings patterns of the Israeli public and more.

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.
 

A new Taub Center study: which basic necessities low-income Israeli families forego?

  • Average monthly spending per person on food in Israel is about NIS 700, of which about NIS 660 is considered normative (i.e., the standard level of spending needed to fulfill household food needs).
  • An average Israeli in the lowest income decile needs NIS 192 more per month to reach the normative spending level, while a person in the second lowest income decile needs an extra NIS 99 per month.
  • Low-income families spend close to the normative amount on meat and chicken, bread and grains, and oil/fats, but cut back on eggs, dairy, and especially fresh fruits and vegetables.

Every year, as the Jewish New Year approaches, the issue of food insecurity rises to the top of the public agenda.  According to figures from the National Insurance Institute, about 320,000 households in Israel – nearly a million people – suffer from food insecurity.  A new study by Prof. Dov Chernichovsky and Eitan Regev, to be published in the Taub Center’s upcoming State of the Nation Report 2014, examines the average per person spending on food and establishes a normative level of food spending in Israel (i.e., the standard level of spending needed to fulfill household food needs).  The researchers also examined the types of food that low income households forego.

Chernichovsky and Regev found that an average Israeli spends about NIS 700 per month on food, which represents 17% of household income and 21% of household expenditures.  Fruit and vegetables account for the largest share (18%) of the household food budget, followed by meat and chicken at 16% (Figure 1).

E Food Insecurity Fig 1

The Taub Center study also examined how changes in income or household size affect food spending.  There are certain staples for which spending is minimally influenced by changes in income, but is greatly influenced by the number of people in the household.  In other words, even as income drops, expenses for such items remain relatively steady, and even a household with fewer resources would have difficulty foregoing these items. The items determined to be most essential for Israeli households are meat and chicken, bread and grains, and oil/fats. Items considered “somewhat necessary” include dairy items and eggs, fish, and fruits and vegetables. Thus, as income declines, households are more likely to forego purchasing “somewhat necessary” products (e.g., dairy, fish and vegetables), and to maintain spending on meat and chicken, bread products, and oil.

Chernichovsky and Regev concluded that out of an average monthly per person food expenditure of nearly NIS 700, about NIS 660 is considered “normative spending.” This classification is based on the broad income range for which food spending remains relatively stable and fixed (the green bars in Figure 2).  The study found that in the lowest and second lowest income deciles, monthly per person spending on food is lower than the normative amount by NIS 192 and NIS 99, respectively.

E Food Insecurity Fig 2

The Taub Center study also determined the “normative expenditure” for different food groups (Table 1).  Groups with the highest normative spending include fruits and vegetables (NIS 137), meat and chicken (NIS 110), and dairy and eggs (NIS 101).  The study found that households in the lowest income decile have difficulty affording meat and chicken, and their spending on these items is 25% lower than the normative expenditure.  Moreover, the second income decile spends 22% less and the lowest income decile spends 29% less than the normative expenditure level on dairy and eggs.  The foregone amount of spending on fruits and vegetables was even larger.  The second lowest income decile has a shortfall of NIS 25 (18% of the normative expenditure) while the lowest income decile has a shortfall of NIS 48 (35% of the normative expenditure) in terms of fruit and vegetable consumption.  The picture that emerges suggests a substantial shortage of these food groups for the lower deciles.

E Food Insecurity Table 1

Chernichovsky concludes: “The patterns of food spending by Israeli households are not surprising: the burden of food expenditures is greater as per person income declines. Nevertheless, there are surprising and important findings on the type of food items that poor families forego. For example, it is concerning that spending on fruits and vegetables and to some extent, also on dairy products, follows the same pattern as spending for luxury items. As such, a decline in income is likely to result in not only a lack of food, but also a reduction in nutritional quality.” Regev adds: “Policymakers must formulate policies to relieve the distress of households whose ability to purchase food necessities falls below what is considered the norm.”

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem.  The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas.  The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Gal Ben Dor, Director of Marketing and Communications 054-464-2333.

 

As the school year begins: The Taub Center publishes a new study on Israel’s education budget

A new Taub Center study by Nachum Blass and Yulia Cogan on the education budget in Israel examined two central issues: (1) a comparison of the current education budget to education budgets in previous years as well as to education budgets in other countries; and (2) the budget’s structure and transparency – or lack thereof. The study found that the Education Ministry’s final, end-of-year, budget grew (that is, money that was actually spent) by 45 percent in real terms (i.e., after accounting for inflation) between 2000 and 2012. Even after adjusting for the number of pupils, which increased by 24% from 2000 to 2012, there is an increase in per pupil expenditure, which grew particularly quickly between 2009 and 2012 (Figure 1). The reason for this rapid growth is the implementation of the comprehensive wage bargaining agreements with the teachers’ unions as well as the accelerated implementation of the Compulsory Education Law for children aged 3-4, two processes that demanded greater spending. E Education Budget Fig 1 The comparison of the education expenditure per pupil in Israel with that of the OECD countries shows that OECD countries invest more in education at every age group – and until 2008, the gap was growing with Israel falling further behind. Since 2008, however, the first year of implementation of the new “Ofek Hadash” wage agreement with Israel’s primary school teachers, education spending has increased dramatically (Figure 1), while the OECD expenditure has frozen or even decreased. The subsequent “Oz Le’Tmurah” wage agreement with secondary school teachers will be reflected in the 2012-2015 budgets, while the plans for completing the implementation of the Compulsory Education Law for children aged 3-4 will be primarily reflected in the 2013-2014 budgets. Consequently, Israel’s expenditure per pupil is expected to continue rising in the next few years – both in real terms as well as relative to the OECD. As Nachum Blass notes: “During the period in question, the data simply does not support the conventional wisdom that education budgets have been cut.” Lack of transparency in the education budget The government budget, and in particular the education budget, reflects government priorities in allocating available resources. In the words of Blass and Cogan, “the budgetary discussions are supposedly open and transparent to the public, but in fact, the budget is more like a maze, even for professionals.” The study examined three levels of the budget: the original budget, the amended budget (which reflects changes to the budget during the year), and the final budget (which reflects the actual expenditures made over the course of the year). Taub Center researchers Blass and Cogan found large differences between these budgets. For example, changes in the 2012 Ministry budget included additions totaling NIS 10.5 billion as well as reductions totaling NIS 6.1 billion – i.e., total changes reaching NIS 16.6 billion, or nearly half of the budget. In Blass’s words, “the value of budgetary planning declines considerably when half of the budget is changed during the course of the year. It is important to stress that this is a multi-year average, and so these deviations from the original budget are not random but serve to reflect a budgetary policy that is clear to those in charge of the education system’s budget but is obscured (at least at the time of full debate on the original budget) from the public.” Examples of the lack of transparency in selected areas Blass and Cogan conducted a micro level analysis of budget lines, and found that, even at this level, it was very difficult to trace the spending and to determine whether actual expenditures aligned with the items specified by the Ministry of Education. For example, it was found that the budget allocated for district departments was hardly spent from 2005 to 2012 and apparently served as a sort of “hidden reserve fund,” enabling transfers to Yeshiva institutions to exceed the original budget by 35 percent (Table 1). E Education Budget Table 1 At the budget line level, which allows for finer resolution, the same phenomena are seen. Weak populations. The goal of the Ministry of Education’s Shahar Division is to advance weaker populations and to narrow educational gaps. In the years examined, NIS 183 million was originally budgeted, though the amended budget rose to NIS 412 million, on average, for this program. The actual spending, as indicated in the final budget, stood at NIS 341 million on average. In other words, the amended budget was more than double the original budget while the final budget exceeded the original budget by 86 percent. Blass explains: “This is a pattern that repeats itself annually in certain budget line items. In the original budget – the one that is up for public discussion – a program may be budgeted much lower than the true budgetary intention. During the course of the year, significant amounts of money are then added, away from the public eye, yielding an final budget that is considerably greater than the one put forth in the original budget.” Another example of the lack of budgetary transparency is the budget item entitled “lowering the number of pupils per class.” From 2009 to 2011, the original budget allocated some NIS 218 million for this purpose, but the implementation and final budget was zero. It seems that this section essentially became a reserve budget, like others that remained unutilized until transferred and used elsewhere. Improving achievements. After the publication of improvement in achievements on the 2011 international TIMSS exams, there was a public debate about whether these achievements were the result of preparation for these specific exams or whether there was a real systemic improvement in the system. The Ministry of Education claimed that the better scores were the result of massive investment in extra teaching hours in lower secondary schools. The Taub Center researchers found, however, that although there is a “program for improving achievements” budget line for some NIS 370 million, it appears only in 2010 (the year preceding the exams) and does not appear again in 2011 or in 2012. Moreover, it appears only in the original budget, and does not appear in the amended or final budgets. Can one conclude that this budget was not utilized? Not necessarily. Blass and Cogan suspect that this budget was transferred to and used by the “general learning hours” budget line instead. Compulsory Education Law through 12th grade. In July 2007, the Knesset passed a law requiring compulsory education through 12th grade. Until 2011, however, it was not included in the education budget, at which time NIS 17 million was allocated towards it in the original budget. In the amended budget, the amount was already reduced to about NIS 1 million, while the actual spending was zero. As Blass notes: “The fact that the Ministry of Education dragged its feet for four years in budgeting the law, and in the end budgeted it with a minimal amount of money that was ultimately not utilized, speaks for itself.” Transfers to Yeshiva institutions. A particularly interesting phenomenon in these budget lines is the contradiction between the cuts in the original budget in 2005-2008 and the sharp increase in 2009. It appears that following the change of government in 2009, two actions were taken: the original budget was brought in line with the amended budget, and, at the same time, the amended budget was increased by 27 percent. In the words of the Taub Center researchers: “When the budget changes were examined, it is clear that the purported cuts between 2005 and 2008 were fictitious – since in fact both the amended and final budgets grew continuously from 2005 to 2007 and remained unchanged in 2008.” The changes were made during the course of the year, although it was clear that they were already anticipated as the original budget was being planned. Blass and Cogan note that due to negative public opinion regarding the budget to Haredi education, it was apparently easier to implement changes in the budget through the Finance Committee rather than to present them transparently in the original budget for the approval of the entire Knesset. Likewise, it was found that budget lines supporting kollels and great yeshivas stopped appearing in the budget beginning in 2008, replaced by a new budget line (support for Yeshiva institutions), at a higher amount than the two previous lines together (except for 2008). An analysis of the actual spending against the cuts in the original budget shows that, in practice, there were no budget cuts in these lines. Non-Utilization of the Budget On the one hand, the Ministry of Education is being asked to cut its budget, while on the other hand, it does not utilize the entire budget at its disposal, forgoing more than a billion shekels on average annually. This non-utilization of funds is not a one-time occurrence for a single, specific year. This phenomenon repeated itself during each of the years examined. The Ministry of Education provides various explanations for not utilizing its funds completely, although Blass and Cogan believe that with efficient management and with greater openness and transparency, it would be possible to overcome these difficulties, or at least to contain their damage. In this way, some of the transfers could be avoided – such as in the 2011 budget, where NIS 141 million was transferred from the Ministry of Education’s budget to the general reserve and from there to the Ministry of Defense for the purpose of enlisting Haredim in the army – something that is completely outside the realm of education spending. The conclusion from this Taub Center study is unambiguous: the education budget is not transparent to the public, as is evident from the substantial and systemic differences between the original budget, the amended budget, and the resulting final budget. Most of the public debate revolves around the original budget, but this budget differs, at times greatly, from the spending that actually occurs. The systematic nature of this phenomenon suggests that the original budget, in certain cases, is intentionally misleading from the outset. Likewise, the amended budget differs from the final budget and the process of budgetary modifications is very difficult or nearly impossible for the public to follow. Due to the number of changes in the budget (more than 8,000 just in 2011), the Finance Committee cannot seriously discuss each and every change. Therefore, what generally happens is that the Committee receives a list of requests for change – sometimes for large sums – and approves them without any significant discussion. The scope of requests totals an average of 20 to 25 percent of the original budget (that is, between NIS 8 and 10 billion). In order to improve the situation, Blass and Cogan recommend: simplifying the budget by reducing the number of budget sections and lines, for example, by eliminating extraneous lines which are budgeted at zero; changing the presentation of budget data to facilitate verification that budget plans matches reality; expanding the explanations to the budget; and improving the process whereby the Knesset approves budgetary changes. The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem.  The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas.  The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Gal Ben Dor, Director of Marketing and Communications 054-464-2333.

A new Taub Center policy brief highlights unique characteristics and challenges of families in Israel, and recommends solutions

Some of the brief’s highlights include:

  • Israel has the highest birth rates in the developed world (3.0 children per woman vs. the OECD average of 1.7) with a variety of government policies encouraging fertility.
  • The country provides a relatively supportive environment for working mothers that yield relatively high employment rates among Israeli women ages 25–44 with and without children.
  • One of the biggest challenges facing Israeli families is poverty, as one in five Israeli households and one in three Israeli children live below the poverty line. The problem is particularly pronounced for Arab-Israelis and Haredim – with differences in the challenges experienced by each of these groups.

The special edition 2014 UN publication Family Futures, featuring the Taub Center article, was published to commemorate the 20th Anniversary of the International Year of the Family (initially celebrated in 1994).  Other authors include heads of state, national government ministers, academics and civil society representatives. The Taub Center was the sole invited contributor from Israel.

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem.  The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas.  The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Gal Ben Dor, Director of Marketing and Communication 054-464-2333. 

In a new Taub Center study, Prof. Shlomo Yitzhaki claims that moving to nationalized pension savings plans would benefit both citizens and the state

In Yitzhaki’s words: “The state has justifiably recognized that in order to prevent senior citizens from becoming a burden on society, people must have pension insurance. However, the state has erred in leaving citizens to manage their savings on their own.” Yitzhaki argues that much of the population is unable to monitor events in the capital markets and to understand the complexities of financial investment; therefore, such responsibilities should not be left to them. The solution, according to Yitzhaki, lies in transitioning to a nationalized pension system, which would lead to a more effective mechanism for contribution and oversight of pension fund money, reduction in management fees, and more generous benefits.

In the Taub Center policy paper, Yitzhaki details the advantages of nationalized pensions over the current private pension system:

Greater efficiency in pension contributions and supervision.   The pension contribution system is currently in the hands of private companies that manage the funds. In contrast, regulation and oversight, which includes ensuring that employers and workers actually contribute the minimum amount to pensions as set by law, is in the hands of the state. This separation of responsibilities makes it challenging for the state to regulate private companies. According to Yitzhaki, this problem would likely be solved if the state itself deducted pension contributions from the employee’s salary, as it does for health insurance. Since the payment system is already in place for the National Insurance Institute (NII), inclusion of the pension contribution in this deduction would simply entail an increase in the total sum deducted by the NII.

Lowering pension fund fees. In 2013, the Knesset Finance Committee decided to cap fund fees charged by two types of pension funds (provident and insurance funds) as of January 2014, with permitted fees of up to 1.05% of the total assets (i.e., the accrued savings plus return) and up to 4% of the contribution amount. “This law is intended to benefit savers,” says Yitzhaki, “although the average person still has limited understanding of pension fees due to the complicated calculations, especially because the legal cap on fees differs by savings fund type.” Yitzhaki examined the share of the returns that go towards management fees over time,for provident or insurance funds that charged the maximum fee in 2014 (Figure 1). The basic assumption, based on actuarial calculations, is that the average return stands at 4% per year. As shown in the figure, the management fees are 1% higher than the returns in the first year, meaning that the saver pays more in fees than he gains in profit even before he begins to realize any return on his savings. In subsequent years, the calculation changes as savings and returns accumulate and so, for example, in the second year, 50% of the return is lost to management fees, while in the fifth year, some 40% is lost. Even in the long-term, nearly 30% of the return goes towards management fees.

E Pension Plans Figure

In addition to the challenging calculations, Yitzhaki points to a number of other disadvantages of management fees in private pension funds. Firstly, in his opinion, the current method of fee collection is regressive and reduces social justice because an individual’s bargaining power with regard to fees grows as his salary increases. Secondly, fees are transferred from the investing public to fund managers and owners, instead of into the hands of the state to serve the public at large. Thirdly, the current fees are inflated relative to what is acceptable elsewhere (e.g., in the U.S., fees are limited to 0.5% of total savings).

More generous pension benefits for savers. Private pension funds must remain balanced at all times (i.e., without a deficit) since rumors of a deficit could cause large numbers of savers to withdraw their money and lead the fund to collapse. In contrast, there can be no mass exodus from a nationalized pension system, because there is no alternative. Furthermore, nationalized pensions in Israel could take advantage of this flexibility to provide more generous benefits than private pensions, since they would be based on Israel’s high population growth rate (a rate of 1.5% per year that is expected to remain unchanged in the future). This growth rate in the labor force translates into growth in pension contributions. National insurance, which does not require actuarial balancing, can rely on the expected growth in contributions to provide current pensioners with a return that is at least 1% higher than the current 4% return for private pensions.

Recommendations for improving the pension system

In the Taub Center study, Yitzhaki recommends several key changes including placing fund management in government hands while leaving the money itself in the private market, allocating a portion of the investment funds in profitable public works, and making changes to benefit senior citizen investors. According to his recommendation, the nationalized pensions would be capped at a specific ceiling, for example, the average market wage, and any contributions based on an amount beyond this maximum would be managed as they are today. Yitzhaki’s plan calls for a governmental committee composed of experts that would serve as the administrator for the pension savings, while in turn transferring management to a pension fund chosen by tender.  According to Yitzhaki, this  process would disperse the investments and limit the shock that moving to a national pension system could create. In addition, he suggests cancelling the required pension deduction for workers who have already reached pension age, who are today required to continue pension deductions including payment of management fees. In order to prevent this illogical situation, he advises adopting the National Insurance Institute system whereby senior citizens (over age 70) who continue to work no longer pay deductions.

Yitzhaki concludes the paper: “Privatizing pension insurance is another example of privatization that does not make economic sense. Pension privatization has a component that no one would object to – ensuring the future of the elderly among us so that they do not become a burden on society. Essentially, though, the system is transferring money from savers to the heads and owners of funds, under the approval of the Ministry of Finance.” The Taub Center policy paper shows that transitioning to a nationalized pension system is likely to lower costs, increase returns and improve the overall welfare of the investing public.

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Gal Ben Dor, Director of Marketing and Communications 054 464 2333.

A new Taub Center policy paper: despite its declared policy, the Israeli government has been neglecting the housing sector

The paper will be presented at a meeting of the Economics Committee (chaired by MK Prof. Avishay Braverman), as a part of the Knesset’s Housing Day, which was initiated by the Housing Caucus (chaired by MK Itzik Shmuli, MK Ilan Gilon, MK Orly Levy-Abekasis, MK Dov Khenin and MK Miri Regev). A new Taub Center study by Dr. Gilat Benchetrit describes how the government has withdrawn support for housing over the past decade, despite repeated warnings of a serious housing crisis.  The various support tools historically employed by the state, including public housing and subsidized mortgages, are of little use today.  Benchetrit notes that rent assistance is the sole mode of support that currently remains available to financially distressed Israeli families, and even it is becoming less relevant.  Thus, despite the Ministry of Construction and Housing’s declared vision of “decent housing, at a reasonable price and in a suitable neighborhood, for every family” in practice, government policies have intensified the housing crisis, as demonstrated by the following:

Shrinking of public housing availability.  Inthe 1950s and 1960s, hundreds of thousands of public housing units were built. The majority of these units were sold following the Public Housing Law (1998), which permitted tenants to purchase the purchase these units at a greatly reduced price.  Even after this law was repealed, the housing campaigns continued.  Although a provision in the law stipulated that income from housing sales be dedicated towards replenishing the supply of public housing, this provision was not implemented.As such, between 1998 and 2011, the public housing supply dwindled by 37,500 units and only a thousand new units were built.  Despite tightened qualification requirements, thousands of eligible families remain without housing.  In 2010, some 8,000 requests for housing were submitted to the Ministry of Construction and Housing, and in July 2011, there were approximately 2,340 eligible households on the waiting list for public housing.  According to the Ministry of Absorption, about 175,000 households have requested public housing since 2011 and of these, approximately 39,500 were deemed eligible.  Benchetrit concluded that “in the absence of a basic stock of public housing, it is simply impossible to provide decent housing solutions to low-income single-parent families, to people with disabilities or to the elderly, who for the most part represent the populations eligible for assistance.”

Deterioration in subsidized mortgages.  The state has historically offered subsidized mortgages; however, over the past decade, these mortgages have become an ineffective tool with a negligible impact on the housing market.  The Taub Center study found that the number of people who benefited from subsidized mortgages was about 55,000 in 1996, 30,000 in 2003 and only 2,200 in 2011. Benchetrit attributes this dramatic decline to two causes.  Firstly, the eligibility criteria for subsidized mortgages were significantly tightened in 1998 – for example, the minimum age for eligibility was raised – and in subsequent years, qualification requirements have become even stricter.  Secondly, the terms of subsidized mortgages became less and less attractive.  The standard, partial linkage of subsidized interest rates to the price index (at 80% of the increase in the price index) was increased to full linkage, and mortgage interest rates were not updated according to the rates prevailing in the free market.  In the early 2000s, the market interest rate for long-term loans was greater than 6%, in comparison to only 4% for subsidized loans.  However, free market interest rates declined over the years, while the interest rates for subsidized loans remained the same; thus, since 2009, interest rates offered by banks are more attractive than those of subsidized mortgages.  Under these terms, many have preferred to obtain free market loans and only those with limited bank credit have been obliged to make do with a government mortgage.

Cuts in rental subsidies.  The system of government subsidies towards private market rent was established in the early 1970s and expanded significantly during the 1990s.  Today, it is the government housing tool that affects the largest number of households, despite its ineffectiveness.  Nevertheless, even if this policy is examined as an effort at housing assistance in Israel, it is evident that it, too, has been considerably eroded in recent years.  Within less than a decade, the budget for rental assistance grants was slashed by 27%, from 1.8 billion shekels in 2003 to 1.3 billion shekels in 2011.  In the wake of this cut, the number of households receiving rental assistance declined from 195,000 in 2001 to 138,000 in 2011.  Moreover, given the trend toward rising rental prices, the amount of assistance provided is minimal.  The study found that the average amount of support per eligible household was 800 shekels in 2011 – just 25% of the average monthly Israeli rent of 3,170 shekels at the time.  Benchetrit adds: “The state’s shift to housing assistance via the private rental market has made it harder to safeguard the rights of those eligible for assistance, inasmuch as free market renters (in contrast to public housing tenants) have no protection under the law and they are dependent on landlords, who may raise their rent or request that they move out at the end of their lease.”

Housing market trends contradict the government’s planning vision Israel’s National Master Plan for Construction, Development and Conservation (NMP 35) sets forth the government’s overall planning vision.  It states the need to develop the Galilee and the Negev, and a desire to promote dense urban construction so as to ensure the conservation of open space.  However, in the Taub Center study, Benchetrit found that vision and reality do not overlap, and in some cases, actual practices even contradict the vision:

Less construction, more low-rise buildings.  The average floor size of new Israeli residential units was 153 square meters in 2000, in contrast to 182 square meters in 2008. According to Benchetrit: “New Israeli construction during these years, including public construction, consisted of dwellings that were more spacious and accordingly – more expensive.”  The Taub Center study compared housing starts data (i.e., the number of housing units on which construction was initiated) for 1995 and 2007, and found that the number of housing starts for 2007 was less than half that of 1995 (30,788 versus 72,876 respectively).  Moreover, high-rise construction (buildings with 3 stories or more) was reduced in favor of more low-rise construction.  High-rise buildings accounted for 48,500 housing starts in 1995, versus just a third of that figure in 2007.  Benchetrit notes: “Low-rise building is, for the most part, expensive and serves the affluent; therefore, the dramatic decline in the construction of apartment buildings is a far cry from a policy of affordable housing.”

Less construction on public land.  About 93% of Israel’s land area within the Green Line is designated as public land.  As such, one may assume that the majority of housing starts would occur on public land.  Surprisingly, between 2008 and 2011, 51 percent of housing starts were on privately-owned land, versus just 47 percent on state-owned land.  “Changes in land regulation could bring about much lower housing prices,” states Benchetrit.

Strengthening of the geographic center at the expense of the periphery.  Analyzing the distribution of Israel’s Jewish population by region between 1995 and 2011 reveals that 48% of the housing growth took place in the center of the country, in contrast to the development vision set forth in the National Master Plan.

Outcomes of a policy of reducing housing assistance in the last decade

Sharp rise in housing prices.  Low supply and high demand has led to a dramatic rise in the housing price index since 2007.  The study found that both the housing price index (based on sales transactions) and the rental price index (based on rental contracts), have skyrocketed since 2007.  The housing price index rose at an even greater rate than the rental price index – a 52% real cumulative increase (that is, controlling for inflation) from 2007 to 2013 (Figure 1).  The disparity between the change in housing prices and that of rental prices indicates the development of a housing market bubble. E Housing Fig 1 Sharp decline in home ownership rates.  Between 1995 and 2008 there was a decrease in home ownership rates: from 73% of households in 1995 to 66.4% in 2008.  In 2008, the proportion of households that rented their home amounted to 27% of the housing market.

Widening social gaps.  The Taub Center study found a large gap in home ownership rates between the various income deciles (Figure 2): owner-occupier rates in the lowest decile were 35% versus 86.5% for the highest decile.  This disparity means that the country’s weakest socioeconomic groups have greater exposure to the risks and instabilities of the private rental market. E Housing Fig 2 Risk to mortgage holders.  Literature studies suggest that the acceptable level of spending on housing expenses is between 25% and 30% of household income, in order to ensure sufficient resources for the consumption of other vital goods and services.  In Israel, however, average mortgage payment rates amount to 35% of borrowers’ income.  Moreover, 24% of borrowers spend at least 40% of their monthly income on mortgage payments, while 12% of borrowers are obliged to allocate at least 50% of their monthly income to mortgage payments.  This is a very heavy housing burden that puts borrowers in a risky situation and raises the possibility of homelessness.

Benchetrit concludes: “Housing, like healthcare and education, greatly affects the degree of equality in society.  The government’s policy of limiting its involvement in the housing market takes a toll in various ways: it hinders the planning vision of NMP 35; intensifies polarization between the geographic center of the country and the periphery; lowers the supply of housing, leading to a rise in prices; and, in particular, increases the frustration and bitterness amongst broad swathes of the population, as manifested in the social protests of 2011.”

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem.  The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas.  The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Gal Ben Dor, Director of Marketing and Communication 054-464-2333.

New Taub Center study on the bagrut exams in Israel

With the beginning of the bagrut (matriculation) exam season, the Taub Center for Social Policy Studies in Israel has released Bagrut Exams: Issues and Recommendations for Reform – a policy paper by Nachum Blass, a senior education researcher at the Center.  The research shows that in the past few years there has been a recognizable trend towards improvement in various aspects of the bagrut exams, and contrary to frequent claims, there is no proof that a decline in the level of the exams is the cause of this change.

The primary piece of data on this issue is that the rate of individuals successfully completing the bagrut exams out of those taking the exams is steadily increasing.  According to the study, the rate of students who receive the bagrut certification has risen from 46 percent in 2006 to 50 percent in 2012.  This rise is especially significant in light of the growing size of population groups that do not take the exam [Haredim (ultra-Orthodox Jews) and residents of East Jerusalem, whose combined percent in the relevant student population has risen from 12 percent to 18.5 percent] as well as the growth in the special needs population, which has a low rate of exam-takers.

The Taub Center research found that between 2006 and 2012, the percent of those receiving the bagrut certification has risen significantly in most population groups: non-Haredi Jews (from 57 percent in 2006 to 67 percent in 2012), Arab Israelis (excluding East Jerusalem, from 35 percent to 42 percent), and Druze (from 44 percent to 55 percent).  Nevertheless, in two population groups, there was no change: Haredim (8 percent received bagrut certification in both 2006 and 2012) and Bedouin (28 percent in 2006 and 29 percent in 2012).

In Blass’ words, the rise in the rate of bagrut qualification is apparently not due to a decline in the level of the exams: “Although there have been changes in the past to the exams, and amongst them a reduction in the amount of material required (units of study) as well as the addition of both second and third testing opportunities for students to improve their scores, these changes are not indicative of a change in the quality of the tests themselves.  There is no research evidence that the central parameters on which the pupils are tested – the level and depth of understanding of the materials, analytical skill and ability to effectively express oneself  – have been compromised, or that the questions are any easier or more difficult than those of the past.”

The Taub Center study found that Israeli pupils do not study fewer hours than in the past, but rather, more.  As can be seen in Figure 1, between 1995 and 2010 the percent of pupils studying the minimum number of units required for a bagrut (21 study units) declined from 38 percent to 29 percent, while the percent of pupils who chose to study for an extended bagrut (31 units of study or more) rose from 17 percent to 29 percent.

E Bagrut Exams Fig 1

Another measure that is indicative of the level of those qualifying for a bagrut certificate is the average score on the psychometric exam, which is similar to the SAT exam in the United States.  Since the psychometric exams are calibrated, comparisons over time can be made and a decline in scores can be taken as evidence of a lower quality system.  The data show, however, that the quality of individuals accepted to most academic institutions has actually risen (for example, the average psychometric score for acceptance to universities increased by 15 points between 2002 and 2012, from 603 points to 618).   Only in the academic colleges without governmental funding, where the number of students has risen steadily in the past decade, have the scores of accepted students significantly declined (from 553 to 532 points).

Technology studies from the perspective of the bagrut exams

Another common claim is that the scope of science education in Israel is limited.  In the Taub Center study, the number of hours of science and technology study in middle school (ages 12-14) was compared to the averages of Western countries and found to be among the highest (Figure 2).

E Bagrut Exams Fig 2

In addition, Blass found that between 1995 and 2010, the share of those taking bagrut exams in mathematics, physics and biology, as well as those passing and excelling in these exams rose.  In fact, these increases were far greater than the rise in the number of those studying these subjects in the relevant population (except for the case of chemistry), such that rather than speaking about a crisis in the teaching of the sciences, it would be more appropriate to note significant achievements.

A proposal for reforms in the bagrut exams

Various parties have a range of critiques of the bagrut exams in their current formulation, including claims that they make the educational process superficial, are not representative of the fields of study and the necessary skills required for graduates in their future lives, are expensive to administer and result in a great waste of school days.

Over the years, in an attempt to address these concerns, there have been many recommendations for reform of the bagrut exams, although most have not tried to fundamentally change the structure of the bagrut exams at the core.  In contrast, Taub Center researcher Nachum Blass proposes in this study a wide-ranging reform wherein the bagrut exams would be comprised of three components:

  • Tools – this will include the subjects that are considered essential tools for integration into adult society: mother tongue, a foreign language, civics, computer skills, and possibly also mathematics.  The exams in this component will be computerized and conducted in national testing centers.  Each examinee will be allowed to take the test multiple times and the highest score will be used in the calculation of the final bagrut certificate.
  • Knowledge – this includes the other subjects, compulsory as well as elective.  The grade in this component will be determined by the school, calculated on the basis of the pupil’s average score over the last three years and based on the evaluation methods as determined by each educational institution: final exams, exams and projects, independent study, etc.
  • Values – this includes an evaluation by the educational staff of the pupil’s performance on a number of non-academic behavioral and values components, such as volunteerism, effort and diligence.

Adopting this proposal would promote the value of the bagrut certificate as a motivator (pupils will have to devote their full energy to three years of study and not purely preparation for the exams), and leave intact the role of the exams as a selection tool for institutions of higher learning.  At the same time, this new program could save hundreds of millions of shekels that are budgeted for the process of writing and reviewing the exams and paid to teachers to prepare for the tests, and would serve to strengthen the  educational and values-oriented aspects of the school’s activities.

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Gal Ben Dor, Director of Marketing and Communication 054-464-2333.

The Taub Center presents a new study of Dr. Zoya Nisanov on the middle class in Israel

Since the 2011 summer protests, the middle class has become one of the most talked about issues in Israel.  A new study published by the Taub Center and written by Dr. Zoya Nisanov of the Economics Faculty at Bar-Ilan University analyzes the middle class, to which the majority of Israelis belong, from a variety of angles, presenting new findings on the composition of this class, the income levels of its members, and trends within this group.  The research will be presented for the first time at the conference of the Israel Economic Association.

Nisanov uses a model that divides the population into income groups according to the best fit of the distribution of incomes.  The main finding is that in Israel there are four economic classes – upper, upper middle, lower middle, and lower.  Therefore, it is more accurate to relate to the middle class in Israel not as a single, homogeneous group, but rather as two separate groups differentiated not just by their income levels but also by their socio-demographic characteristics.  According to the study by the Taub Center, the lower middle class includes households with a monthly income of between NIS 1,950 and NIS 5,000 adjusted per capita, weighted according to 50 to 130 percent of the adjusted per capita median income – a group whose size is 40 percent of the overall population.  The upper middle class households have a monthly income of greater than NIS 5,100 but less than NIS 12,540 adjusted per capita (up to 320 percent of the median income).  This group is some 29 percent of the overall population.

As can be seen in Figure 1, between 2002 and 2011 the gaps between incomes in the two groups widened.  The lower middle class became poorer relative to the upper middle class.

E Middle Class Fig 1

In Nisanov’s words, “The long-term goal should be a unification of these two groups into a single large and strong middle class.  In order to achieve this, the gaps between the lower middle and upper middle class must be narrowed.  On the basis of the results from the study, the conclusion is that increasing the number of years of study and improving professional training amongst the lower middle class is likely to contribute to narrowing the gap between the two classes.”

The composition of the middle class: More young people and residents of the center of the country; fewer immigrants, Haredim and Arab Israelis

Through a series of segmentations according to various socio-demographic characteristics, the Taub Center study examined the composition of the various classes, including the composition of the middle class in Israel.  The findings revealed that despite all of the attempts to achieve more equality among the different societal groups, there are still large gaps that make it more likely for certain population groups to belong to higher socioeconomic classes.

According to Nisanov’s study, the most important factor explaining gaps between groups is the number of wage-earners in the household.  Amongst the two lower social classes, the rate of households with less than two wage-earners was very high (some 95 percent in the lower class and some 59 percent in the lower middle class), while some 25 percent of upper middle class households and some 15 percent of upper class households had less than two wage-earners.  These findings can explain, at least in part, the lower likelihood that Haredim, Arab Israelis and immigrants will belong to the middle class, since in these households the number of wage-earners is particularly low.  Only some 31 percent of Arab Israeli households, for instance, have more than one wage-earner.

Nisanov examined the influence of various socio-demographic variables on the likelihood of a household belonging to each of the classes and found that being a Haredi household raised by 42 percent the chances of a household belonging to the lowest social class.  Being an Arab Israeli household increased the chances of belonging to this social class by 18 percent, while it lowered the  likelihood of belonging to the upper middle class by 15 percent.  Another important variable that plays a role in keeping Haredim and Arab Israelis from belonging to the higher social classes is the number of children in these households.  The study found that every additional child under the age of 18 increases the likelihood of the household belonging to a lower class.

Nisanov also found that the older population is being left behind in the area of income.  The lower middle class was comprised of more older-adults (aged 55 and over), while the upper middle class had more heads of households aged 35-54.  The upper middle class is the youngest social class (45 on average), and the age of the head of household is lower on average by nearly three years than the average in the lower middle class.  The lowest class is also the oldest group.  This leads to the conclusion that the probability of belonging to the group with the highest income rises until a certain age, and then declines.

As expected, place of residence has an influence on class status, with residents of the central region being most likely to be amongst the higher classes relative to households living in the south or north of the country (Figure 2).

E Middle Class Fig 2

The differences in class according to the gender of the head of household (Figure 3) reflect the fact that households headed by women generally have only a single wage-earner   (e.g., widows, single parents, or Haredi women),  and thus are mostly in the lower classes.  For example, it was found that in one-third of poor households headed by women, the women are widows.  The influence of this characteristic is considerable also when the data was segmented by family status: married couples have a higher chance of belonging to higher income groups.

E Middle Class Fig 3

Figure 4 presents the division of income groups by continent of birth.  It was found that amongst those born in Asia/Africa, the chances of belonging to the lower class was greater, while amongst their children who were born in Israel, their chances of being in a higher class grew.  Specifically, it was found that heads of households born in Africa had a higher chance of belonging to low income groups than those born on other continents, while those born in Europe had a higher chance of belonging to higher income groups.

E Middle Class Fig 4

In light of these findings, Nisanov suggests a course of action for the government: “The deliberate policy to strengthen the middle class must encourage participation in the labor force and offer employment opportunities, particularly amongst Haredi men and Arab Israeli women.  At the same time, there is a need to provide appropriate training and enforce minimum wage laws in order to prevent a widening of the gaps between the upper middle and lower middle classes, as well as a lowering of the average standard of living within the middle class as a whole.”

Do transfer allowances narrow gaps?  It depends who you are

In the Taub Center study, Nisanov examines the influence of child allowances and old-age allowances on the income distribution of households.  According to her findings, there is no proof for the conjecture that child allowances contribute to a lessening of the polarization between rich and poor, at least not since the cuts of 2003.  In Nisanov’s words: “This combines with an overall decrease in the effectiveness of taxation as a tool for narrowing gaps in Israel, as well as a decrease in the effectiveness of the policies directed toward this goal in general.”  On the other hand, old-age allowances have been shown to be a more effective tool in narrowing income gaps.

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Gal Ben Dor, Director of Marketing and Communication 054-464-2333.

New Taub Center publication: A Picture of the Nation 2014

This is the second year that the Taub Center for Social Policy Studies in Israel is publishing its Picture of the Nation – an original, unique and user-friendly book of figures – that includes one figure per page accompanied by a brief explanation.  The booklet provides a bird’s-eye perspective of Israel’s society and economy in several key areas: primary and secondary education, higher education, labor productivity, poverty and income inequality, the elderly, women in the labor market, Haredi employment, and health.  The booklet, written by the Center’s executive director, Prof. Dan Ben-David, is based primarily on Taub Center research and highlights areas where Israel excels and those in which a change of direction is needed.

Some of the new findings appearing for the first time in this year’s booklet:

  • There are large gaps between the achievements of Hebrew speakers and Arabic speakers in the Meitzav exams.  In the eighth grade, gaps in Meitsav test scores between Hebrewspeakers and Arabic speakersreached 13.8% in English, 9.4% in mathematics and 8.7% in science and technology.  Gaps amongst fifth graders were lower, though still relatively high – 4.6% in English, 8.5% in mathematics and 6.8% in science and technology.  (Page 3)
  • International exams also show a large divide between Jewish and Arab Israelis.  Achievements in basic educational subjects of Jewish children (excluding Haredi children) were 4.8% higher than the overall average in Israel.  The achievements of Arab Israeli children were 16.8% lower than the overall Israel average, and also below the achievements of children in developing countries like Jordan, Tunisia and Malaysia.  (Page 4)
  • Educational achievement gaps between Israeli children on the international tests are the greatest in the developed world and have been consistently so since 1999.  Israelis ranked first among developed countries in terms of gaps between pupils on every international test since 1999.  (Page 5)
  • Public expenditure per pupil on primary education, relative to GDP per capita, declined since 2002 and remained lower than the OECD average.  The gap between the OECD and Israel in terms of public expenditure on secondary schools has increased.  While the average public expenditure on primary and secondary education in the OECD is trending upward, in Israel the expenditure in these areas has been in decline for the last decade. (Pages 10-11)
  • Public expenditure on higher education in Israel lags further and further behind the OECD.  A comparison between public expenditure per student, relative to the standard of living, indicates that the gap between the OECD and Israel is widening. (Page 18)
  • The tax burden has fallen in the past years.  The ratio of government tax revenues to GDP, or what is commonly referred to as the tax burden, was relatively high compared to the OECD average.  In 2007, the tax policy changed and the burden was lightened to slightly below the OECD average.  (Page 47)
  • The primary sources of government tax revenues are different in Israel than in the OECD.  In Israel there is a greater reliance on indirect taxes (like VAT and import tax) than on direct taxes (like income tax).  The indirect taxes that Israelis pay comprise 36.7% of the government’s tax revenues, while the average revenue from indirect taxes in the OECD countries stands at only 23.6% of the total tax revenues.  In contrast, Israeli income taxes provide 30.1% of the government’s total tax revenues, while the OECD average is 36.6%.  (Page 48)
  • Half of Israelis do not pay any income tax.  Some 49.7% of individuals in Israel did not pay any income tax in 2011; in 2012, the rate was even higher at 52.3%.  The top two income deciles are the source of nearly 90% of the government’s total tax revenues while the top decile alone is responsible for 72.9% of these revenues.  The highest marginal tax rate in Israel in 2012 was 48%, placing Israel in seventh place out of the 34 OECD countries – and this rose to 50% in 2013.  (Page 49)

For details, or to arrange an interview, please contact Gal Ben Dor, Director of Marketing and Communications 054-464-2333.

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

The Taub Center is pleased to share with you our latest Taub Center Policy Brief, “Hot issues in Israel’s healthcare system.”

These issues include the provision of private healthcare services in public hospitals, the growth in private insurance coverage and the government’s dual role as regulator and hospital owner.  The Brief also contains information on healthcare financing, hospital operations, insurance coverage and the medical workforce.

As always, we welcome any feedback that you may have on this topic and look forward to providing you information on additional socioeconomic issues in Israel.  If you would like hard copy versions of this brief, please contact us at info@taubcenter.org.il.

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan, socioeconomic research institute based in Jerusalem. The interdisciplinary researchers – including prominent academics and leading experts – provide the country’s policy makers and the general public with a professional, evidence-based, “big picture” perspective and policy options in the economic and social spheres.

 

Contact details:

Gal Ben Dor
Taub Center for Social Policy Studies in Israel
Email: gal@taubcenter.org.il
Mobile: +972(0)50-5931577
Office: +972(0)2-5671818

Israel’s tight welfare policy and high dependence on private pensions leads to elderly poverty rates that are the highest in the developed world

  • In Israel, elderly poverty rates based on market income (before transfer payments and taxes) are the lowest in the West, thanks to more widespread private pension ownership than is common in other developed countries.
  • However, Israel provides fewer benefits for the elderly and limited income support.
  • Consequently, disposable income poverty rates (after transfer payments and taxes) among Israel’s elderly are the highest in the developed world.
  • Many of the elderly – particularly females, Arab Israelis, and those who immigrated to Israel from the former Soviet Union at an older age – have little private pension savings, if any, making public assistance even more essential for them.

The new Taub Center Policy Brief comes on the heels of recent research at the Center which found that among developed countries Israel’s elderly poverty rates in market incomes are the lowest, while poverty rates in disposable income are the highest.  Liora Bowers, Director of Policy at the Taub Center, examined the reasons for this anomaly, finding that it is related to Israel’s policy regarding private pensions, which historically were more common in Israel than elsewhere and have been mandatory for workers since 2008.  Alongside this, the state provides the elderly with relatively limited financial assistance.  For example, an Israeli male entering the labor force in 2011 and earning the average wage will receive 56 percent of his average lifetime wage from his private pension upon his retirement – a relatively high rate compared to the other countries examined.  At the same time, the same Israeli will receive only 22 percent of his average lifetime wage from old-age allowances, versus the 50 percent average rate across the OECD. In addition, Bowers has found that only 24 percent of the elderly in Israel receive public assistance in the form of income support.  Owning a vehicle (certain types), land or savings make one ineligible.  “These criteria are considered very stringent by Western standards and may disproportionately hurt elderly Arab Israelis, who are more likely to live in agricultural villages and have greater dependency on both car and land ownership,” explains Bowers. The Taub Center Policy Brief also highlights that today’s mandatory pension contributions rate of 17.5 percent (considered relatively high in the West) reduces the take-home pay of low-income earners, creating an economic burden for young, poor families.  For example, there are low-income workers who, upon retirement, may receive private pensions and public allowances totaling up to 140 percent of their average earnings.  In some cases, these workers might have been better off if they had lower pension contributions and greater take-home earnings at younger ages – for housing and education – in exchange for lower income upon retirement.  Furthermore, if mandatory high pension contributions are accompanied by a future reduction in government spending on income support, many low-income earners today may be worse-off than under a voluntary pension contributions system.  Bowers concludes: “Israel’s polices place great responsibility for one’s economic future on the individual and his savings, and is geared towards minimal public assistance.  This makes it challenging for low-income families to support themselves in the present.” EPR2014 Elderly Poverty Brief Fig 1 The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State. For details, or to arrange an interview, please contact Gal Ben Dor, Director of Marketing and Communication 054-464-2333.

Press Release: State of the Nation Report: Society, Economy and Policy 2013

A selection of findings from the “State of the Nation 2013″:

A Macroeconomic Perspective of Israel
Poverty and Inequality Over Time: In Israel and the OECD
(Prof. Dan Ben-David, Executive Director, Taub Center and Haim Bleikh, Taub Center researcher)

  • Income gaps within the middle class in Israel are the highest among all Western countries: the income of the 75th percentile in Israel is 2.8 times greater than the income of the 25th percentile.
  • The share of Israel’s wealthiest (the top 1 percent) in the country’s total market income (that is, before taxes and transfer payments) is high, 6.3 percent of all the income in Israel) – though it is not particularly high when compared to the incomes shares of the top one percent in other developed countries.  The share of Israel’s top one percent out of the country’s total disposable income (that is, after taxes and transfer payments), 5.3 percent, is slightly above the median for other developed countries.
  • The effectiveness of Israel’s welfare and tax system in reducing poverty is particularly low compared to that of other developed countries, including even the United States.
  • Market income poverty rates in Israel are high, even after exclusion of Haredim and Arab Israelis from the sample (29 percent).
  • Poverty among children in Israel, after transfer payments and taxes, is the highest in the developed world; one-third of all children in Israel live below the poverty line.

Israel’s Economy: a Macro Perspective
(Prof. Eran Yashiv, Chair, Taub Center Economics Policy Program)

  • Israel’s labor market is characterized by two important trends over the past decade: (a) labor market participation rates have been rising steadily, from 58 percent in 2003 to 64 percent in 2012; (b) unemployment rates have steadily declined from over 13 percent to less than 7 percent during the same period.
  • Unemployment rates in Israel are amongst the lowest in the Western world.

Labor Productivity in Israel
(Prof. Dan Ben-David, Executive Director, Taub Center)

  • In all employment sectors except for agriculture – that is in the building, manufacturing, wholesale and retail trade, hotels and restaurants, transportation, financial intermediation and real estate sectors – labor productivity in Israel is the lowest among developed countries with data for recent years.
  • Where capital investments are higher, labor productivity is greater – both across countries and also across business sectors within Israel.  Furthermore, the research shows that there is a positive and direct relationship between productivity and wages.

Employment and Income
Education and Employment in the Haredi Sector
(Eitan Regev, Taub Center researcher)

  • The employment rate among Haredi men with an academic education is 71 percent, compared to only 34 percent among Haredi men without an academic education.  This large difference between Haredim with and without an academic education is also evident in terms of wages: the average income of Haredi men with an academic education is NIS 13,565, compared to NIS 7,580 among Haredim without an academic degree.
  • In the past few decades, there has been a sharp rise in the share of Haredim who do not have more than a primary education: from some 30 percent of the male population a decade ago to almost half of all Haredi men today.
  • Fewer and fewer Haredim study in high schools as more Haredim study in yeshivas.  For example, just 56 percent of Haredi men 75 years old and up ever studied in institutions of higher Torah, as opposed to 90 percent of the 25 to 34 year olds.  The significance of this trend is that younger Haredim have fewer skills for competing in the modern labor market even relative to their parents’ generation.  This trend is opposite that of the Western world, where each generation is more educated than the previous one.
  • Among some 80 percent of Haredi married couples, neither spouse has an academic degree.  In only 5 percent of households do both partners have an academic degree; incomes in such households are about 2.5 times higher than in those in which neither partner has an academic degree.
  • An examination of the patterns of study versus work among the Haredim indicates that the transition in the last three decades from active involvement in the labor market to entrenchment in the world of Torah study is not simply the result of ideology, but also largely stems from a lack of skills and appropriate tools to integrate in the labor market, along with dwindling available options.

Women in the Labor Force: The Impact of Education on Employment Patterns and Wages
(Prof. Haya Stier, Chair, Taub Center Social Welfare Policy Program and Efrat Herzberg)

  • The level of education of women in the labor market has risen: close to half of women in the labor force 2011 had an academic education, compared to only 22 percent in 1980.  Furthermore, 39 percent of women in the labor force had less than a secondary school education three decades ago, as compared to 9 percent in 2011.  As a result of the rise in education levels among women, there has been a significant rise in the rate of women’s participation in the labor force over the past three decades.  Nevertheless, there are large differences in participation rates among Jewish and Arab Israeli women: today some 59 percent of all Jewish women in Israel work, as opposed to only 24 percent of Arab Israeli women.
  • Female labor force participation is lower at lower levels of education.  The participation rate for women with an academic level education has been relatively stable for the past three decades (at roughly  75 percent) , while there has been a decline of almost one-third in the labor force participation rate among women with less than a secondary education, from 28 percent in 1980 to only 20 percent in 2011.
  • Average wages for women have risen substantially across all education levels.  For women with an academic education, there has been a particularly large wage increase, from NIS 2,583 in 1980 to NIS 8,844 in 2011 (in 2011 prices).  Consequently, the income gap between women with an academic education and those with the lowest education levels (less than secondary education) rose from 81 percent in 1980 to 118 percent in 2011.
  • In general, the labor force participation rate of women with children under the age of 4 has risen over the years, although as women’s education level decreases, so, too does their participation rate in the labor force when they have young children: in 2011 there was a 16 percentage point gap between non-working and working mothers of young children with less than a secondary school education, as compared to only a 1 percentage point gap among women with an academic education.

Educational Opportunity, Employment, and Income: 1995-2008
(Eyal Bar-Haim; Carmel Blank, Policy Fellow, Taub Center Education Policy Program; Prof. Yossi Shavit, Chair, Taub Center Education Policy Program)

  • The number of university graduates with a bachelor’s degree has risen only slightly in the past two decades: from some 58,000 graduates two decades ago to about 65,000 graduates in 2011.  In contrast, there has been a substantial and continuous increase in the number of bachelor degree graduates from the non-research colleges: from 20,000 graduates two decades ago to almost 120,000 graduates in 2011.
  • While the chances of earning a bagrut certificate and bachelor’s degree have risen for the overall population since 1995 the likelihood that one will complete high school and earn a bachelor’s degree increases with the occupational prestige of one’s father,.
  • The relationship between the occupational prestige of one’s father and the likelihood of someone earning a master’s degree has risen since 1995 only for those children whose father’s occupational prestige is of a medium or high level.

Education
“It Disturbs the Whole Class”: Disciplinary Infractions in the Classroom and Their Relation to Pupil Achievement
(Carmel Blank, Policy Fellow, Taub Center Education Policy Program and Yossi Shavit, Chair, Taub Center Education Policy Program)

 

  • The lower the education level of parents, the less discipline in their children’s classroom (i.e. when parents’ education levels are below average, disciplinary infractions in their childrens’ classes are three times greater than the average).
  • Roughly two-thirds of the difference in the level of disciplinary infractions between classes is related to characteristics of the specific class (such as number of pupils in the class) rather than to school characteristics (such as the number of pupils in the school, which is fixed for all classes). Therefore, disciplinary infractions of a given class are dependent primarily on that particular classes characteristics than they are on the school’s characteristics.
  • In schools that strictly enforce discipline, only 17 percent of classes are unruly, while more lenient schools have double the number of classes with disciplinary problems (33 percent).
  • In classes where the teacher is perceived as unfair, there are twice as many disciplinary infractions than in classes where the teacher is perceived as fair (33 percent versus 17 percent, respectively.)

Trends in the Development of the Education System: Pupils and Teachers
(Nachum Blass, Taub Center Senior Researcher)

 

  • Over the past decade, there has been a pronounced decrease in the share of pupils in primary education (grades 1-6) that are in the state education system (from 48 percent in 2000 to 40 percent in 2013).  The share of pupils in the state-religious education system has also declined, from 14.7 percent to 14.0 percent.  At the same time, there has been a substantial increase in Haredi pupils (from 13.4 percent of the total in 2000 to 18.6 percent in 2013), and a rise in the population of Arab Israeli pupils (including Druze and Bedouin) from 24.2 percent of the total in 2000 to 27.1 percent today.
  • In the past three years, there has been a slowdown in the rate of change across most of the population groups.  In the state system and the state-religious system, there was a slight increase in registration for grades 1-6.  In the two fastest-growing populations, the Haredim and Bedouin, there was a decline in the rate of change over the last three years.

Social Services and Expenditures
Material Hardship in Israel
(Prof. Haya Stier, Chair, Taub Center Social Welfare Policy Program and Dr. Alisa Lewin)

 

  • Some 34 percent of Israel’s population has reached a level of material hardship; wherein, due to their financial situation, they forewent heating or cooling their residences.  Likewise, 20 percent reduced their food consumption and 13 percent went forewent electricity or telephones because of their costs.  Of those in need of medical services, almost 40 percent forewent dental care due to financial considerations, 16 percent went without some form of medical care, and 15 percent went without some prescription medication.
  • Material hardship is not just amongst the lowest income quartile in Israel, but is also a problem for the middle class – and at relatively a high rate.  Within the second income quartile, more than 50 percent forewent heating or cooling their residences, 30 percent forewent some food, some 16 percent forewent electricity or a telephone, and more than 50 percent forewent dental care.  Even among those in the third quartile (that is, those with an income greater than the median), some 30 percent forewent heating or cooling their residence, 14 percent forewent food, and some 35 percent forewent dental care due to financial considerations.
  • Haredim in need of financial support receive more assistance from their parents, friends, and relatives, while Arab Israelis in need of support more often turn to their children.  This seems to indicate that Haredim are the “new poor,” while Arab Israelis are suffering generational poverty.

Health
Trends in Israel’s Healthcare System
(Prof. Dov Chernichovsky, Chair, Taub Center Health Policy Program and Eitan Regev, Taub Center researcher)

  • In Israel, the number of physicians per capita is among the highest in the Western world (largely due to the immigration of physicians from the former Soviet Union), but the annual number of medical school graduates per capita is less than half of the average of other Western countries.  Moreover, while the number of medical school graduates is continuously growing in other Western countries, these numbers have been declining in Israel over the past decade – indicating a relatively low number of future Israeli physicians in lieu of major policy changes.
  • Nursing school graduation rates per capita stand at only one-third of the average in the West, and this number is also in decline.
  • The number of hospital beds in Israel is two-thirds the average found in the West, and is also steadily declining.

The Law for Rehabilitation in the Community of Persons with Mental Disabilities: An Interim Appraisal
 (Prof. Uri Aviram, Policy Fellow, Taub Center Health Policy Program)

  • Mental health services have expanded in the last decade following the rehabilitation reform implemented at the beginning of that period.  Nevertheless, only about one-fifth of the population in need of mental health rehabilitation services receives the care they need.
  • The average expenditure on mental health rehabilitation has declined in the past five years and is insufficient to meet the needs of the system.
  • The rehabilitation reform of the past decade has led to a 50 percent decling in the number of psychiatric hospitalization beds and a 43 percent decline in the average number of annual mental health hospitalizations.  The average length of hospitalization has also declined substantially, the share of long-term hospitalizations out of all hospitalizations has also declined dramatically, and the average time between hospitalizations has lengthened considerably.
  • Over the years there has been a deliberate policy of cutting costs and manpower in the mental health services – to such an extent that between 1999 and 2009, while the number of Ministry of Health employees increased, the number mental health services employees decreased by some 10 percent. The Ministry of Finance frequently seeks ways to decrease the mental health budget, although the research indicates that hospitalization rates would never have declined without the rehabilitation services – and Israel would have had to add at least one billion shekels in additional funds per year to the budget.

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provides policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Gal Ben Dor, The Taub Center’s Director of Marketing and Communication 054-464-2333.

 

 

Taub Center study finds that poverty rates among Israeli elderly are the lowest in the developed world – but are also the highest

  • 50% of Israel’s elderly are below the poverty line according to their market income – that is, before taxes and welfare.  This is the lowest market income poverty rate in the developed world.
  • 21% of Israel’s elderly are below the poverty line according to their disposable income – that is, after taxes and welfare.  This is the highest disposable income poverty rate in the developed world.
  • Israel’s welfare and pension policies are designed to promote self-sufficiency in older age, but are the least effective in the developed world at reducing poverty among the elderly.
  • the share of 65+ year-olds in Israel’s population is the lowest in the OECD

Taub Center Executive Director, Prof. Dan Ben-David: “The case of poverty among the elderly – those aged 65 and over, who are at or above what is generally still considered retirement age in most countries – provides what is perhaps the most striking illustration of the ineffectiveness of Israeli tax and welfare programs in reducing poverty.  The problem of market income poverty among the elderly is considerably less in Israel than in the rest of the developed world, but once each country’s social welfare safety net takes effect – then the situation simply reverses, with disposable income poverty among Israel’s elderly rising to the top of the developed world.” As researchers Ben-David and Bleikh point out, “A surprising finding is that the share of elderly people living in poverty according to their market incomes is actually lower in Israel than it is in 20 of the 21 other countries – and it has been declining over the past two decades.  The inclusion or exclusion of Haredim and Arab Israelis does not affect the market income poverty rate nor its rate of decline.”  In fact, while 50.2 percent of Israel’s elderly would have lived under the poverty line had they been dependent only on market income (Figure 1), over three-quarters of the elderly would have lived under the poverty line in 15 of the other 21 countries.  In other words, a smaller share of Israel’s population is elderly, and a smaller share – considerably smaller compared to most countries – of Israel’s elderly would have lived under the poverty line if left to their own devices. E Elderly Poverty Fig 1 Despite the relatively large elderly populations in the other countries, the assistance provided to the elderly is substantially more effective in reducing poverty elsewhere than it is in Israel (Figure 2).  The differences between Israel and the other countries regarding poverty reduction among the elderly are substantial.  Ben-David and Bleikh find that welfare and tax policies nearly eliminate poverty among the elderly in 12 of the 22 countries, with 95 percent and greater reductions in the rate of poverty from market incomes to disposable incomes. E Elderly Poverty Fig 2 All but two of the 22 countries – the United States and Israel – are able to reduce poverty rates among the elderly by at least 80 percent.  By comparison, the United States reduces poverty among the elderly by 68 percent.  Israel – with the smallest elderly poverty issue in terms of the extent of market income poverty rates and the relatively small size of the country’s elderly population – only reduces its elderly poverty rates by 59 percent.  Consequently, the share of elderly Israelis remaining under the poverty line after taxes and welfare is 21 percent, the highest in all of the countries examined. There are a number of reasons for the large discrepancies between Israel’s relative levels of market income poverty versus disposable income poverty among the elderly.  Taub Center researcher Liora Bowers points out that Israel has traditionally had one of the highest rates of private pensions among OECD countries – about 50 percent of Israel’s elderly had a private pension in 2011 – which has contributed to the relatively low rates of market income poverty among them.  In addition, Bowers finds that Israel’s average pension “replacement rates” (combining both private and government benefits – generally referred to as public pensions) are slightly above the OECD average, meaning that earning the mean wage throughout their career will yield a retired Israeli 78 percent of their pre-retirement wage, compared to an average of 69 percent in the OECD. On the other hand, benfits provide 22 percent of an average worker’s earnings in Israel, compared to an average of 50 percent in the OECD.  As Bowers notes, “Elderly Israelis have to be more self-sufficient, as public transfers in the OECD contribute 61 percent of an elderly person’s income – even more in Western Europe – and less than 50 percent in Israel.” Professor Dan Ben-David: “Domestic politics play a double role in yielding these outcomes.  First, the share of elderly in the entire poor population is substantially higher in the other developed countries than it is in Israel.  So when the other countries implement welfare programs designed at reducing national poverty rates in disposable incomes, it is not surprising that they tend to focus more on reducing poverty among the elderly because that is where they see a greater bang for their buck.” A second aspect of the political dimension is that the demographics of the elderly are simply working against them in Israel.  The large elderly populations abroad wield a sizeable share of the voting population, so it is probably no coincidence that they are able to channel this political power towards benefits that almost eliminate poverty among the elderly in some countries.  As Ben-David and Bleikh note, Israel’s elderly had a brief period of greater political influence between the rise and fall of a “pensioner’s party.”  But as the data indicate, the plight of Israel’s elderly is considerably worse in terms of disposable income than in any of the other developed countries in the sample – this, despite the fact that they are actually better off prior to the implementation of the welfare and tax programs in each of the countries. Prof. Dan Ben-David summarizes: “Israel’s redistributive social safety net of welfare and taxes is not nearly as effective as the social safety nets in other developed countries in reducing poverty and inequality in disposable incomes.  This is a major problem in general, and its severity is particularly striking in the case of the elderly.  Israel’s market income poverty rate among the 65 and over population is actually one of the lowest in the developed world, and declining (although still very high compared to the general population).  However, the disposable income poverty rate for this age group is by far the highest among developed countries.  Most of these individuals are beyond the age where working is an option, so they are totally dependent on the system to keep them above the poverty line – and in Israel, this system has failed them more than in any other country.” The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State. For details, or to arrange an interview, please contact Gal Ben Dor, Director of Marketing and Communication 054-464-2333.

A new Taub Center study that will be presented at a special meeting of the Knesset Economic Affairs Committee reveals findings on patterns of employment and income for the older population in Israel

  • Employment rates for those aged 55-74 have increased in the past decade
  • Per capita income in households of those aged 65 and over rose significantly in the same period
  • Despite this, income gaps between Jews and Arab Israelis grew amongst the elderly population

Demographic projections indicate a sharp rise in the elderly population in the State of Israel in the coming years, and it is unclear to what extent the social security and pension systems are prepared for this change. The implications of these trends and changes amongst this population are also unclear.  A new study by Taub Center researchers Prof. Ayal Kimhi and Kyrill Shraberman, which will be published in the upcoming Taub Center State of the Nation Report 2013, examines these changing employment patterns, as well as the economic situation of the elderly population between the years 2000 and 2011.  Research findings will be presented at a special meeting of the Knesset Economic Affairs Committee headed by MK Prof. Avishay Braverman, which will be held on October 29, 2013. In the words of Prof. Ayal Kimhi, “According to recent demographic projections, the increase in longevity is likely to bring a continuous increase in the proportion of elderly in Israel.  Until 2010, the elderly dependency ratio (the number of those aged 65 and over relative to those aged 15-64) was relatively stable, and remained at a level of less than 160 elderly per 1,000 working age adults.  From 2011, this ratio began to rise, and it is expected to continue to rise steadily and reach some 233 elderly per 1,000 working age adults by the year 2030.” In light of this data the Taub Center study examined whether there is a change in the ability of the elderly to sustain a reasonable standard of living for longer periods than what might have originally been planned for. The research found that while the per capita income in households headed by working age adults (up to age 64) in Israel did not grow in real terms (that is, after accounting for inflation) in the past decade, the per capita income of households headed by older people grew significantly (Figure 1). E Elderly Employment Fig 1 Prof. Kimhi explains this change: “Labor income contributed significantly to the per capita income increase, however elderly households benefited also from an increase in capital income and pensions.”  All of this is true for the Jewish population only, as can be seen in Figure 2.  The elderly Arab-Israeli population, whose per capita income was about half of that of the Jewish population at the beginning of the decade, remained behind and the gaps continued to widen. E Elderly Employment Fig 2 Taub Center researchers determined that the growth in income was first and foremost a result of the growth in the rate of employment of the older population.  Amongst men and women in the 55-64 year-old age group (Figure 3A), the rate of employment in Israel was on the rise and was similar to the rates in the OECD countries in the first half of the previous decade.  Since the middle of the previous decade, the rate of employment in Israel has risen faster than in the OECD countries and a gap of more than 6 percentage points to Israel’s advantage was created – for men and women alike. Amongst those aged 65-74 (Figure 3B), the employment rates among men in Israel were similar to those among men in the OECD countries until 2004.  Beginning in the middle of the decade, employment rates rose more quickly in Israel so that by the end of the decade there was a gap of some 5 percentage points in Israel’s favor.  This trend is similar to what was observed amongst the 55-64 year-olds, although employment rates of 65-74 year-olds were more than 50 percent lower than those of 55-64 year-olds.  The difference is that the rise in employment rates of 55-64 year-olds has slowed down in the past few years while the rise in employment rates of 65-74 year-olds has accelerated. E Elderly Employment Fig 3A and B With regard to women aged 65-74, a different picture emerges.  While their employment rate rose from about 7 percent in 2001 to more than 12 percent in 2011, their employment rates remained lower than the average of the OECD countries – although the gap narrowed beginning in 2008 to 1 percentage point in 2011. In addition, the Taub Center researchers found that one of the main factors that helps employment for the elderly is education.  Figure 4 shows a significant gap between employment rates of those with 9-12 years of schooling and those with 8 years or less of schooling for men and women aged 65-74.  Employment rates are even higher for those with 13 years of schooling or more although to a lesser degree.  Between 2001 and 2011, there was an increase in the employment rates for all education groups.  Amongst women, the employment rate for those with less than 8 years of schooling grew only slightly while the rate for those with 9-12 years of schooling more than doubled between 2001 and 2011.E Elderly Employment Fig 4 Prof. Ayal Kimhi explains: “The demographic changes that bring about a continuous increase in the number of elderly in the population raises concerns regarding society’s ability to ensure them a decent standard of living.  Nevertheless, these same demographic changes, and especially the fact that the health of this group is relatively good compared to past cohorts, allows them to remain in the labor force and to sustain themselves for longer periods.  Another factor that allows the elderly to remain in the work force after the official retirement age is that the job mix in the modern labor market is changing and physically demanding jobs are decreasing in importance.” One of the factors that contributes considerably to the rise in employment of the elderly and the increase in their income is their higher levels of education.  Since in the coming decades an additional rise in education level of this population is expected, it is likely that the trends of greater employment and income will continue.  It should not be concluded from this that the authorities do not have to take these demographic changes seriously.  To this Prof. Kimhi says: “We should continue to encourage flexible employment conditions and tax breaks so as to allow the elderly to continue working even after official retirement age should they be interested in doing so.  At the same time, solutions should be found for those population groups that are left behind – especially the Arab Israeli population and those with low levels of education.  If it has been common to speak of three layers of income sources after retirement – social security, pension funds, and private savings – a fourth layer of growing importance, labor income, should be added.  For those groups who are lacking the skills to benefit from this fourth level and who cannot enjoy labor income, the state must strengthen the bodies responsible for the well-being of the elderly – that is the social security system and pension funds.” The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provides policy recommendations in the key socioeconomic issues confronting the State. For details, or to arrange an interview, please contact Gal Ben Dor, The Taub Center’s Director of Marketing and Communication 054-464-2333.

A new Taub Center study reveals a further deterioration in the state of Israel’s higher education

  • The country’s top universities have fewer senior faculty positions today than they did four decades ago.
  • Since 1973, the number of students per professor has more than doubled.
  • The universities have moved away from employment of higher costing academic researchers and have increasingly outsourced the teaching to non-research, external lecturers.
  • Israel’s academic brain drain to the United States is unparalleled, with 29 Israeli scholars in the U.S. for every 100 remaining at home in 2008 (the most recent data available), an increase from the 25 per 100 in the U.S. just four years earlier. This is several orders of magnitude more than the 1.1 Japanese or the 3.4 French scholars for each 100 remaining in their respective home countries. 

With the beginning of the academic year around the corner, the Taub Center is releasing a study on the state of higher education in Israel.  It will be published in the Center’s forthcoming State of the Nation Report 2013. As the author of the study, Taub Center Executive Director, Prof Dan Ben-David notes: “Israel established some of the world’s leading research universities during its first two and a half decades of existence despite being inundated during this period with refugees arriving with no more than the clothes on their backs, food rationing in the 1950s, repeated all-out wars and internal budgetary limitations.  By the beginning of the 1970s, Israel had seven major research universities.  The number of senior faculty members per capita shot up and reached levels similar to those in the United States (Figure 1).” E Higher Education Fig 1 “Since the 1970s, the country is much wealthier and has significantly greater ability to develop its university system, but Israel dramatically changed course.  Over the next four decades, the country’s universities steadily receded from the nation’s national priorities – as is clearly evident from the data.” Figure 2 shows the increases in population and in the demand for higher education between 1973 and 2010, and the government’s reaction in terms of financing academic positions in the country’s public universities.

E Higher Education Fig 2

Figure 3 show that Israel’s population increased by 133 percent, the student population in its research universities expanded by 157 percent and the number of students in Israel’s entire higher education system (including colleges) rose by 428 percent. The Taub Center study found that the number of senior faculty in the research universities rose by just 9 percent while the overall change in senior academic faculty in all of the colleges and universities rose by only 40 percent.  The size of the academic faculty in Israel’s two flagship universities has actually declined over the past three and a half decades.  There were 17 percent fewer faculty positions in 2010 at the Hebrew University than there were in 1973 – and 26 percent fewer positions at Tel Aviv University.  The Technion has lost over a quarter (26 percent) of the faculty positions that it had nearly four decades earlier. Between 1977 and 2010 (Figure 3), the number of students per senior faculty member more than doubled, from 12.6 students per professor to 26.1, but as Prof. Dan Ben-David notes, “the situation is considerably worse than reflected in these numbers when it comes to the issue of relaying state-of-the-art findings to the next generation of researchers – who are today’s graduate students.”  The number of PhD students to professors rose from less than one student per faculty member to over two students per professor and the number of MA students to professors rose four-fold, from two to eight. To fill the teaching void, the research universities essentially outsourced.

E Higher Education Fig 3

The Taub Center study finds that the universities brought in external lecturers in rapidly increasing numbers to replace the tenured and tenure-track research faculty (Figure 4).  In 1986, the external teachers represented 13 percent of the senior research faculty.  By 2010, this ratio had risen to 46 percent – i.e. almost half of the university lecturers today are not on the research faculty. As Prof. Ben-David notes: “This low cost solution to the public’s declining interest in funding research universities has had two important negative ramifications.  The first is the declining quality of instruction that students are receiving from individuals not actively engaged in cutting-edge research.  The second is that many of these individuals may have intended to proceed along the research route, but the increasing lack of tenure and tenure-track positions in Israel’s research universities – relative to available graduates – has caused many to either drop out of the research path or to find research positions abroad.”

E Higher Education Fig 4

The Taub Center study shows that the country experiencing the greatest brain drain of its scholars to the United States – by several orders of magnitude – is Israel (Figure 5). In 2003-2004, there were 25 Israeli scholars in the United States for every 100 members of the academic faculties in all of Israel’s universities and colleges.  This compares to 1-4 scholars in the U.S. for all other countries except Canada, with 12.

E Higher Education Fig 5

By 2007-2008, the latest data available, Prof. Ben-David finds that the brain drain had fallen from most countries to the U.S. – while Israeli academic brain drain to the United States had risen to 29 scholars out of every 100 in Israel. Professor Dan Ben-David summarizes: “Education is probably a country’s most important infrastructure, and Israel is still blessed with some of the world’s top academic institutions.  These are key to lifting up the country’s extremely problematic primary and secondary education systems, and they are essential for raising Israel’s very low productivity levels that are so crucial for competing in a modern global economy.  Over the past four decades, a much wealthier Israel with much greater budgetary capacity than in the 1950s and 1960s has steadily neglected its world-class academic institutions – and it has been increasingly jeopardizing its future that is so dependent on Israel remaining at the cutting edge.  It is not too late to change direction, but that means that Israel needs to rethink its national priorities and return them to the path of its first decades – the path that eventually enabled the country to become the “start-up nation” that Israel needs to remain if it is to survive in its very hostile neighborhood.”

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provides policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Gal Ben Dor, The Taub Center’s Director of Marketing and Communication 054-464-2333.

Taub Center study reveals new findings on primary factors underlying Israel’s low productivity

Taub Center study reveals new findings on primary factors underlying Israel’s low productivity:

  • Israelis work many more hours than is common in developed countries,
  • but capital investments are very low, and
  • cumbersome bureaucracy inhibits productivity even further.

Wages are highly dependent on the amount produced per hour – or what is commonly referred to as labor productivity.  As shown in the soon to be published State of the Nation 2013 report by the Taub Center, Israel’s labor productivity is among the lowest among developed countries.  In addition, a labor productivity gap has been growing between the leading Western countries and Israel – with the G7 steadily pulling away from Israel since the 1970s.  In the study, Taub Center Executive Director, Prof. Dan Ben-David, looks at a host of key factors surrounding and underlying Israel’s problematic productivity.  For example, the number of annual hours worked per person in Israel and in the G7 fell until the mid-1970s (Figure 1). E Low productivity Fig 1 “While fewer Israeli’s participate in the labor force than is common in the leading western countries, those who do work many more hours each year,” says Prof. Ben-David.  “In fact, employed Israelis work have worked more hours than employed workers in the G7 countries since the mid-1970s, and the gaps in work hours have only grown: the number of hours worked in the G7 has fallen steadily for four straight decades while the number of annual hours worked by the average Israeli in 2012 – which fluctuated broadly in recent decades and has been falling since the late 1990s – roughly equaled the number of hours worked over three decades earlier.  Though Israelis who do participate in the labor force work more hours than workers in the leading western countries, their productivity per hour worked is considerably less, and falling further and further behind (in relative terms) the G7 labor productivity.” While there are undoubtedly important factors that are idiosyncratic to different business sectors, there are also a number of related economy-wide determinants.  Capital plays a key role in spurring productivity – and here, as Ben-David finds, Israel has major problem.  In addition to the problematic level of the country’s human capital infrastructure and to the multi-decade neglect of its transportation infrastructure, Israel’s capital formation is at the low end of the OECD.  Capital and labor are considered substitute factors of production.  An increase in the capital stock improves labor productivity, which is why it is not a coincidence that there exists such a strong positive relationship between capital formation, in general, and labor productivity – which is strongly evident in Figure 2.  So, as Ben-David notes, “it should come as no surprise that a country with relatively low national levels of physical and human capital is exhibiting problematic productivity growth at the national level.” E Low productivity Fig 2 In addition to all of the above factors that hinder Israel’s productivity growth, there is also the country’s cumbersome governmental bureaucracy, requiring the diversion of even more resources away from actual production of goods and services, lowering productivity even further.  For example, Figure 3 shows that the number of days needed to start a business in Israel (34 days) is the second highest in the OECD – two and a half times the OECD average of 13 days.  The high bureaucratic costs imposed on both Israeli and foreign firms interested in doing business in Israel reduce the competition so essential for creating the pressure to invest, innovate, and produce better goods and services at lower cost.  Though the regulation has been somewhat reduced, it is still substantial and it continues to extracts a high price in terms of productivity. E Low productivity Fig 3 Professor Dan Ben-David: “The country’s small domestic market is concentrated in the hands of too few individuals and it suffers from insufficient competition – a crucial factor in spurring physical and human capital investments necessary for productivity growth. All of these factors combine to yield higher domestic prices that reduce the economic viability and attractiveness of Israel’s economic environment even more.” “The problems associated with relatively low rates of employment, the high number of hours worked and the labor productivity that is lagging ever further behind the leading developed countries combine together to create an increasing national burden on the shoulders of those who bear it.  This is a significant issue that is worsening over time and requires systemic long term attention and treatment by Israel’s policy makers.” The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State. For details, or to arrange an interview, please contact Gal Ben Dor, Director of Marketing and Communication 050-593-1577.

A new study by the Taub Center on the subject of merging municipalities has found that amalgamation could save hundreds of millions of shekels annually

Today in Israel there are some 50 municipalities with fewer than 6,000 residents each.  The Taub Center study shows that economies of scale in the provision of public service are greatest when municipality size ranges between 7,000 and 10,000 residents.  In other words, fixed costs (like salaries for municipal employees) are distributed over more residents, so each resident has to pay less.  Dr. Reingewertz shows that expenditure per resident for municipalities that amalgamated in 2003 were lower than in those that did not merge.

To bring municipalities closer to the optimal size, Dr. Reingewertz suggests a plan for municipal amalgamation, showing that it is possible to save some NIS 131 million annually.

Total municipal expenditure amounted to some NIS 43 billion in 2010 – about 16 percent of the government budget.  Roughly 35 percent of the municipal budgets are received from the central government; the rest is financed through income to the municipality and loans.

Dr. Reingewertz, an economist at George Washington University in the United States, finds 25 municipalities that fulfill the criteria for optimal success in amalgamation (Table 1): they have fewer than 6,000 residents and they are adjacent to another municipality that is similar to them in social and cultural characteristics.  This list includes municipalities like Rosh Pina, Pardesiya, Savyon, and Kfar Shmaryahu.  The budgetary savings from such amalgamation would be substantial (Table 2).  For example, a merging of Savyon and Ganei Tikva would lead to an expected savings of NIS 7.4 million annually.  Likewise, if Elyachin and the Emek Hefer Regional Council were to unite, the savings would be around NIS 17.7 million annually.

In 2003, Israel implemented a partial municipal amalgamation program, although 3 out of the 12 amalgamations were dissolved between 2009 and 2010 following the opposition of both residents and the local political leadership.  Dr. Reingewertz notes that to ensure the success of municipal amalgamations, they should be done in cooperation with the municipalities.  How should this be done?  In Dr. Reingewertz’s words: “The political and administrative levels must be involved and there must be cooperation between the central and local authorities; it is advisable to give adjustment grants to municipalities that merge to help cover one-time costs of amalgamation; and, there should be a reduction in government administered parity grants to smaller municipalities.  Such a step would serve as an incentive for municipal amalgamation.”

E Merging Municipalities Table 1

E Merging Municipalities Table 2

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decisionmakers, as well as the public in general, with a big picture perspective on economic and social areas.  The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provides policy recommendations in the key socioeconomic issues confronting the State.

For additional information or to arrange an interview, please be in touch with Gal Ben Dor, Director of Marketing and Communications at the Taub Center: 050-5931577.

Taub Center new research on income inequality

  • The main cause of income inequality is educational disparities, although its importance has declined over time.
  • Income gaps between population groups that differ by sector (Jews/Arabs), residential location and number of children in the family have grown over time.
  • Dividing the population into groups by household characteristics explains only some 20 percent of the total income disparity.  That is, most of the income inequality stems from differences in income between individuals with similar characteristics.

“Income inequality in Israel has been on the rise for the past 30 years and today is among the highest within the OECD countries.  In previous decades the increase in inequality stemmed primarily from market forces, while in the past decade it is a result of government policy and in particular cutbacks in social allowances and a lowering of direct tax rates.”  This is according to Prof. Ayal Kimhi, Deputy Director of the Taub Center and an economist in the Department of Agricultural Economics at the Hebrew University.  Prof. Kimhi will present his new research on this subject at the annual conference of the Israeli Economic Association on Tuesday, June 4, 2013.

The study by the Taub Center indicates that in the 1980s and 1990s inequalities in net income grew at a more moderate level than gross income inequality.  This indicates that in the same period government policy had a partial success in controlling the widening of economic gaps.  In the first half of the last decade, on the other hand, gross income inequality declined while net income inequality grew at an accelerated rate.  In 2009, net income inequality in Israel was amongst the highest in the OECD countries after Chile, Mexico, Turkey, and the United States.

Prof. Kimhi, in a joint work with Michal Shafir-Tidhar from Ben-Gurion University, examined the level of inequality by different characteristics of the household and of the head of household (that is, of the individual who contributed the most income in the household) for the years 1997 and 2010.  As can be seen in the figure, the greatest contribution to inequality is related to the number of years of schooling of the head of household.  Nevertheless, this factor explains less than 10 percent of the total inequality in 1997 and less than 8 percent in 2010.  Factors that contributed less to the inequality were residential location, age of head of household, sector (Jewish/Arab), and number of children.  The contribution to inequality of gender, type of residential locale, and family status were less than 1 percent each.

E Income inequality Fig 1

Prof. Ayal Kimhi says: “All of the characteristics together explain just 20 percent of the total inequality, so that the majority of the income inequality is between households that belong to the same population groups and is not between population segments.  That said, over the years there has been a rise in the contribution of residential location, sector (Jews/Arabs), and number of children to inequality.  This indicates a widening of gaps between the center and the periphery of the country, between Jews and Arabs, and between smaller and larger families.”

The central role of years of schooling in creating income inequality throws a spotlight on the importance of the education system in narrowing economic and social gaps.  Nevertheless, Prof. Kimhi emphasizes that chasing after degrees and certificates will not solve the problem.  According to him, there is a need to improve the work skills especially of those pupils who will not continue on to higher education, because these are the people at the highest risk of suffering from a lack of employment and low wages.

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem.  The Center provides decisionmakers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For addition information or to arrange an interview, please be in touch with Gal Ben Dor, Director of Marketing and Communications at the Taub Center: 050-5931577.

Gal Ben Dor
Director of Marketing and communications
Taub Center for Social Policy Studies in Israel

 

A new Taub Center study on Israel’s treatment of debtors finds that the current system impedes competition in the credit market and imposes unnecessary hardship on debtors

A study on Israel’s treatment of insolvent debtors by Dr. Asher Meir, a Research Fellow at the Taub Center for Social Policy Studies in Israel and Senior Lecturer in Economics at the Jerusalem College of Technology, presents new findings on the functioning of the consumer credit market in Israel.

The widespread idea that Israelis borrow with abandon but are slow to repay appears to be a misconception according to the study by Meir. The ratio of household debt to disposable income in Israel is lower than any country in the G7 and is less than half the average level for these countries (Figure 1). Rates of missed payments on loans of all kinds are no higher than those in comparable countries.

E Debtors Fig 1

The study found that the market for credit information on borrowers is insufficiently developed in Israel.  Fuller implementation of the Credit Information Service Law and additional reforms would enable better access to the credit market for most Israelis and protection from over-indebtedness for others.  According to Dr. Meir, an additional benefit would be improved competition: “The current situation gives the bank monopoly on the payment information of their customers, which strengthens concentration in the market for loans.”

The Taub Center study found that one out of seven Israeli adults has an open collection file at the Enforcement and Collection Authority, and that files remain open for prolonged periods.  According to the 2012 report of the Enforcement and Collection Authority, around 755,000 individuals have open files in the Authority.  Dr. Meir comments: “These figures point to a problem of worrisome extent, affecting 15 percent of the adult population of Israel.”  About half of the files remain open after four years.

The study found no evidence that imprisonment of debtors improves the credit market and claims that it is liable to harm the market. Dr. Meir explains: “Imprisonment for debts is a severe punishment and very exceptional on an international basis.  In addition, the threat of imprisonment is a drag on credit demand and thus on the total level of demand in the economy.  When leniencies to this policy have been introduced, including the virtual elimination of imprisonment for debtors in 2011,no negative impact was found on credit markets, and even collection was not negatively impacted.”  Figure 2 shows that in recent years,the extent of household loans other than mortgages has continuously grown even as the threat of imprisonment has continuously declined.

E Debtors Fig 2

The Taub Center study found that the Israeli approach, in which debtors face intrusive sanctions for inability to pay routine debts, is not accepted throughout Europe and North America.  Even when a debtor who is recognized as being “of limited means” (i.e., unable to meet the original conditions of the loan repayment and subject to a revised payment schedule), he can face sanctions such as limitations on his bank account, revocation of credit card, and prohibition on leaving the country. This is in sharp contrast to most countries, where restrictions of this nature apply only to debts relating to child support.

In   light   of   these   findings,   Dr.  AsherMeir   makes   the   following   recommendations:

1.    Continued development of an effective consumer credit scoring system would benefit consumers and the credit market as a whole.

2.    There is no justification for punitive sanctions on limited means debtors, or for imprisonment for non-payment of routine debts.

3.    There is a need for transparent and equitable standards for a fresh start.

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem.  The Center provides decisionmakers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

Contact details:

GalBenDor
Taub Center for Social Policy Studies in Israel
Email:
gal@taubcenter.org.il

New Taub Center publication: State of the Nation in Pictures 2013

The pamphlet presents the state of Israeli society and its economy in a number of pivotal areas: the macro picture, employment, education, costs of living, health, social services, and transportation.   The booklet, edited by the Center’s Executive Director Prof. Dan Ben-David, is primarily based on the Taub Center research and details where Israel excels and where the country is in need of a course correction.

The Taub Center for Social Policy Studies in Israel, headed by Professor Dan Ben-David, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts –as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details or to arrange an interview contact GalBenDor, Director of Marketing and Communication 050-5931577.

Taub Center appoints Gal Ben Dor as its new Director of Marketing and Communications

The Jerusalem-based, independent, non‐partisan Taub Center focuses on researching the primary socioeconomic issues facing Israel and disseminating its research to policy makers and the public at large.

In the last two years, Gal Ben Dor has served as the Spokesperson and Parliamentary Assistant to Members of Knesset Prof. Avishay Braverman (Labor) and Nino Abesadze (Kadima). Prior to that, she was the CEO of a non-profit organization named ‘Tzemach’ (Zionism, Leadership, and Education) which works towards educating Israel’s next generation.

In her new role as the Taub Center’s Director of Marketing and Communications, Ben Dor will be responsible for maintaining ongoing relationships with local and foreign media in Israel, promoting government relations, organization of conferences, cooperation with organizations and NGOs, and communicating the research findings and policy recommendations gathered by the Center’s research in its policy programs (in economics, education, health, labor and social welfare) to the Israeli public, via the internet and social networks.

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan, socioeconomic research institute based in Jerusalem. The interdisciplinary researchers – including prominent academics and leading experts – provide the country’s policy makers and the general public with a professional, evidence-based, “big picture” perspective and policy options in the economic and social spheres.

 

Contact details:

Gal Ben Dor
Taub Center for Social Policy Studies in Israel
Email: gal@taubcenter.org.il
Mobile: +972(0)50-5931577
Office: +972(0)2-5671818

Access to Social Justice in Israel

Access to justice and to resources is crucial in insuring that individuals and groups realize their fundamental human rights.  Despite the existence of laws, institutions and programs in Israel intended to address needs, the ability of individuals to actually realize their rights and access the benefits and services offered by these social institutions is not equal.  Often the obstacles that limit, or even prevent, the realization of rights are particularly prevalent in the case of the excluded social groups most in need of these rights: the poor, immigrants, and ethnic or national minorities. Clearly the lack of access to the means to attaining social justice serves to exacerbate existing social gaps and disparities that are unjustifiable, unnecessary and preventable. Access to social justice has an important role in enhancing a sense of social cohesion and belonging. Its absence contributes to a feeling of exclusion, alienation and frustration. The obstacles to accessing social rights stem from a variety of causes: among them a lack of material resources and knowledge, the existence of language and cultural barriers, as well as a lack of understanding of how the justice system works. The goal of this book is to underscore and analyze various aspects of access to social justice, to understand better the obstacles that prevent people from accessing justice and their sources, and to try to identify solutions for facilitating greater access to social rights in Israeli society.

Available in Hebrew only

The Singer Series: Israel’s Social Services 2008

From mid-2003 and up until the current slowdown, the Israeli economy grew vigorously.  Numerous achievements point to the period’s economic vitality at both the aggregate level − as reflected in a rise in both the total and per capita gross domestic product (GDP) − and with regard to other economic indicators such as increased foreign investment in Israel, a rise in the number and rate of employment and a concomitant decline in the unemployment rate, as well as an increase in real wages within both the private and the public-service sectors.  This period of economic prosperity might have been a golden opportunity to work on reducing economic inequality − by, among other things, channeling resources to weaker populations on various planes.  However, from the findings in this report as well, it seems that the opportunity has been missed and that the benefits of economic growth have failed to trickle down, at least not adequately, to all sectors of the population.

We are currently in the midst of a worldwide economic crisis, one that has not, unfortunately, spared the Israeli economy.  As a result, one may expect that the circle of those dependent on the welfare networks will expand,  the number of those eligible for wage-replacement benefits from the National Insurance Institute will increase, and the burden on Israel’s social service system will grow heavier.  The recent fighting in Gaza may, moreover, be expected to place a greater burden on Israel’s security system during the current budget year.  At times like this, concern for the socioeconomically weaker populations becomes an especially complex issue.  It is, however, precisely at these times that social solidarity is put to the test and the government’s social priorities are manifested in the practical sphere.  To the constraints enumerated above one may add the fact that due to early elections, as of early 2009, no budget has been approved; in effect, the budget on which the government will be functioning during the early part of 2009 is based on the budget approved for 2008.  What this means is that, during the first quarter of 2009, there will be no budgetary reflection of the needs relevant to this time period.  One of the most important challenges that the incoming government will have to face is that of finding a way to address the needs of the weaker sectors and acting to narrow existing socio-economic disparities − while also advancing an economic policy designed to place the Israeli economy on a path toward renewed growth.

The 2008 Social Survey

As in previous years, this year’s survey included several questions that were phrased identically to those of earlier surveys; this is meant to ensure efficient monitoring of changes in public attitudes regarding issues on which it has been questioned repeatedly. Some of the questions – those touching directly on the most fundamental aspects of social confidence – constitute the basis for calculating the Taub Index of Social Confidence, an index that quantifies the Israeli public’s sense of social confidence and gives a fuller picture than that which can be obtained from responses to specific questions. An index of this kind, which can be used for comparison purposes across time periods and population groups (for each of which an index is separately calculated), expands and enriches our understanding of public attitudes and sentiments (see below).

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2008, Yaakov Kop (editor).

 

 

Government Expenditure on Social Services – 2008

The last three years were characterized by impressive economic expansion, following on the heels of a slowdown during the period 2001-2003, one to which the Israeli government itself contributed by implementing a severely restrictive fiscal policy that curbed public consumption.  This curtailment of public consumption had ramifications for various sectors of the economy.  During the following years, from mid-2003 on, there was a significant upturn as reflected in several economic indicators.  Amongst other things, there was an awakening in the labor market:  in 2002 the number of those employed grew at an annual average rate of 0.9 percent, and since then the rate rose to 3.2 percent.  At the same time the unemployment rate declined by 3.4 percentage points and 2008 is expected to end with an average unemployment rate of 6.3 percent.  Employment rates for the 25-64 age group have been trending upward since 2003, reaching 70 percent in 2007.  Wages have also been rising steadily in real terms since 2003, in both the private and public sectors.

This brisk economic activity led to a rise in tax revenues and to a consequent reduction in the deficit from a high of 5.3 percent in 2003 to one percent in 2006 and to a balanced budget in 2007, with a decline in public debt as a percentage of GDP.  Unfortunately, this improved economic situation did not bring about a social improvement.  The chapters of this year’s Report point to deficiencies in various areas of social concern and highlight the state budget’s failure to adapt to changing social needs.  The report proposes various options for improving matters on the social plane while also encouraging economic growth − with due consideration for time constraints and the difficulties posed by the global and local crises.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2008Yaakov Kop (editor).

 

 

Summary of Findings – Israel’s Social Services 2008

The following policy areas are reviewed: Economic Developments; Employment, Unemployment and Wages; Government Expenditure on Social Services; The Education System; The Health Care System; Personal Social Services; The Social Security System; The 2008 Social Survey.

This appears as a chapter in the Center’s annual publication, Israel’s Social Services 2008, Yaakov Kop (editor).

Characteristics of the Distribution of Teachers in Schools and Affirmative Action Policy

However, this policy does not try to influence directly the placement of teachers in weaker schools and areas, despite the accepted assessment of the influence of the quality of teachers on the educational attainment of students.

This paper examines the relationship between teacher characteristics and measures of the socio-economic characteristics of schools, in order to assess the extent to which the current distribution of teachers is in line with a policy of affirmative action.

Surprisingly, no marked differences in the quality of teachers were found between schools serving different student populations. Further, teachers in schools that serve stronger populations were not found to be more “expensive” to the system. In fact, the opposite was found to be true, indicating “affirmative preference” in this aspect of the allocation process. “Thus,” the authors conclude, “the major achievement gaps that persist between schools differing in the socio-economic characteristics of their students cannot be attributed to the seniority, education level and salaries of the teachers.”

This paper is available in Hebrew only.

Protecting Mortgage Holders

Until recently, this has been a rare phenomenon in Israeli society and appropriate methods for dealing with this have not developed. Dr. Benchetrit suggests a direction for solving this problem: to insure mortgage holders, with the State’s guarantee, to protect them against foreclosure, eviction and continuing debt.

The study presented in this pamphlet is accompanied by a discussion from an expert meeting of housing specialists in Israel. Their responses point to the many facets of this issue as well as additional questions that will need a response regarding the involvement of the State in the area of housing.

This paper is available in Hebrew only.

The Health Care System – 2007

Life expectancy in Israel is among the highest in the world (especially among men) and infant mortality is below the OECD average, even though the percentage of underweight births, ordinarily a proxy for high infant mortality, is much higher than in European countries. Many factors other than the curative and preventive services affect life expectancy and mortality, including some related to culture, education, and lifestyle. However, the health care system is central in preventing and coping with states of morbidity and contributes to the achievements described above.

The public nature of the health care system, as well as the high quality of its health care staff, should, at least in principle, guarantee the delivery of health care services that meet high professional standards and are theoretically accessible to the entire population. In recent years, however, disparities between population groups have widened in many aspects of health status and accessibility to health care services. This has taken place against a backdrop of reduced state participation in funding of the system – often overshadowing the system’s previous achievements.

As in past years, this chapter reviews indicators of developments in the health care system. Part A surveys national expenditure on health care services, and changes in the composition of its funding, relative to the OECD countries. The main developments in the inpatient system and in health care system personnel are reviewed. Part B focuses on the consequences of the inequality in health and health care services as reflected in indicators of the public’s health, access to health care services, and differences in infrastructure in different parts of the country.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2007.

The Education System – 2007

The chapter begins by presenting main developments and changes in the past decade in the student and teacher population. Part 2 discusses the financial resources that are available to education, as reflected in government expenditure, its share in overall national education expenditure, and the state budget. Part 3 discusses changes in the Ministry of Education policies that affect the narrowing of educational disparities and affirmative action for weak population groups.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2007.

Government Expenditure on Social Services – 2007

It is precisely for this reason that the distress of specific population groups who have not benefited from the trickle down effect of this economic growth stands out all the more. The experience of recent years shows that pro-growth macroeconomic measures take a long time to benefit society’s weaker groups and that even then the achievements are incomplete and inadequate. Therefore, to cope effectively with socioeconomic problems, the government should also employ a range of direct and focused measures.

Policymaking and the selection of methods of promoting the welfare of weaker population groups have been flawed for various reasons including difficulties in identifying and measuring costs and benefits and, particularly, in comparing cost-benefit ratios among different kinds of public social expenditure. The purpose of this review is to enhance the discussion of the government’s socioeconomic policies by improving its factual base. It describes developments over time and evaluates the main trends in government social expenditure. It also tries to assess, to the extent possible, the efficiency of resource allocation.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2007.

 

 

The Singer Series: Israel’s Social Services 2007

The Israeli economy has been expanding rapidly for several years, and the accepted estimates for this year point to continued strong growth by the standards of developed European countries. The social services provide a less encouraging picture. Israeli society has faced difficult challenges in its history and has stood up to some of them with considerable success, but some of its basic problems remain unsolved.  Foremost among them are income polarization and a high incidence of poverty – meaning that not all Israelis are benefiting form current or past economic growth.

The Report that follows reviews Israel’s main social systems and discusses their development and trends in recent years.

 

The 2007 Social Survey

This year, as every year, several questions were repeated with identical phrasing in order to allow an analysis of trends in the public’s attitudes. Several new questions on matters relevant to the recent public debate were also added. The survey provides an important complement to the objective indicators of the economy and society presented in this Report by showing opinion and personal assessment trends.

Employment and Wages – 2007

Thus, the civilian labor force participation rate rose from 54 percent at the beginning of the decade to 56.7 percent in the third quarter of 2007; employment rose from 2.2 million to 2.8 million; and the unemployment rate, after peaking at almost 11 percent in the second half of 2003, declined steadily to 7.3 percent in the third quarter of 2007 – the lowest rate since 1997. The national average wage, which declined during the recession years, also rebounded to NIS 7,813 per month (August 2007). Although the rapid economic growth that powered these trends began in the second half of 2003, labor markets tend to respond with a lag to economic recovery; thus, the improvement in the labor market was not felt until 2005. The outlook for the years to come is one of continued growth in employment and improvement in other economic indicators, provided that global and domestic economic growth continues.

This chapter takes a closer look at developments in the labor market and discusses aspects of Israel’s employment policy.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2007.

Summary of Findings – Israel’s Social Services 2007

Findings in the following areas are reviewed: Economic Developments; Employment and Wages; Government Expenditure on Social Services; The Education System; The Health Care System; Personal Social Services; The Social Security System; The 2007 Social Survey.

The full publication is Israel’s Social Services 2007, Yaakov Kop (editor).

The Social Security System – 2007

These programs offer a safety net for individuals and families in the case of lack of work related income or reduced income or in the case of additional expenses in diverse circumstances. The programs focus on alleviating poverty; assisting individuals and families maintain a reasonable standard of living; dispersing income over an individual’s lifetime; helping meet additional expenses such as those related to child raising; providing incentives for the unemployed to join the labor market; compensating for loss or injury; redistributing resources; and enhancing gender equality. Public expenditure on state run social security programs in 2007 was NIS 42 billion, 41 percent of total social expenditure in the current year’s budget.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2007.

Personal Social Services – 2007

The Ministry of Social Affairs and Social Services, and the municipal welfare departments, are responsible for developing the services, determining their contents, and financing them. Responsibility for the delivery of most services, in contrast, has long belonged to nongovernmental organizations, including volunteer organizations (NPOs) and private businesses.

The personal social services provide various types of assistance for a wide range of population groups, including children and teens at risk, seniors and others with disabilities, families in distress and crisis (including single-parent and immigrant households), the mentally retarded, alcoholics and drug addicts, and the homeless. Thus, these services focus on assisting the population groups that constitute society’s weakest and the most vulnerable links.

The following review and examination of the state of Israel’s personal social services includes three main parts. Part 1 briefly describes developments in government expenditure for these services in recent years. Part 2 focuses on main issues that occupy these services. Part 3 explores two of these issues at greater length: how the municipal welfare services are coping with the poverty problem, and inequality among locations, especially between Jewish and Arab ones, in the personal social services that their populations receive.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2007.

Reducing Class Size: Budgetary and Educational Implications

In this agreement, the government committed itself to working to reduce class size to a maximum of 32 students. The research has two levels: one level examines the expected advantages and disadvantages of fulfilling the commitment. This includes a discussion of the educational advantages of small classes and in particular the ability to give students attention according to their needs, the opportunity to raise student achievement and the chance to improve the atmosphere in the schools. The second level presents the results of a simulation experiment in which the details of the resources required to fulfill this commitment are examined. The results are examined in terms of the money and manpower required at each educational level. It was found that the total costs would be somewhere between NIS 5.7 and 9.3 billion not including the one-time expenses of building and training the new teachers that will be needed. It was also estimated that some 17,000 new teachers and 7,500 classrooms will be necessary to implement the class size reduction.

This paper is available in Hebrew only.

Policy Guidelines for the Elderly in Israel

Demographic and social developments among the elderly are also presented as background for the discussion of issues of work and pension. The Long-Term Care Law is also presented as a “case study” for social policy analysis.  The implications of these subjects are presented as they relate to a view of aging in society as a “burden” or an “asset”.

This paper is available in Hebrew only.

Immigrant Integration in the Social Security System

The social welfare system is intended to insure a minimum standard of living for all members of society and particularly for those individuals and families who find themselves in need. More specifically, this study looks at how immigrants and long-time residents differ in the level of services that they receive.

This publication is in Hebrew only.

Oral and Dental Health: The Responsibility of the State Towards Its Citizens

Morbidity is high and the disparities between population groups are substantial. Public spending on dental health care is the lowest among Western countries. Oral and dental health is an integral part of overall health and morbidity in this area represents a drain on the individual and on society as a whole. Most European countries have recognized their obligation and have included dental care in their national health insurance plans and as part of their basket of services, something that eases accessibility to receiving care and narrows the gaps between population groups. The State of Israel has not as yet accepted this responsibility.

The authors state that the time has come to fulfill the intentions of the law regarding dental care for school age children by adding dental care to the basket of services that are stipulated under the National Health Insurance Law. They also recommend widening the basket of services for dental care to other population groups (such as the elderly) through a relatively modest budget increase. They also suggest establishing an epidemiological dental data base with on-going follow-up of individuals and cases, as well as widening educational work with populations, training more manpower in dental health care services and increasing the fluoridization of water in Israel.

This publication is in Hebrew only.

Formulating Welfare Policy in Israel, 2000-2005

Among the principle factors were:

  • the political ideological changes in the years 2000-2005;
  • the radical change in the welfare system;
  • organizational changes in the welfare system itself that have been instituted in the past few years;
  • programmatic changes that were introduced in many welfare programs with the purpose of changing the long-term characteristics and basis of these programs;
  • and, the wide-ranging state initiated cutbacks in the majority of social programs and social safety net.

This paper appears as a chapter in the book Formulating Social Policy in Israel, Uri Aviram, Johnny Gal and Yosef Katan (editors).

This paper is in Hebrew only.

Partial Privatization of the Personal Social Services

This is not a new phenomenon. Privatization has been happening at different levels and at different rates in many service sectors such as health, education, housing, and employment. This chapter focuses on a description and analysis of the privatization policy in the social services in Israel.

This paper appears as a chapter in the book Formulating Social Policy in Israel, Uri Aviram, Johnny Gal and Yosef Katan (editors).

This paper is in Hebrew only.

Ideology, Pedagogy and Educational Policy in Israel

The emphasis has moved distinctly towards an emphasis on educational standards and student achievement. The impact and meaning of this move is examined in this paper as well as the central players and the results in terms of the educational system as a whole.

This paper appears as a chapter in the book Formulating Social Policy in Israel, Uri Aviram, Johnny Gal and Yosef Katan (editors).

This paper is in Hebrew only.

Privatizing Public Housing: A Change or a Continuation of Housing Policy

Since then, the number of apartments in public housing has declined rapidly. In the year 2006, it was estimated that there were approximately 76,000 public housing units, that is, less than 2% of the housing market. This drastic decline in public housing is the result of two forces: the failure of the government to build rental units and the selling of the rental units that were in government hands.

This paper appears as a chapter in the book Formulating Social Policy in Israel, Uri Aviram, Johnny Gal and Yosef Katan (editors).

This paper is in Hebrew only.

Formulating Social Policy in Israel: Trends and Issues

Policy setting is characterized by priority setting, by choices between options and by decision making that directs activities and behaviors in all aspects of daily life. It is important to emphasize, though, that not making a decision also reflects a policy decision.

The papers in this compendium examine a wide range of examples of policy making in different areas of social policy, expose the different alternatives that the Israeli welfare state has tried, discuss the factors that have influenced these policies, and point to the contradictions behind policies that are a reflection of the development of social policy in Israel in the areas of various social services.

This publication is in Hebrew only.

Enacting the National health Insurance Law: Why in 1994?

The legislation regarding national health insurance is among the most important pieces of social legislation of the past decade. Until its ratification in 1994, there were no fewer than 15 propositions, some put forward by the government and some as private initiatives (by Knesset members from different parties). Why did all the previous initiatives fail and what was particular about the latest bill that it passed? No single factor led to the necessity to change the “rule of the game” when it came to health care and the healthcare system. The combination of a crisis with the possible solution form the Natanyahu Commission’s recommendations as well as changing political conditions, macro-economic developments and the “winds of reform” that blew at the time, all contributed to 1994 being the right time for health legislation and reform.

This paper appears as a chapter in the book Formulating Social Policy in Israel, Uri Aviram, Johnny Gal and Yosef Katan (editors).

This paper is in Hebrew only.

The Plan to Reorganize Mental Health Services in Israel, 1972: Factors that Help and Hinder the Reform to Community-Based Mental Health Services

Since the mid-1970s the mental health services have attempted to decrease the number of psychiatric beds and decrease the number of services given on an in-patient basic, while simultaneously developing community-based services that are accessible and available to the public at large. Despite all the efforts, the attempts at instituting this reform have not gone well. This article begins with a brief description of the social and organization state of the mental health service,s the reform plans, the major events that have occurred in attempts to institute the reform, and factors that have helped and hindered the process.

This paper appears as a chapter in the book Formulating Social Policy in Israel, Uri Aviram, Johnny Gal and Yosef Katan (editors).

This paper is in Hebrew only.

Reform in Immigrant Integration: The Move from Institutional Absorption to Direct Integration into the Community

New immigrants began what was called a “direct integration track” into the community. More than one million immigrants were dealt with in this way. This new track represented a privatization of the business of immigrant absorption and a major change in the policies relating to immigrant rights. The implications went beyond the organization or even ideology; the impact on culture and on the cultural integration of immigrants was significant. Reasons for the change – power struggles and windows of opportunity – are all discussed in this paper.

This paper appears as a chapter in the book Formulating Social Policy in Israel, Uri Aviram, Johnny Gal and Yosef Katan (editors).

This paper is in Hebrew only.

A Safety Net Full of Holes: Changing Policy Towards Israel’s Social Assistance Program

Despite the existence of social welfare programs that address the specific needs of various populations – the unemployed, people with disabilities, the elderly or families with children – every welfare state is aware that there are individuals and families who suffer from social and economic insecurity on a temporary or long-term basis.  These people may not be served by other social programs that serve clearly delineated populations, or their needs may not be sufficiently covered by those programs. The welfare state has devised a social security net to help these particular people.

This paper focuses on the factors that led to the abrupt “about face” in social policy that took place in the years 2002-2004. While the country faced a severe economic and security crisis, its attempts to reduce government spending included reducing social services spending. Factors that led to this policy change as well as implications of the change are examined.

This paper appears as a chapter in the book Formulating Social Policy in Israel, Uri Aviram, Johnny Gal and Yosef Katan (editors).

This publication is in Hebrew only.

Policy Towards Persons with Disabilities: From Social Legislation to Legislating Rights

In general, policy and legislation can be divided into three main periods:

  1. From the establishment of the State until the 1970s. Policy and legislation were social and based on a bio-medical model and on the source of the disability for determining benefit levels or specific services;
  2. From 1970 until 1995. In both policy and legislation there was recognition of the need to assimilate people with disabilities into the community.
  3. From 1995 until now. Policy is based on legislation of equal rights for people with disabilities and on the rights of the individual with disabilities to participate fully in all aspects of life and society.

This paper deals with the shaping of policy and legislation regarding those with disabilities.

This paper appears as a chapter in the book Formulating Social Policy in Israel, Uri Aviram, Johnny Gal and Yosef Katan (editors).

This paper is in Hebrew only.

A Turnaround in Children’s Rights and Social Services for Children

This process and the public, societal and legal support for it, is indicative of a more general support for human rights and for the rights of the child in particular. This movement has been expressed in significant change in social policy regarding children and in the social services that are available to them. The fact that this change coincided with a time of social cutbacks is also significant is examined in this paper.

This paper appears as a chapter in the book Formulating Social Policy in Israel, Uri Aviram, Johnny Gal and Yosef Katan (editors).

This paper is in Hebrew only.

The Education System – 2006

The first part of the analysis deals with major changes in the first of these dimensions — changes that affect the character and the quality of the education system. The major developments of the system are not new and have been assessed in the past. Nevertheless, because of their importance it is necessary to review them, briefly, in order to obtain a clearer understanding of these developments and their effects. The second part of the survey focuses on resource allocation to the education system: the budget, characterization of the resources, and the developments of recent years.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2006, Yaakov Kop (editor).

Government Expenditure on Social Services – 2006

Under these new conditions, the problems of coping with Israel’s socio-economic issues became even more complicated and difficult.

The challenge of crafting the desired policy for the improvement of the welfare of weak population groups suffers, among other things, from difficulties in identifying, measuring and, particularly, in comparing cost-benefit ratios among different public social outlays. The goal of this survey is to contribute to the debate over the government’s socio-economic policy by improving its factual base. It describes long-term developments in a way that is consistent with previous surveys, gauges the main trends in government expenditure on social services, and attempts — to the extent possible — to assess the effectiveness of the expenditure.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2006, Yaakov Kop (editor).

The Share of Public Expenditure in GDP in View of the Need to Increase Defense Spending

However, the planned changes in the 2007 budget, following these principles had no effect on the focal point of the policy: reducing the share of general government in the economy. The intention was to hold the increase in public expenditure to a rate slower than expected growth in business sector and household private consumption, estimated at more than 4 percent per year. Concurrently to this decrease, the share of government expenditure, the tax cuts that had been approved as part of the tax reform that began in 2003 were supposed to continue. The reform was intended to reduce tax revenue in 2010 by NIS 13 billion relative to the level that would have prevailed had its implementation been suspended in 2007.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2006Yaakov Kop (editor).

The Singer Series: Israel’s Social Services 2006

The following chapters tell of the prolonged erosion of social expenditure, as part of a general policy of cutbacks initiated in 2002. The effects of this policy continue and as a result the hoped-for recovery – based on the government’s pre-election platforms and its basic policy program – has not materialized. When the current government began its term in office, there was hope of a revival of the “welfare state”, but the war in Lebanon put all such plans into a deep freeze.

The 2006 Social Survey

The survey, based on a public opinion poll, illuminates the Israeli public’s sense of well-being and social confidence as well as its attitudes towards various social issues. This year, as every year, several questions were asked again in identical phrasing in order to provide an indication of trends in public attitudes. Also, as in previous years, several new questions were introduced pertaining to the public’s welfare. These questions were chosen due to their centrality in recent public debate. The survey provides an important addition and complement to the social picture provided by the Center’s annual report and analysis of social expenditure.

Three surveys were conducted this year (February, July, and September). Each of the survey periods chosen represents a theoretically different period of the year in terms of social, economic, security, and political affairs. Since 2006 was a year of rapidly shifting developments, it is of interest to determine to what extent the changes influenced the public sense of social confidence as reflected in the Taub Index and the other social indicators examined in the survey. The February survey was conducted while Ariel Sharon was still prime minister and the outlooks on the continuation of economic and political recovery were positive. The July survey was conducted after Ehud Olmert formed a new government following an election campaign that emphasized the “social agenda.” The September survey took place after the Second War in Lebanon and the beginning of a return to routine life.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2006, Yaakov Kop (editor).

The Social Security System – 2006

The system encompasses a lengthy series of programs, most run by the National Insurance Institute and administered by various government ministries (Defense, Finance, Immigrant Absorption) and the free market (employer pension plans). The social security programs have several specific goals: alleviating poverty; maintaining the standard of living of the general population; distributing an individuals’ income over various periods in their lives; helping to cover additional expenses such as those related to child raising; inducing the unemployed to join the labor market; compensating for loss or injury; redistributing resources; and enhancing gender equality. Public expenditure on these programs in 2006 came to NIS 44.5 billion, 42 percent of total social expenditure in the past year’s budget.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2006, Yaakov Kop (editor).

Personal Social Services – 2006

The Ministry of Social Affairs and the local welfare departments are responsible for developing the services, determining their contents, and financing them. Responsibility for the delivery of most services, in contrast, has long belonged to nongovernmental organizations, including volunteer organizations, NPOs, and private businesses.

This review of the state of the personal social services includes three main parts. Part 1 examines the structure, components, and characteristics of the main service categories and surveys the main changes that have occurred in government expenditure for these services in recent years. Part 2 focuses on several main characteristics and problems of the services and points to possible methods of addressing them. Part 3 briefly describes how the war in the North in the summer of 2006 revealed the characteristics and problems of the services through their functioning, and offers recommendations that may help the services to cope more effectively with future emergencies.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2006, Yaakov Kop (editor).

Health Care Services – 2006

The services are legislated by the National Health Insurance Law and are delivered at relatively low private cost. The achievements in respect of the population’s health status and satisfaction with the health care services provided should be credited to the public nature of the system and the level and quality of its personnel. However, the system still has some residual problems that overshadow its achievements and are reflected in declining public satisfaction. They include, in particular, the problem of inequality in access to services and rising costs of the system.

This year as in the past, various aspects of developments in the health care system are reviewed with emphasis on issues that, if dealt with, may improve the functioning of the system and prevent harm to the population’s health. The chapter is divided into two parts. Part A surveys the main developments in the health care system. Section 1 discusses the optimum level of expenditure for health care services, comparing Israel with the OECD countries. Section 2 examines the composition of funding for the system and its effect on equity, with emphasis on the upward trend in the share of private funding in recent years. Section 3 is devoted to manpower in the health care system, and the last section examines the health status in Israel in selected areas, including recent developments in infant mortality and life expectancy. The second part of the chapter (B) discusses the significance of inequities in health and health care services against the backdrop of the second war in Lebanon.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2006, Yaakov Kop (editor).

Summary of Findings – Israel’s Social Services 2006

Findings in the following areas are reviewed: Share of Public Expenditure in Gross Domestic Product; Government Expenditure on Social Services; The Education System; Health Care Services; Personal Social Services; The Social Security System; The 2006 Social Survey.

Complete papers appear in the Center’s annual publication, Israel’s Social Services 2006, Yaakov Kop (editor).

School Violence: Characteristics, Causes and Ideas

The two viewpoints were: that violence is “imported” from outside the school and the alternate view is that it is endemic to the system and structure of schools. The report includes recommendations based on successful courses of action taken in various schools in Israel.

This paper is available in Hebrew only.

The 2005 Social Survey

Survey questions also examine social policy issues and reflect the public’s value preferences in regard to several matters on the public agenda. For example, the survey addresses social disparities, a recurrent issue on the social and economic agenda, in two dimensions: what the public thinks about the nature of changes taking place; and, its judgment about how government policy in various spheres has helped to ease or exacerbate the disparities. This issue cuts across many of the topics in the survey and it appears that the public’s feelings about the intensity and widening of social gaps correspond to findings in various other studies conducted in Israel.

The survey also attempted to ascertain the public’s evaluation of the effects of economic developments, with questions relating to the assessment of the respondent’s personal situation, including expectations of improvement. The twenty-six survey items were coupled with nine background questions about the respondents’ age, gender, education, income, date of immigration, level of religious observance, and so on.

Importantly, the survey is a tool that complements the Center’s analysis of social service allocations presented every year in its Annual Report. The survey illuminates the views of consumers of social services – the public at large – and, within the limitations that are typical of tools of this kind, is a reliable indicator of public attitudes.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2005, Yaakov Kop (editor).

Transfer Payments – The National Insurance Benefits – 2005

They are administered largely in the form of financial support that recipients may use in accordance with their needs and preferences. Some benefits (old-age benefits and child allowances) are given universally; others (e.g., income maintenance and unemployment compensation) are only for those who meet set criteria and eligibility tests. In recent years, benefits have been eroding as the government strove to cut its budget generally and its social budget specifically. The most significant cutbacks have been in benefits for the working age population: child allowances, income maintenance, and unemployment compensation. During the review period, long-term care benefits, alimony payments, maternity grants, and workers’ injury compensation were partly reduced, whereas disability benefits were hardly affected.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2005, Yaakov Kop (editor).

Main Findings – Israel’s Social Services 2005

A summary of findings in the following areas appear here: Government Expenditure for Social Services; Education; Health Care; Personal Social Services; Transfer Payments – National Insurance Benefits; The 2005 Social Survey; Privatization of Social Services; A Framework for Discussion; Education: On Privatization and Education; Welfare: Efficiency and Quality in Nursing Homes – NPOs versus Business Entities; Health Care: Relations Between Community-Based Medical Services and the Inpatient System.

This appears as a chapter in the Center’s annual publication, Israel’s Social Services 2005, Yaakov Kop (editor).

Personal Social Services – 2005

The challenge these services face is complex. The proportion of households, children, and elderly under the poverty line has been rising in recent years and the monthly unemployment reports show many localities with unemployment rates between 10 and 20 percent.

The personal social services have a critical role to play at the present time. They should, above all, reflect the state’s ability to assure the welfare of needy inhabitants by supplementing the universal social services. Many population groups, it turns out are unable or find it difficult to cope and their distress severely impairs their functioning, quality of life and impedes their social integration. The main groups at issue are the elderly, children at risk, teens in distress, battered wives, single-parent families (usually single-parent mothers), families in crisis, persons with disabilities, the mentally retarded, recent immigrants who have not achieved occupational and social integration, ex-convicts, drug addicts, and “street people.”

This chapter begins with a general survey of the personal social services by main areas of activity, including the quantitative dimension of expenditures. Part 2 focuses on main issues in the structure and functioning of the services and their ability to fulfill their tasks. In Part 3 the discussion is expanded and several important policy recommendations are offered.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2005, Yaakov Kop (editor).

Health Care Services – 2005

The credit for these achievements, as has been noted in the past, definitely belongs to the caliber and quality of the system’s personnel and also to the public nature of the health care system.

At the same time, though, the rise in the share of private funding in health care and the system’s growing susceptibility to conventional market failures have meant that the social and economic achievements of the system are being eroded and there are rising concerns that, ultimately, the public’s health will suffer. The private funding of services is claiming a growing portion of the household budget, especially among the low-income quintiles, and is making medical services less accessible due to cost. The cost of services has been rising and the public’s satisfaction with the system has been falling. In this chapter, the increase in private funding as a main health care system issue is examined. As in past years, there is also an assessment of several other issues that, if dealt with appropriately, may help the system to function better and to provide more continuity and better coordinated services.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2005, Yaakov Kop (editor).

The Education System – 2005

On the other hand, the system underwent two important developments with unclear implications for the future: the continued implementation of the Shoshani Committee Report on changes in the budgeting method of primary schools; and the publication of the Dovrat Committee Report, which conducted a comprehensive examination of the education system and presented proposals for change and improvement.

It is absolutely clear by now that the implementation of the Shoshani Committee Report has led to the redistribution of budget resources among schools and segments of the primary education system. In the main, the Arab sector received extra resources and sectors that had previously enjoyed preferential treatment suffered substantial cutbacks. (The issue is discussed at greater length below.) It is still premature, however, to point to the full effect of the reform. Firstly, the report is being phased in, over five years. Secondly, additional budget cutting continued last year, too. Thirdly, some school principals and directors of education departments in the local authorities are not yet fully aware of the significance of the changes in the budgeting method. Thus, some of the changes, such as the closure of small schools and the reorganization of school-level resources, have not become fully evident for the time being. Just the same, the report has had the demonstrable result of enhancing equality in resource allocation at the primary school level.

he discussion that follows is dedicated to the two main actors in the education system: pupils and teachers. Regarding pupils, the focus is on the phenomenon of “horizontal” movement between segments of the education system, i.e., transfers between the State and the State-Religious systems, between the official systems and the non-official recognized system, and between public and private schools (Part 2). As for teachers, the main issue is whether Israel is facing a shortage of teachers in the near future and, if so, what is to be done (Part 3).

The budget discussion focuses on the initial results of the change in the budgeting method of primary schools and examines in detail the need to expand the method to preschools and the education system that serves special-needs youngsters (Part 4).

Part 5 tackles education policy by probing the origins of the current feeling of crisis in the education system and proposing ways to cope with the relevant issues. The analysis focuses on the polarization that typifies Israel’s education system and on population groups that are unable to realize their potential. Lastly, there are proposals in three main fields: quality of personnel, curricula and core curriculum, and changes in school budgeting.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2005, Yaakov Kop (editor).

Government Expenditure for Social Services – 2005

Thus, the dilemmas of socioeconomic policy remain unresolved: is a pro-growth macroeconomic policy enough to enhance the well being of weak population groups? And if the general improvement does not trickle down enough, or does so at an unsatisfactory pace, how should the government intervene? Should Israel revert to its traditional policy of spending more on social services and transfer payments, or should it take a different approach, more focused and less universal, including significant changes in expenditure targets?

Ideological outlooks influence attitudes toward these questions. Even people who share similar worldviews, however, may disagree due to practical difficulties that originate, among other things, in limitations in identifying and measuring costs and benefits and, primarily—in comparing the cost-benefit ratios of different public social outlays. The review that follows strives to establish a factual basis for discussion of a desirable government socioeconomic policy. Apart from describing developments and noting main long-term trends, the analysis also makes a partial assessment of the efficacy of the expenditures.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2005, Yaakov Kop (editor).

The Singer Series: Israel’s Social Services 2005

Part of the hardships faced by many Israelis may be attributed to government policy, especially the State budget directed to social services. The State budget for the coming year was based on the previous year’s budget with an increase in expenditure of only one percent of GDP. Even if the entire increase were allocated to social services, it would not cancel out the cumulative decline that occurred in 2002–2004. Analysis of the State budget as presented to the Knesset shows that total social expenditure in the 2006 will be equal to that in 2005 — meaning that the per capita budget is smaller than in recent years.

Preventive Medicine for Pregnant Women and Their Children: At a Crossroads

In the past this branch has dealt with regulating disease; in the past few decades the challenge has been widened to improving the health and quality of life of populations and to narrowing the health gaps between different populations. Preventive medicine is based on the principle of university service that is reliable and accessible to all.

This work examines the organization and budgeting of services; evaluation of the services and accepted national and international measurements; a brief history of mother and infant services in Israel; recommendations for future planning and improvement of the service.

The paper is available in Hebrew only.

A Rethinking of Secondary Education in Israel

This also became a national undertaking with the establishment of the Dovrat Commission.  There is a feeling of a crisis following the poor attainments of Israeli students on the international scholastic tests, low achievement on Army tests, and growing educational gaps in achievement and in matriculation certification between social economic groups.

This article focuses on the most worrisome issues in education, their causes and recommendations regarding ways of thinking towards change and improvement of the educational system.

This paper is available in Hebrew only.

The Relationship Between Community Medicine and the Hospital System

In practice, the relationships within the medical services – between hospitals and sick funds – is becoming ever more complex. Changes within and outside of the system  – like an aging population, increased longevity, greater numbers of chronic care patients, new medical technologies – impact on both the givers and receivers of service.

This paper examines the existing relationship between community medical services and the hospital system and recommendations for improving this increasing important and complex relationship.

This paper is available in Hebrew only.

Rights of the Elderly

The rate of increase of those over age 75 is even faster.  At the same time, the natural population growth has slowed which increases the rate of aging of Israeli society. Despite the aging of Israeli society, Israel is still a relatively young society compared to European countries where the percent of the elderly is between 15 and 20 percent of the population.

This work examines the legislative aspect of services for the elderly and the interface between local and national services for this population.

This paper is available in Hebrew only.

The 2004 Social Survey

The survey complements our analysis of allocations for the social services by illuminating the opinions of the service recipients — the public at large — and enriches the debate at the Taub Center on major issues in the social services:  education, health, social disparities, personal security, income, and employment. This year’s survey asked twenty-three questions, in addition to eight background questions providing information on the respondent’s gender, education, income level, religious observance, time of immigration, and so on.

The findings are presented in three main dimensions:  the public’s attitude toward current social policy and its effects on society; the effect of social policy on the individual’s personal situation; and, the public’s attitudes on issues relating to values and ideologies. The longitudinal aspect allows an analysis of changes in the public’s sense of its well-being and its evaluation of government policy in various fields and, in other cases, reveals its attitudes toward important social policy issues.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2004, Yaakov Kop (editor).

Transfer Payments – The National Insurance System – 2004

Decisions about National Insurance benefits and their position in Israel’s overall social welfare fabric, as well as the issue of universality versus selectivity in benefits should be the subject of systematic public debate. Decisions of such significance should not be made lightly or implemented by indirect means through the Economic Arrangements Law.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2004, Yaakov Kop (editor).

Personal Social Services – 2004

The focus is on three main elements:  the extent of financial resources available for personal social services; the legislative infrastructure of the services; and, the organizations that take part in delivering the services, their roles, and their interrelations.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2004, Yaakov Kop (editor).

Health Care Services – 2004

The challenge facing the system, primarily in view of changes towards increased private funding, is to maintain and improve the level of service.  Following these changes, satisfaction with the system has declined somewhat and there is concern that the changes in the composition of funding will impair the health of weak population groups, since these groups’ access to medical services is declining relative to others.

This year marks the tenth anniversary of the enactment of the State Health Insurance Law, which established every resident’s basic entitlement to a “basket” of medical services and created a funding system that would assure the fair and equitable realization of this entitlement. The law marked the first stage in the reform of the Israeli health care system as originally proposed by the Netanyahu Commission and, more recently, by the Amorai Commission. Other important elements of the reform, which pertain to the law directly and indirectly, concern issues that are not being implemented even though the system deals with them extensively. Three such issues are discussed in the second part of this chapter.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2004, Yaakov Kop (editor).

The Education System – 2004

The first dimension is the increase in student enrollment and changes in the distribution of students among sectors of the system. The second concerns changes in the size of schools and classes. This dimension, too, is discussed on the basis of distribution among sectors of the system. The fragmentation of the education system by educational streams and communities is reflected in a proliferation of small schools; this phenomenon is discussed at length. The third dimension is the budgeting of the system and how it varies by educational level. The fourth dimension concerns main developments in education manpower.

Part B discusses two issues of major concern in Israeli society: the rising trend in private expenditure on education, using “other sources,” especially parent payments, to finance the system; and the issue of inequality in achievements and educational disparities, and the relationship between them. In this context, the education system’s ability to narrow disparities among students who come from different social strata is examined. A proposal is put forward for an initiative to promote compensatory educational activities, entailing extra resource allocation for those population groups who under-achieve due to certain socioeconomic characteristics. The proposed activities would raise the achievement level of the population at large and narrow inequality among its segments.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2004, Yaakov Kop (editor).

Government Expenditure for Social Services – 2004

In recent years, relatively large changes were made in the size and composition of the budget in the course of the budget year. This makes it difficult for government ministries to implement their working plans efficiently and may result in underutilization of resources and confusion regarding priorities.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2004, Yaakov Kop (editor).

Summary of Findings – Israel’s Social Services 2004

Main findings are presented in the following areas: Economic Developments and Government Expenditure; Education; Health Care; Personal Social Services; Transfer Payments – The National Insurance System; The 2004 Social Survey; The Erosion of Low Salaries and Increasing Poverty Among Working Families; Employment, Unemployment and Welfare Policy; Educational Streaming: Classrooms and Groups – A Recommendation for Changing Teaching Methods; Mental Health Care Reform.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2004, Yaakov Kop (editor).

The Singer Series: Israel’s Social Services 2004

These changes were definitely abetted by changing economic conditions and other complementary circumstances, including the declining intensity of terror attacks in Israel proper. Thus, one cannot determine whether 2004 marked the beginning of recovery or a temporary pause. Be this as it may, the sense of economic relief was not felt at the social level. In fact, the plight of various social groups worsened and the 2005 budget seems to promise more of the same.

Mental Health Reform in Israel

Israel, like many other countries in the world, is in need of mental health reform. Wise implementation of reform will require an understanding of the societal processes as well as an accommodation to professional attitudes.

This paper is in Hebrew only.

Health Policy and Legislation: Changing the Rules of the Game

Despite these improvements, there are gaps between population groups in Israel on every one of these indicators – in terms of risk-factors and morbidity rates. In addition, there are indications that these gaps are widening.

This paper reviews the the passing of the National Health Insurance Law in 1994 and processes of change since then.

This paper is in Hebrew only.

The 2003 Social Services Survey

The survey is a complementary tool to those used by the Center to analyze resource allocation for social services by reflecting the views of service recipients, that is, the public at large. This year, as every year, we varied some of the questions. We continued to ask certain questions without changing their wording in order to obtain an indication of trends in the public’s views on these social issues.

The survey questions fall into three broad categories:

1.   Questions relating to the respondents’ assessment of the overall social situation and changes that have occurred in it, with reference to the level of inequality and the social gaps.

2.   Questions relating to changes during the past year in the economic situation and the level of service that citizens enjoy, both generally and personally.

3.   Questions relating to the respondent’s attitude toward socioeconomic policy issues in matters that lie at the heart of the public debate. One may also regard the responses to these questions as a reflection of the respondents’ ideological and political preferences.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2003, Yaakov Kop (editor).

Government Expenditure for Social Services – 2003

It should be borne in mind, however, that the budget in its final version is the result of political and governmental struggles over the apportioning of the national resource pie. The extent and composition of Israel’s social expenditure reflect the outcome of a process in which many players take part: the government, its ministers, the Knesset, the media, public entities, and academia. The budget as the Knesset ultimately approves it is the “bottom line” of decisions and outcomes.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2003, Yaakov Kop (editor).

The Singer Series: Israel’s Social Services 2003

The indicator that might best reflect this economic decline, per capita GDP, shows that Israel has slipped from a respectable position among other industrialized countries to one of a lesser status. Unfortunately, this economic downturn has carried with it a marked deterioration in the individual and societal sense of well-being.

The immediate social price has been increased unemployment, which has persisted at a rate of more than ten percent for a longer time than Israel has ever known before.  Another effect has been a marked decline in the standard of living.

This year’s annual review of Israel’s social services points to a mixture of achievements and failures.  Foremost among the latter are poverty and unequal income distribution.

The Report has not taken an explicit side in the social welfare debate. It is clear, however, that a special effort will be required to maintain the achievements of the Israeli welfare state. Much of the legislation and decisions of the past year serve to undermine the basic premises of the Israeli welfare state, which, with all its drawbacks, has contributed to maintaining social cohesiveness. Even if the current social and economic problems make budget cuts unavoidable, these restraints should be applied with great caution to insure that they do not do more harm than good. To be more precise, unless the government proceeds with caution, the negative effects suffered by a segment of society will exceed the more limited gains for the public at large.

Local Leadership Leading to Change – Another Way Is Possible: Success in Local Authorities

At the base of this work stands the question of the socioeconomic advancement of communities from a different perspective. That is, is it possible to identify circumstances that allow local leadership to make fundamental changes in a certain direction and get positive results. The work focuses on examples of success that show “another way is possible.”

This paper is in Hebrew only.

The Public’s Opinion on Social Services – 2001-2002

Similarly, most respondents report that their income affords them a reasonable standard of living. When we compare the responses with “objective” quantitative information about the situation, we find that the public has a rather good sense, or a rather accurate knowledge, of how resources are allocated for social services and current budget trends. Most people sense that the social service budget has stopped growing and that the budget for in-kind services, in per-capita terms, has actually declined slightly. The public believes that social gaps have widened in the past year and that the budget as it stands today is not helping to narrow them. The respondents rated two areas – health and housing – quite favorably, as shown in their responses that these two areas of social service need less assistance from the state budget than other areas. The main areas that require additional budget expenditures, in the opinion of a majority of respondents, are education and unemployment. The participants also indicated being severely distressed about and dissatisfied with the state of personal security, environmental protection, pension arrangements, and institutional arrangements for the elderly.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2001-2002, Yaakov Kop (editor).

Personal Social Services – 2001-2002

It was in the spirit of these principles that the Welfare State model emerged in many Western countries after World War II. It strove to provide a fitting solution to a broad spectrum of social problems and needs and to create a more egalitarian, socially just society. This model was based on two main principles that were perceived as essential: first, centralized planning, funding, and provision of social services; and second, broad social legislation. It was assumed that these elements would ensure the allocation and provision of essential social services to populations on a just and equitable basis.

This chapter surveys the range of personal social services provided and analyzes the degree of equality in these services, in light of the extent of centralization and decentralization of these services and their legal infrastructure. Section 2 surveys the main services provided to various populations by the public system of personal social services and their development in recent years. Section 3 analyzes the main features of the structure and service patterns of this system, decentralization, centralization and legislation. Section 4 focuses on equity in the allocation of personal social services to populations in need. The final section sums up the survey and presents the main conclusions to be drawn from the data.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2001-2002, Yaakov Kop (editor).

Government Expenditure for Social Services – 2001-2002

Thus, the global economic situation, the state of the domestic economy, and the security situation may combine to force a rollback in the social services. Cuts in the state budget – including social service budgets – are sometimes unavoidable. This is the case when the damage caused to the economy by an increase in the budget deficit exceeds the damage caused by a reduction in social spending. Such an evaluation is linked, of course, to value judgments, but it is also a question of the size of the deficit, and the general economic circumstances and expectations. If the size of the deficit and its trend threatens economic stability, budget cuts may become unavoidable.  It is, however, important that the government exercise extreme caution when facing difficult dilemmas of this sort. The budget deficit problem should be regarded as a temporary development caused by an economic slowdown that will be followed by an upturn. As soon as the economic outlook will show significant indications of this expected recovery, the basic structure of government expenditure should return to its pre-cutback track.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2001-2002, Yaakov Kop (editor).

The Health System – 2001-2002

We then examine national expenditure on health and the funding of the health system. Developments in the hospitals and health funds gives a picture of overall changes in health care, and the degree to which the health system meets users expectations and needs is also explored. The remaining sections of the survey deal with specific sectors of the health system, with emphasis on developments in the past year. In addition, we will devote a separate discussion to trends in the use and regulation of medicines, dental health care, and mental health care.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2001-2002, Yaakov Kop (editor).

The Education System – 2001-2002

The survey analyzes cross-sections by age in various educational institutions – preschools, primary schools, and post-primary schools – of varying levels and types, as well as post-secondary schools and higher education (colleges and universities). There are additional vertical cross-sectional analyses by sector, differentiating between Jewish and Arab schools and within them by type of school system.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2001-2002, Yaakov Kop (editor).

Israel’s Social Services 2001-2002

The brief growth spurt of 2000 that centered on high-tech industries and the international activities of Israeli firms in these fields were nipped in the bud – and its demise also quashed the techno-economic leap forward.

The economic pressures and social challenges of the past decade have led to areas of social distress that have not been addressed in full, although notable improvements did occur in certain fields.

The Report that follows describes, at length, various dimensions of Israel’s social realities and paints a complex portrait of growth in some sectors and stagnation in others. Each element of the portrait is reliable and solid in itself and is also shown against contrasting developments elsewhere in the socioeconomic system. This work portrays the magnitude of the challenges that Israeli society faces.

Making the Bedouin Towns Work

This paper considers this urbanization process, the limited success of the policies that were pursued and proposals for a strategic urban development approach that would begin to rectify the situation.

Any plan for the Bedouin must be viewed as an integral part of a larger plan for the Negev as a whole.  A region of this size should be an important contributor to the national economy.  But fragmented into a number of dysfunctional towns and detached rural settlements, it remains a drag on the economy, kept in a state of impoverishment and dependency by a steady inflow of non-productive investments and personal transfers.

Action Plan – Personal Social Services

Their main challenges are to make meaningful contact with population groups in need, to provide them with services tailored to their needs, and to help them extricate themselves from their states of distress and poverty. The recommendations presented in detail below are meant to help craft an array of personal social services that can meet these challenges and help ease the plight of Israel’s distressed population groups.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1999-2000, Yaakov Kop (editor).

Action Plan – Long-Term Care Services

First, we describe the extent of the problem occasioned by the exclusion of long-term inpatient care from the services covered by National Health Insurance. Second, we present the value and organizational perceptions that are crucial in policymaking. Several issues are taken up in this context. The first concerns the kind of health expenditure that policy should address – should it assure a given level of national expenditure or only a given level of public expenditure? The second issue concerns funding and, especially, whether long-term inpatient care and general health insurance should be funded separately. The third issue is which institutional player to prefer as the manager of long-term care insurance, in view of the challenges in regard to coordination and continuity of health services. Some of the discussion of these issues is enriched by other countries’ experience.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1999-2000, Yaakov Kop (editor).

Action Plan – Health Services

Another goal was to create an inclusive and comprehensive package of services – including components that the health funds had not offered before the law was enacted – to which all residents would be entitled. Has the law attained these goals? Not yet. Most of the recommendations of the CSPS health team wish to make progress toward these goals. The recommendations also explain the main reasons for the non-attainment of these important goals thus far.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1999-2000, Yaakov Kop (editor).

Action Plan – Education System

The first group includes recommendations concerning central-government policy measures that may not require budget allocations but may affect the performance, social status, and quality of the education system. This group includes Recommendations 1-3 and Recommendation 10.

The second group focuses on resource allocations for measures that may narrow disparities in inputs for the various sectors, in consideration of each sector’s different needs, in order to narrow gaps in scholastic achievements. Recommendations 5-7 belong to this group.

The third group concentrates on resource allocations for pedagogical measures meant to enhance the educational process and the system’s outputs. At issue here are Recommendations 4, 8, 9, and 11.

We do not offer a yardstick for use in prioritizing the recommendations. However, to fulfill three of the recommendations – applying the State system to all children countrywide, paring the executive functions of the Ministry of Education, and aiming for a 50 percent rate of matriculation-certificate eligibility among members of the relevant age group by the end of the incumbent government’s tenure – immediate decisions and preparations seem to be necessary.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1999-2000, Yaakov Kop (editor).

Proposal for an Alternative Economic Policy

The monetary policy has actually strengthened the shekel against the dollar artificially, thereby slowing export growth and increasing the volume of imports. For most of this time and in most respects, the Bank of Israel has applied monetary policy and the Finance Ministry has invoked fiscal policy without coordinating their actions and without consensus.

The alternative economic policy proposed here is designed to extricate the economy from its lethargy, reignite growth, and boost employment on the basis of vigorous growth of exports, by revising the underlying strategy of the country’s fiscal and monetary policies. This section of the book also discusses needed reforms in taxation, the capital market, major economic infrastructure projects, and defense spending, which carries a major macroeconomic impact. The resumption of growth should be accompanied by a reduction in income-distribution inequality and the attainment of additional social goals.

The plan is based on the view that the current policies, if allowed to continue, will not lead to the desired turning point in the next few years. According to historical experience, the Israeli economy was lifted out of downturns by a combination of policy measures and exogenous shocks (the Six-Day War, mass immigration in the 1990s, etc.). As 1999 drew to a close, economic activity began to recover to some extent, but not energetically enough to induce the economy to utilize all of its production and growth potential.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1999-2000, Yaakov Kop (editor).

Personal Social Services – 1999-2000

The total expenditure does not reflect the full extent of resources pledged to the personal social services; these services have access to additional resources from central government (such as the budget-balancing grants that the Interior Ministry gives to municipal authorities), municipal authorities, nonprofit organizations (many of which receive government aid), and private entities. However, the central-government allocation is an important component in the resources available to the personal social services.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1999-2000, Yaakov Kop (editor).

Health System – 1999-2000

Is Israel’s national health expenditure high by the standards of the industrialized countries to which Israel is usually compared? What major outputs, in terms of residents’ health, does Israel gain from its investment in health services?

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1999-2000, Yaakov Kop (editor).

Education System – 1999-2000

The first part of this section presents the main characteristics of enrollment and calls attention to major processes and trends. Afterwards, the discussion focuses on the system’s two main organizational settings: the class and the school.

The growth and development of these two settings have important budgetary implications. The class is the decisive unit in budgeting of the education system; the number of classes is the factor that determines the cost of the system.

The second part of this section discusses class size in its educational, organizational, and economic aspects. This part presents the distribution of classes by size and various characteristics of the population and uses this context to focus on the implications of reducing class size.

The third part of the section discusses school size in several respects. Various factors affect the size of schools and they rarely lend themselves to rapid change. The figures and discussions presented below shed light on various aspects of the issue.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1999-2000, Yaakov Kop (editor).

Government Expenditure for Social Services – 1999-2000

Our definition of government social services includes government ministries’ activities in social spheres as well as in-cash benefits paid by the National Insurance Institute, one of the most important components of the government social-service system. The largest spheres of social-service activity are education and health, along with National Insurance Allowances, foremost old-age pensions and child benefits. Areas of secondary magnitude in financial terms are immigrant integration, housing, employment, and personal social services. Although this report focuses mainly on analyzing government expenditure for social services, as a preface we briefly review the economic background amidst which the state budget is determined.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1999-2000, Yaakov Kop (editor).

Israel’s Social Services 1999-2000

In the long term, one may characterize it as growing and expanding, but it has had “ups,” as in the early 1970s, and “downs,” as in the mid-1980s. These up and down periods were affected by many factors, but one of them, beyond doubt, was the economic situation in the country, which left its mark on the system and bears some responsibility for the volatility that has characterized the performance of the Israeli welfare state.

The first part of the book presents a wide array of data and analyses that allow readers to draw conclusions about the “state of the nation” in the social services. A brief summary of the main findings is appended to the end of this chapter.

In the second part of the book, the CSPS professional teams present a series of policy recommendations in various fields. First, an alternative economic policy that may lift the economy out of its lengthy slump is proposed. The resumption of growth, apart from being a goal in itself, creates a basis for the resumption of development in the social services. Elsewhere in this section, teams of experts in education, health, and personal social services propose ways to improve the performance of these systems and to make progress toward Israel’s social goals.

 

Personal Social Services – 1998-99

These services serve the most vulnerable groups in Israeli society, such as children at risk, disabled or needy elderly, teenagers in distress, battered women, families in crisis, the disabled, the retarded, recent immigrants with adjustment difficulties, ex-convicts, and drug addicts.

Various service organizations are active in the arena of personal social services and are in charge of providing these groups with assistance, which includes advice, treatment, provision of information, mediation, instruction at the individual, family, and group levels, and material aid. These organizations also engage in developing, funding, and operating various community and institutional services: institutions, clubs, and day centers for the elderly, hostels and community housing for the retarded and the disabled, shelters for girls in distress and for battered women, clubs and afternoon centers for children, rehabilitation centers for the disabled, family counseling centers, and detoxification centers for alcoholics and drug addicts.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1998-99, Yaakov Kop (editor).

Health Services – 1998-99

Truth to tell, even before the law was enacted the health system suffered from ongoing crises, but this law was intended to solve the system’s problems, at least from the financial standpoint, and has not done so. One of the salient parameters of the health system during these years has been the continual and consistent attempts by the government to cut back its budgetary involvement and increase the public’s share in the funding of national health expenditure.

In our review this year, the presentation of health expenditures has been modified in order to bring it closer to the changes that have occurred in the past few years in the structure of system funding. One of the main changes was the elimination of health-fund membership dues and their replacement by the health tax. According to the principles of national accounting, there is an essential difference between these two types of levies: the former is voluntary, the latter obligatory. In the course of the changeover, various parameters of course changed, leading to a different incidence of funding. However, to permit a multi-annual comparative survey, the health tax can be presented as the successor of the direct private insurance (membership dues) in effect before the passage of the law. Accordingly, this study does not include National Insurance transfers on account of the health tax as part of government expenditure.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1998-99, Yaakov Kop (editor).

Education System – 1998-99

The second half of the 1990s has been under the sign of a slowdown in terms of budget growth and system expansion. This slowdown should be viewed against the backdrop of the retreat and cutbacks in other social services, on the one hand, and the protracted economic slump, on the other hand.

This year the education chapter focuses on the accelerating expansion of post-secondary and higher education. Our point of departure is post-primary education, especially the transition stage between it and higher education – the matriculation examinations – which must be passed in order to be eligible for the future possibilities available to graduates of the formal education system. The chapter begins with an analysis of the fiscal resources available to the education system and then reviews the system’s non-financial development as a preface to discussion of issues in higher education.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1998-99, Yaakov Kop (editor).

Social Expenditure and Its Composition – 1998-99

Much of this spending is devoted to the social services – education, health, personal social services, housing, and immigrant integration. In addition to these functions, there are the benefits paid to individuals and families by the National Insurance Institute, partly funded from the State budget. The aggregate of these two large categories constitutes the central-government social budget of the State of Israel.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1998-99, Yaakov Kop (editor).

Economic Downturn, Growth, and the State Budget – 1998-99

The effects of the decrease in immigration from the former Soviet Union, the restraint, and high real interest rates were compounded by the slowdown in world trade, prompted by the crises in southern Asia, Russia, and South America. The protracted slump warrants the application of a counter-cyclical policy by means of a more expansionary state budget and a less contractionary monetary policy, which would help the business sector break out of the slump and attain a growth rate commensurate with the increase in the labor force and productivity in the years to come. In view of the instability in the world financial system and the rising susceptibility of the Israeli economy to exogenous shocks, however, expansionary measures in general, and budgetary policy in particular, should be applied in moderation, subject to multi-annual targets for public expenditure, derived from the optimum long-term growth potential of the economy.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1998-99, Yaakov Kop (editor).

Summary of Findings and Policy Alternatives – 1998-99

The most conspicuous phenomenon in the field are a suspension of economic growth, rising unemployment, and decreased investments and exports. The downturn interrupted the process of social progress experienced by Israel during the first half of the decade and led to a retreat in several areas.

Against this background, the relative importance of macroeconomic policy within the overall domain of social-policy issues has increased; today it has a major impact on the advancement of all social issues.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1998-99, Yaakov Kop (editor).

Israel’s Social Services 1998-99

Often, during the fiscal debates, when the need for substantial cutbacks in the budget arose (and when was this not the case), economists demanded reductions in defense spending. In these cases, the point of departure was not necessarily the idea that defense spending was too high in view of military needs. The point of departure was different: because the experts have determine that the budget must be cut, and because even a huge reduction in small items will not yield the desired arithmetic results, there is no alternative to trimming the largest expenditure component, the defense budget. Thus, it was the relative size of the defense budget that placed it in the budget – slashers’ crosshairs. During the past few years, as the data in this report show, these two components – social services and defense – have exchanged their relative position, and social spending now occupies the slot once held by the defense budget. As a result, the social-services budget has also replaced the defense budget as the prime target whenever the need for cutbacks arises (and, as we have said, when is it otherwise). This is evidently the fate of any item that exceeds 50 percent of the total budget. These remarks should not be construed as deprecating the concept of “budget constraint.” It should be borne in mind that social expenditure is substantial not only as a percentage of the budget; it also consumes a growing share of the total national product. In the past few years, social-service expenditure has accounted for more than one-fifth of the total output of the Israeli economy (Gross Domestic Product). Therefore, setting the size of the social-services sector is – and must be – an inseparable part of economic decision-making. Hence an assessment of social trends requires a thorough scrutiny of economic policy, as this policy in itself dictates major elements of the welfare system. If, for example, we examine the changes in income distribution within society, we find that the main factor in inequality derives from disparities in wages and economic income. One cannot indict state intervention mechanisms for failing to narrow the inequality with greater vigor. The gulfs stemming from the labor market are too vast for a transfer-payment policy to eradicate or rectify to the extent required. However, there is good reason to examine the extent to which overall economic policy contributes, from the outset, to the formation of these disparities.

The Equality Dimension in the Activity of the Personal Social Services

In an examination of the issue of equality in the policies and activities of the personal social services, four main dimensions should be taken into account: the availability of personal services of identical scope and quality for population groups of similar needs; equity in accessibility to services; equity in use of social services; and, equity in resource allocation.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1996, and is available upon request.

Bequething of Economic Assets – Home Ownership

It is part of a more extensive study based on a comprehensive survey, in which 1,600 people were chosen randomly and interviewed in matters of family income, family economic resources, and intergenerational debts between parents and children. This analysis focuses on the effect of parents’ economic resources and financial assistance on home ownership and home equity (a major component of economic resources) among the recipients’ generation.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1996, and is available upon request.

National Expenditure on Education and Health

The study shows the the performance of expenditure on civilian public consumption declined markedly in 1994-1995, meaning the the public did not receive its full due for the heightened burden foisted on GDP for the delivery of these services.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1996, and is available upon request.

Government Expenditure on Social Services 1994-1995

This report analyzes actual government outlays for social services in 1994 and the budget for 1995. The findings are analyzed in the context of development in the 1980s and 1990s.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1994-1995, and is available upon request.

Israel Towards the Twenty First Century – Social Report

The overarching examples of change looked at here in education, health, and income maintenance point to the emergence of new patterns in the operating environment of the social services. Systematic inspection of each of these social systems shows that in order to continue nurturing the Israeli welfare state, it will be necessary to reexamine the objectives, the goals, and the means for attaining them.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1994-1995, and is available upon request.

Israel’s Social Services 1992-1993

This year’s annual publication includes the following chapters:

Government Social Expenditure 1992-1993, Jimmy Weinblatt, Joel Blankett
Demographic Changes in Israel in the Early 1990s, Sergio DellaPergola
Social Indicators: Changes and Implications, Moshe Lissak
Welfare Profile of Major Israeli Cities: Population, Immigration and Resources, Yaakov Kop, Joel Blankett, Dalit Sharon

This publication is available upon request.

 

Government Social Expenditure 1992-1993

The various sections in this review examine developments in the Israeli economy in the early 1990s with emphasis on 1992 and the level of planned government outlays for social services as presented in the 1993 State Budget proposal. It also looks at social expenditure trends in the State Budget, and the composition of this expenditure as well as its main components of income maintenance, education and health services.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1992-1993, and is available upon request.

Israel’s Social Services 1988-1989

This year’s publication includes the following chapters:

Government Expenditure on Social Services, Yaakov Kop, Joel Blankett, Dalit Sharon
Basic Commodity Subsidies and Income Distribution, Leah Ahdut, Ephraim Sadka
Research Conditions in Israeli Universities, Gideon Czapski
Feedback in the Israeli Education System, Zahava Sass
Development of Preschool Education in the Israeli Arab Sector, Farid Abu-Gosh, Shlomit Canaan
Demographic Changes and Social Services in Israel’s Major Cities, Yaakov Kop, Joel Blankett, Dalit Sharon
Jerusalem – Population and Services, Yaakov Kop, Joel Blankett, Dalit Sharon

This publication is available upon request.

Demographic Changes and Social Services in Israel’s Major Cities

It is important to focus attention on the main concentrations of population, if only because most services are delivered on the local or regional level, not on the national one. This paper helps to identify existing or potential bottlenecks and weak points in the social services in Israel’s major cities.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1988-1989, and is available upon request.

Feedback in the Israeli Education System

The proposed center would provide the education system with feedback on its products and outputs. It would have other potential functions that are unrelated to product appraisal; these are discharged today by various agencies, some within the Ministry of Education and others outside it.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1988-1989, and is available upon request.

Development of Preschool Education in the Israeli Arab Sector

In view of the shortage of preschool education services, most Arab children reach formal education inadequately prepared to cope with the demands of school. Providing preschool education is also an important factor for tackling the basic problems of Arab society, some of which are connected with the transition from traditional to Western patterns. The program proposed here is based on establishing an extensive system of kindergartens, family nursery schools, and training facilities designed for the plan’s implementation.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1988-1989, and is available upon request.

Research Conditions in Israel Universities

The present study attempts to examine whether Israeli scientists do show a quantitative preference for doing their research abroad rather than in Israel, and, if this is the case, to identify the main components of this preference. The study also suggests possible ways of arresting this trend, which threatens the future of science in Israel in many ways.

This publication appeared as a chapter in the Center’s annual publication, Israel’s Social Services 1988-1989 , and is available upon request.

Basic Commodity Subsidies and Income Distribution

Subsidization of basic foodstuffs and public transport is an important element in the phalanx of systems meant to narrow income distribution disparities in Israel. Thus the cutback in subsidies aggravates inequality in the distribution of incomes.

This study reviews the development of the subsidy system and suggests alternatives to basic commodity subsidies.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1988-1989, and is available upon request.

The Jewish Agency Department of Immigration and Absorption: Options for Change 1987

This study sought to identify central or strategic issues in the operation of the Department of Immigration and Absorption, which, if properly dealt with, could lead to considerable improvements in the handling of aliya and absorption. It should be stressed that this report does not deal with special situations of “mass immigration,” but rather with aliya within the dimensions that we have known for the past 20 years.

This publication is available upon request.

Social Policy Toward Families of Working Parents with Preschool Children

The proposals are mostly built with a view not to exceed the present costs of the maternity allowance program, thus taking into account current constraints in public expenditure, while aiming at improving the relative economic situation of families of working parents at the middle and lower income levels. Some of the alternatives also offer a greater flexibility in the conditions of leave, so that families may use the leave and the attendant financial benefits at greater convenience.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1986-1987, and is available upon request.

Wage Differentials in the Israeli Manufacturing Sector

This paper examines the industrial wage structure from several angles. The first is the distribution of wages in industry and its main sectors. The paper describes the highly heterogeneous structure of Israel’s industrial sectors with regard to the level and distribution of wages.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1986-1987, and is available upon request.

The Cost and Allocation of Social Services, and Priorities in Social Policy

Recurrent breakdowns in the running of the health and education systems, coupled with persistent claims – voiced by many politicians – that the economic stabilization plan has hurt the economically weak more than anyone else have created the impression the the resources allocated to the social services are being substantially reduced.

Analytical discussion of the subject involves a number of the short-term as well as the long-term trends of the system as a whole and of its major constituents – income maintenance and the provision of services.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1986-1987, and is available upon request.

National Expenditure for Social Services

Even relatively small sums have become the subject of difficult negotiations. It is therefore worthwhile to review national expenditures on social services in Israel from a historical perspective and compare Israel’s situation with that of other countries.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1986-1987, and is available upon request.

Government Expenditure – Structure, Target Population, and Forecast of Needs

There is no doubt, however, that deliberations on the annual budget ought to be guided by multi-year considerations and anticipated long-term feasibility. Thus, predictable requirements should be examined for the next quinquennium. For certain purposes, even a more distant period, the nineties, should be considered. The findings presented here, therefore, are important not so much for their absolute values as for the trends and patterns of change they suggest for the medium and long term.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1986-1987, and is available upon request.

Lessons from the Analysis of Social Expenditure

Most of this report is addressed to government activity in these fields, because of our special interest in government social policy as expressed by its pattern of resource allocation. Furthermore, the government’s financial role in social affairs is most often decisive – and, frequently, all-inclusive.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1986-1987, and is available upon request.

Social Service Expenditure in 1986/87: Where Do We Go From Here?

One of the most troubling findings in the study of Israel’s social situation today may be the perceptible slack in planning and implementing deliberate measures in order to prepare our social services for the future. Reinforcing such activities may help social policy makers reach more rational decisions given the choices that are still available and may even help place Israelis’ expectations of and aspirations for a better future on firmer ground.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 1986-1987, and is available upon request.

Israel’s Social Services 1986-1987

This year’s analysis relates not only to government expenditure on social services and national expenditure on education and health, but also the various services’ target populations by age group. The 1986-1987 analysis presents a forecast of the changes in expenditure patterns expected in view of Israel’s demographic trends.

This publication is available upon request.

Social Services in Israel 1986-87

It draws on selected studies undertaken by the Center’s researchers, as well as deliberations with other policy experts from academia, government and Knesset, the private and not-for-profit sectors, and the trade unions. This summary also reflects the Center’s special interest in the links between economic and social policies.  Unlike earlier summaries, this one presents not only a macro-analysis of social spending for the human services and their target groups but also presents a future scenario based on the demographics of Israel’s population. It suggests that the consequences of Israel’s demographic situation must be carefully taken into account as the social policies of the nineties are in the making.

This publication is available upon request.

Israel’s Social Services 1985-86

It points to the current need for finding ways of trimming and containing public expenditure for human services by a partial transfer of the burden of funding more directly to all citizens with the current introduction of stronger redistributive measures and efficiency. Alternative and politically acceptable policies may not lead to dramatic reductions in the resources now used by Israel’s human services. However, some options can release material and non-material resources for what is now done inadequately and still must be done.

This publication is available upon request.

Fiscal Policy

It has become a major factor in the planning of wage and price policy, as well as what is known in israel as “absorbing money from the public,” during the new economic policy implementation period. Among the major policy measures measures involving taxation, direct taxes have been raised somewhat and indirect taxes slightly lowered.

This paper appears as a chapter in the Center’s annual publication, Changing Social Policy: Israel 1985-1986, and is available upon request.

Income and Income Maintenance Policy

This discussion comes under three headings: comments on the significance of the measures used for the purpose of quantifying the impact of social policies; the rising pattern of transfer payments and the need to reconsider policy; and an examination of the “package deals,” particularly their social aspects, leading to proposals for modifications of these policies.

This paper appears as a chapter in the Center’s annual publication, Changing Social Policy: Israel 1985-1986, and is available upon request.

National Expenditure on Education and Health – 1985

First, we expand the discussion to include expenditures on social services by all active participants in the social field in addition to the central government. In other words, we explore national expenditure, including the activity of the private and the non-profit organization sectors, which complement the government activity.

This paper appears as a chapter in the Center’s annual publication, Changing Social Policy: Israel 1985-1986, and is available upon request.

Government Expenditure on Social Services – 1985

The centerpiece of economic policy at the time was the first so-called “package deal,” an accord between the government, the Histadrut and representatives of employers and manufacturers. The first such agreement took effect in late 1984 and lasted until early February, 1985. It aimed to defeat inflation by artificial means, reducing it to a level at which its underlying factors might be treated, and sought simultaneously to trim the balance of payments deficit.

This paper appears as a chapter in the Center’s annual publication, Changing Social Policy: Israel 1985-1986, and is available upon request.

 

Changing Social Policy: Israel 1985-1986

Beyond analysis of government expenditures and its use in the fields of income maintenance and social services in-kind, the Report reviews the development of needs in light of demographic trends and directs special attention to the immediate and longer-term implications of public expenditure on social services. Discussion of health and education adopts a more comprehensive yardstick of national expenditure. Alert to high proportion of social expenditure on income maintenance, it analyzes Israel’s incomes policy in 1985 – a rather turbulent year in socio-economic policy, with two “package deals” in which government, the employers and the Histadrut occupied center stage. Final, the Report addresses several fiscal welfare issues as well as housing assistance arrangements. Each study contributes in its own way to a more comprehensive review of social policy, its shaping and its implications.

This publication is available upon request.

Housing Policy

The discussion is initiated with a brief overview of the housing sector, including evaluation of geographic variation and cyclical fluctuations in housing construction and price. It then focuses on policy instruments and outcomes associated with recent demand-side programs for targeted, entitled populations. Finally, the paper’s concluding chapter discusses deregulation and reform of the housing finance system, including introduction of alternative mortgage instruments and development of secondary mortgage finance.

This paper appears as a chapter in the Center’s annual publications, Changing Social Policy: Israel 1985-1986, and is available upon request.

Tax Expenditure

Such a “budget: would provide the public with detailed and systematic information as to the amount of tax relief granted to certain population groups or defined economic activities. Tax expenditure, an important instrument used by the government in its activity in the economy, is neither documented in any medium nor budgeted in any way.  The present study relates to the major tax laws, including income tax, VAT, employer’s tax, customs and indirect taxes.

This paper appears as a chapter in the Center’s annual publication, Changing Social Policy: Israel 1985-1986, and is available upon request.

Distribution of Family Income and Taxes

This study summarizes the first stage of research and surveys the current situation and examines income and tax distribution from a perspective of the family as an integral unit. All income received by the family has accordingly been totaled as well as all taxes paid by it.

This paper appears as a chapter in the Center’s annual publication, Changing Social Policy: Israel 1985-1986, and is available upon request.

Allocation for Services and Equity

The “family” of services in kind embraces education, health, personal services and other budget expenditures. Appraisal of consumption of services in kind proves problematic when the consumers belong to different income, age, occupation and education brackets.

Nevertheless, such an appraisal and its quantification across all social services provided by the government or other public bodies is essential for an understand of economic inequity and, of course, inequity in economic welfare.

This paper appears as a chapter in the Center’s annual publication, Changing Social Policy: Israel 1985-1986, and is available upon request.

The Non-Profit Sector and Volunteering

Alongside these two sectors there has been a broad and varied group of organizations operating without the aim of earning profits. The activities and nature of these non-profit organizations differ both from those of organizations in the public sector and those in the private for-profit sector.

This paper appears as a chapter in the Center’s annual publication, Israel’s Outlays for Human Services 1984, and is available upon request.

Implementation of the Etzioni Commission Recommendations

It produced a series of proposals for raising academic qualifications of teachers, restricting entry of unqualified teachers into the education system, and granting teachers a substantial pay increase. Along with these, there were also recommendations for far-reaching changes in the Israeli education system, aimed at remodeling it in line with a new conception of the school as a community education center open over extended hours, rather than merely an institute of formal education.

The main part of this paper is devoted to a discussion of the policy implications of the proposals. The main problem pointed up by the study is that if the framework of government allocation to education remains unchanged, the additional expenditure required for implementing these recommendations must come at the expense of other educational programs.

An additional aspect analyzed in this work is the issue of geographic variations in teaching standards. The paper finds that the collective agreements reached following the Etzioni Commission “distributed” salary increases uniformly, even though they could have been allocated so as to constitute a greater incentive for experienced teachers to transfer from their present posts to more distant schools.

This paper appears as a chapter in the Center’s annual publication, Israel’s Outlays for Human Services 1984, and is available upon request.

Integration of Assistance Programs for the Young

Israeli society accepts its obligation to extend the necessary support – the current programs designed to meet this need receive appreciable public funding. But they are nevertheless inadequate in several respects.

This study presents the advantages of a proposed Threshold Fund from which assistance should be disbursed to young people at the start of their independent life-path. The scheme calls for major changes in the mechanics of government assistance for young people, in the areas of housing, post-secondary education – both higher and vocational – and initial establishment as a self-employed breadwinner. To keep the proposed scheme within reasonable budgetary limits it is suggested that initially only discharged soldiers enjoy eligibility.

This paper appears as a chapter in the Center’s annual publication, Israel’s Outlays for Human Services 1984, and is available upon request.

Social Implications of Subsidies on Necessities

As a consequence, subsidies on necessities are an efficient instrument reducing the economic burden on poor families in Israel.

This study also examines the trade-off between subsidies and transfer payments. Some people object to subsidies, as these must by their very nature aid wealthy families, as well. This line of thinking prefers the method of transfer payments, which can be channeled directly to the needy. However, this method as serious drawbacks, as well.

To sum up, it would appear that each of the two methods has its advantages and drawbacks, and that the best policy requires a proper combination of both frameworks – subsidies and direct transfer payments.

This paper appears as a chapter in the Center’s annual publication, Israel’s Outlays for Human Services 1984, and is available upon request.

Government Outlays on Social Services – 1984

To understand what happened in 1983 and 1984, however, requires a larger canvas. Consequently, we are presenting the data for these years and the analysis in relation to expenditures during 1981 and 1982. The wider horizon enables us to identify trends in the allocation to the various social services.

This paper appears as a chapter in the Center’s annual publication, Israel’s Outlays for Human Services 1984, and is available upon request.

Social Services in the Eighties – A Turning Point?

The deepening economic crisis has cast major doubts on the government’s ability to persist in expanding its budget faster than the national product growth rate. Under these conditions, the call for budget cutbacks, once the battle-cry of a minority of economists, has now become the slogan of a universally sanctioned national campaign. Today, the question is no longer whether to cut the budget, but by how much and where. Thus, the competition for government funds has intensified, as the different sectors scrimmage over a dwindling total volume of resources.

This paper appears as a chapter in the Center’s annual publication, Israel’s Outlays for Human Services 1984, and is available upon request.