Category Archives: Social Welfare

REALITY CHECK* – Arab Israelis: From Education Through Employment

muslim girlThe past decades have seen remarkable changes in education within Arab Israeli society, with particularly prominent changes evident among Arab Israeli women.

Starting with high school, the portion of 14-17-year-olds enrolled in school grew from 63% in 1990 to 93% in 2015, with a steeper climb for girls than for boys. There was growth for the Jewish population also, but since the portion studying was far higher to begin with, the increase was much smaller – from 91% to 97%.

Within the high-school system, the share of students in technological-vocational education tracks (VET) has risen. As of 2017, more than 45% of students in the Arab education system were enrolled in VET studies, compared to 37% of students in the Hebrew education system. (The Israeli education system is divided into Hebrew and Arab education based on the supervisory authority and language of instruction.)

It is interesting to note that the greatest increase was among those entering the high technology education track (e.g., computer programming); here, too, the share among those in Arab education is higher than among those in Hebrew education. This trend is likely to improve their chances to integrate into the future labor market; the high technology track gives its students high-level math skills, which are in demand in high tech employment.

Although these science and technology studies are more prevalent in Arab education than in Hebrew education, unfortunately, the scholastic level of their bagrut (matriculation) qualification is on average lower, and fewer of their students study math and English at the highest proficiency level (5-units of study).

In general, the lower level of English (and Hebrew, which is also studied as an additional language) proficiency in the Arab Israeli sector harms their ability to integrate into high wage employment. Improving their proficiency in these languages is central to narrowing labor market gaps.
Graph Eng

The increase in the share of Arab Israeli girls studying in the technology track, and particularly in the high technology track, is noteworthy. In 2017, 21% of the girls in Bedouin education and 31% in Christian education studied in the technology track.

In addition, their share in the science-engineering track is high, including in studies not traditionally considered “female subjects” such as computer science, electronic systems, technology science, and the like. Among Druze girls, more than half of those with a bagrut in science study in tracks other than biology and chemistry (which are not considered high tech oriented).

The percentage of those with a bagrut qualification has increased substantially over the past 20 years, as has the portion of those with a qualification that fulfills the requirements for acceptance to higher education. The most substantial gain was among Arab Israeli girls – in 2017, their achievements were close to those of their Jewish peers.

Among Arab Israeli boys, the increase was smaller, relative to both Arab Israeli girls and to Jewish boys. The share of boys with a bagrut in the Bedouin sector remains particularly low – only 25% – and it rose by only about 5 percentage points between 1999 and 2013.

With the increase in the share of those in Arab education with a bagrut certificate, the share of those entering higher education has also increased. However, the rise was mostly among Arab Israeli women, while the increase among men was much smaller.

The most marked increase was among the Druze and Bedouin women, where the rates of those entering higher education rose by about 50% between 2008 and 2013 and, in all likelihood, this upward trend has continued.

In terms of study majors in higher education, it is interesting to note that about a third of Arab Israeli students, both men and women, study health-related fields, either in Israel or abroad. That said, the past decade has seen a shift, with men with high grades studying computers and engineering (rather than health professions) at rates similar to those of their Jewish peers.

Despite the fact that we see more Arab Israeli high school girls studying these subjects, we do not yet see women in higher education studying science at high rates. Their share in academic level computer and engineering studies is lower than that of Arab Israeli men or of Jewish women.

Until 2014, of the Arab Israeli women who studied science in high school (excluding biology and chemistry), 22% of Christian and Druze women and only 9% of Muslim women continue their studies in related fields in academia.

These developments in education have had a tremendous influence on the employment of Arab Israelis. There is a positive relationship between higher education and employment, with higher employment rates among those with an academic education.

Employment rates among Arab Israeli women are on the rise; between 2003 and 2014, the employment rate rose by about 11 percentage points, an increase of almost 50%, and in the final third of 2018, it reached almost 40% of the population – only 1% shy of the 2020 employment target for Arab Israeli women set in 2010 by the then Ministry of Labor, Trade and Employment.

The rise in the employment rate of Arab Israeli women is strongly correlated with the increase in their education levels; Arab Israeli women with degrees are far more likely to work than are those without such a degree. Nevertheless, their employment rates are still much lower than those of Jewish women in Israel.

In light of the strong correlation between education and employment for Arab Israeli women, encouraging them to major in fields with the potential for subsequent high wage employment, particularly in technology and engineering fields, could have significant spillover effects.

A rise in these women’s salaries could serve as a beacon to other women, which can ultimately lead to increased education and employment rates, to an improvement in their socioeconomic situation, and to a decline in their poverty rates. For the same reason, it is worthwhile considering expanding vocational training programs and assistance given to Arab Israeli women who choose not to go on to academic studies and who, nonetheless, are interested in working.

Finally, turning to Arab Israeli men, their employment rates are lower than are those of non-Haredi men and lower than the OECD average. In 2018, about 75% of this group were employed as opposed to almost 90% of non-Haredi Jewish men.

Their lower education levels impact their employment opportunities, and a large portion of them are employed as skilled workers in manufacturing, construction, and agriculture. While this portion is falling, it is still high – about 50% in 2017. These are low prestige jobs that pay poorly, and are also likely to be computerized in the not-so-distant future, making these workers susceptible to losing their livelihood.

In addition, these jobs have high burn-out rates and, as a result, employment rates among Arab Israeli men over 50 are low. Men employed as skilled workers tend to have low education levels, particularly for Arab Israelis; the portion of Arab Israeli men without a higher education in these jobs is 60% versus 34% among Jewish men. Improving the education level of Arab Israeli men could help give them access to improved employment opportunities.

In light of the strong correlation between education and employment, policies and programs that encourage the Arab Israeli population to gain higher education and to find their place in high wage employment have the potential to be very beneficial to the Arab Israeli population and to contribute greatly to the continuing growth of the entire economy.

 

Material Assistance to People Living in Poverty – A Historical Overview and Current Trends

Executive Summary

Almost one-fifth of families in Israel live in poverty, the highest rate among OECD countries. Over the past number of decades, the perception of poverty in Israel and methods for coping with it have changed. Since the early 2000’s, there has been a sharp decrease in the scope and accessibility of Income Support provided by the National Insurance Institute (NII), which acts as a safety net for families living in poverty, while the budget allocated to impoverished families for emergency assistance has remained fairly stable.

Alongside the NII allowances, there have been efforts in the past decade to offer people living in poverty comprehensive programs that include providing material assistance through local social services departments. The Ministry of Social Affairs and Social Services’ flagship program for this is the Breath of Relief program.

Trends in poverty policy and material assistance over time

Today, assistance to impoverished families is granted mainly through Income Support distributed by the NII, while a smaller amount, earmarked for financing emergency assistance, is provided by local social services departments.

Since the turn of the century, Israel has shifted from a “welfare-to-work” model to more of a “social investment” and “poverty-aware” approach to social welfare.

  • Economic instability in the early 2000’s resulted in a sharp reduction in the level of Income Support and more stringent eligibility requirements, such that the share of families receiving Income Support declined from 8% to 3% by 2017.
  • The early 2000’s also witnessed an acceleration of the outsourcing of social services to civil society organizations and private companies.
  • In 2004, a welfare-to-work program was established to encourage Income Support recipients to integrate into the labor market, but was discontinued after a short trial period.
  • The public began paying more attention to social welfare issues following the 2011 social protests. One manifestation of this was the establishment of the Committee for the War Against Poverty (The Elalouf Committee). The Committee’s recommendations touched on areas of education, housing and employment, and were designed to strengthen the human capital of families living in poverty.
  • The “poverty-aware social work” paradigm, which emerged in 2010, directed the discourse on poverty to families’ social rights, and paved the way for the comprehensive Breath of Relief program.

    The Breath of Relief program

    The Breath of Relief program has been in operation since 2015. The program consists of two main components: (1) Rights Centers – community centers focused on the take-up of people’s social rights and the implementation of employment and community programs; (2) An intensive 2-year family support program that includes a flexible family budget and social worker intervention.

    The cost of this program is NIS 100 million a year. Each family participating in the program receives NIS 8,000 a year for various purposes, allocated at the discretion of social workers and in consultation with the families.

    • By the end of 2018, approximately 5,700 families had been reached through the program, of which 41% were from the Arab and Bedouin sectors, and 44% from the north of the country.
    • About 40% of recipient families have four or more children, and about 64% of the Jewish participant families (not including Haredim) are headed by single parents.
    • The parents in most of the families have 12 years of schooling, 17% have studied in higher education, and 27% have less than a high school education.
    • Most participants in the program are employed, but their incomes are low and allowances comprise the major source of their livelihood.
    • About 70% of the families in the program reported being in debt, and it is reasonable to assume that the real percentage is even higher.

The flexible budget seems to serve families for a variety of expenses: household needs, employment, paying off debt, and more. However, not all recipient families use the assistance to the fullest extent and they avail of the funds to cover different types of expenses.

  • The sum used during the first year of the two-year program stands at only NIS 4,200, on average – a little over half of the total allocated sum. Those who joined the program in 2017 used a larger sum in the first year.
  • About 42% of the assistance is used by families for household needs (electrical appliances, furnishings, and household goods), about 28% is spent on employment (training advising, and equipment), and about 10% is spent on paying off debt.
  • Among Arab Israeli families, a large share of the assistance is spent on electrical appliances and home accessories. This is particularly true among the Bedouin, where about 50% of the assistance is spent on household needs.
    Expenditure from financial assistance on goods and servicedThe differences in the ways in which the recipient families use the aid indicate the need to maintain the flexible nature of these budgets so that they can provide a real response to the different needs of the families participating in the program.

 

 

Why are there so many children in Israel?

Fertility in Israel stands at 3.1 children per woman – the highest fertility rate in the OECD, and almost one full child above the next highest fertility countries, Mexico and Turkey. To put Israel’s fertility in historical perspective, among Western countries fertility was last as high as 3.1 in the US toward the end of the baby boom in the mid-1960s, in Italy in 1931, in Germany in 1914, in the UK in 1908, and in France in 1889.
Israel's birth rath relative to the OECD countries

Not only is Israel’s fertility high among developed countries, it is also higher than fertility rates in emerging economies. In fact, despite a magnitude of differences in other areas – including GDP – Israel’s fertility is most similar to that of its direct geographic neighbors: Egypt and Syria.

People often mention two factors that encourage Israel’s high fertility: the cultural aspect, which is anchored in the historical experience of the Jewish people, and particular policies that make it easier for Israeli women to balance work and family (such as leave for sick children, reduced working hours following the return from maternity leave (“nursing hour”), and part-time, flexible positions).

Yet these arguments are less convincing when we compare Jews in Israel to their counterparts elsewhere. Although they share the same history, fertility among Jews in every other developed country is considerably lower – including among Jews living in Europe, where welfare policies are more generous than in Israel.

Another argument is that Israel’s high fertility is driven by certain parts of the population, such as Haredi (ultra-Orthodox) women, having many children (the fertility rate of Haredi women is indeed quite high at around 7 children per woman).

However, the rise in Israel’s fertility over the last two decades has been largely driven by the secular and traditional Jewish populations, whose combined fertility rate is greater than 2.2, which is itself higher than the overall fertility in any other OECD country.

Among the Arab Israeli population, fertility trends have followed patterns similar to those in the rest of the modern world – decreasing significantly since the 1960s in conjunction with increased education levels and employment participation rates among women. As such, Israel’s fertility has risen in recent decades despite Haredi fertility remaining relatively stable and despite a decline in fertility among Arab Israelis.

Furthermore, Israel’s fertility is not only exceptional because it is high. It is also exceptional because strong pronatalist norms cut across all educational classes and levels of religiosity, and because fertility has been increasing alongside a rise in the age at which women first give birth and increasing education levels — at least in the Jewish population. From an international perspective, these are extremely unusual patterns.

For example, Israeli women are having more kids even though they are having them later in life and working more. In fact, non-Haredi Jewish women in Israel have higher employment rates than women in any other OECD country, except for Iceland. Around the world, both increased age at first birth and increased labor force participation are generally correlated with declining fertility, yet the trends in Israel do not follow suit.

Additionally, in almost every other developed country, more educated women have fewer children than less educated women. However, by age 40, Israeli women with a college degree have the same number of children as those whose highest level of education is high school.

To a large degree, the reasons behind Israel’s fertility trends remain a mystery. However, they will continue to impact Israeli society. As direct result of these fertility patterns, a higher percentage of children in Israel are being born to older and more-educated parents than is the case in other developed countries.

This has implications for education, social and health policy. Older parents tend to be wealthier and more financially stable, which influences their own children’s outcomes across a wide range of domains, and parent’s levels of education also have indirect effects on outcomes for other children in their neighborhoods, which allows for positive spillover effects.

As policy makers look into the future, these implications of Israel’s exceptional fertility profile need to be taken into account.

Executive Summary: Welfare Nonprofits in Israel – A Comprehensive Overview

Civil society organizations (or nonprofit organizations) are playing a growing role in the field of welfare in Israel. In 2016, 43,000 nonprofit organizations were registered, a particularly high share of organizations per capita. Of them, 15 percent were active in the field of welfare…

To continue reading the summary, download the full publication.

Full study available under “Related Materials”

Executive Summary: The Income-Expenditure Gap and Household Debt in Israel

How do Israeli households sink into debt? Given the difficulty of assessing actual debt due to data limitations, the gap between Israeli household income and expenditure can be analyzed alongside characteristics such as socioeconomic status, age, marital status, and type of housing expenditure…

To continue reading the summary, download the full publication.

Full study available under “Related Materials”

Israel’s Social Welfare System: An Overview

Data on Israeli social welfare spending in recent years, and decisions by the government and its ministries on issues relating to the social welfare and social security of the country’s residents, point to two prominent trends in Israel’s social welfare system.

One trend is that of long-term stability in social spending levels and the limited effectiveness of measures to address poverty and inequality. The other trend indicates a new emphasis on implementing elements of a “social investment” approach to social welfare activities.

Welfare expenditure in Israel

 

The data show that, since the early 2000s, social security and social welfare spending as a percentage of GDP has remained more or less stable, as has the incidence of poverty in Israel. The overall trend during this period continues to be one in which the share of Israeli families living in poverty, and the degree of inequality between Israeli citizens, have remained among the highest in the OECD.

Welfare expen as percent of GDP ENG

  • Social spending, which includes government spending on education, healthcare and social welfare, amounted to about NIS 223 billion in 2017 – an increase of NIS 18 billion compared with 2016.
  • In financial terms, social welfare spending alone increased by about 9% between 2016 and 2017, amounting to about NIS 110 billion in 2017. The main source of this increase is expenditure on the Savings for Every Child program and growth in the budgets of the Ministry of Labor, Social Affairs and Social Services and the Ministry of Housing.
  • In February 2018, following an intensive protest campaign by organizations for people with disabilities, the Knesset approved an increase in the basic disability benefit as well as an increase in the “disregard” limit (the maximum income from work that a person with disabilities can earn without their disability benefit being reduced) from NIS 2,800 to NIS 3,700.

The government’s official adoption of the recommendations of the Committee for the War Against Poverty (established in 2013 and headed by MK Eli Elalouf) has not brought about a dramatic change in poverty policy.

  • The spending increase in 2017 as compared with 2014 for all areas covered by the final Committee recommendations amounts to some NIS 3.6 billion – 48% of the total recommended expenditure (NIS 7.4 billion per year).
  • Although a large portion of the recommendations have been adopted, their chronic under-funding together with the government’s failure to implement other major recommendations, such as more generous income support benefits, have impaired the effectiveness of current poverty-fighting efforts.

Implementing “social investment” policies

 

The three main elements of a “social investment” approach to welfare policy are:

  1. “Flow”: facilitating the entry and exit of groups into the labor market
  2. “Stock”: continuously improving human capital and skills
  3. “Buffers”: ensuring safety nets for segments of society in need

In recent years Israel has implemented measures intended mainly to reinforce the “stock and “flow” elements of a social investment approach, while little effort has been made to upgrade the “buffer” components.

Social investment areas ENG

  • Savings for Every Child. The implementation of the Savings for Every Child program, which, in 2017, amounted to NIS 4.2 billion, seeks to jumpstart young Israelis’ transition to post-secondary education and the labor market. This program is aimed to increase human capital and facilitate future social mobility.
  • Daycare centers. As part of the adoption of the Trajtenberg Committee recommendations, the budget of the day Care Centers Department almost doubled between 2011 and 2017 and stood at NIS 1.64 billion in 2017. Out of this budget, the share of expenditure devoted to construction and the conversion of buildings into day care centers increased substantially, from about NIS 2 million in 2011 to about NIS 260 million in 2017.

This increase reflects the centrality that welfare states currently ascribe to early childhood education and the importance of early educational interventions for human capital enhancement, especially for children of families suffering economic distress.

  • Expenditure on active labor market policy in Israel, that is, on programs to encourage the optimal integration of different populations into the labor market, is among the lowest in the OECD. Of this expenditure, the share that Israel devotes to vocational training is 0.06% of GDP, about half of the OECD average. In recent years the expenditure in this area has been rising, but there have been no significant changes in its share of GDP.

Between 2013 and the end of 2017, the budget of the agency responsible for government-funded vocational training grew by 26%. There have also been changes in the share of vocational training expenditure spent on adult v. youth training. The share of adult training has increased relative to the spending on youth training, and stood at about 43% of the training expenditure in 2017.

  • Work grants and Intervention programs. While there have been no major changes in the amount of the average work grant since 2012 (NIS 3,700 per year), eligibility for the grant was extended to single parents in 2017, which added another 50,000 people to the population of those entitled to the grant. Additionally, recent years have witnessed the promotion of intervention programs such as Noshmim Lirvacha, operated by the Ministry of Labor, Social Affairs and Social Services to address the social exclusion of families living in poverty.

On the one hand, the early childhood education system has been expanded; investment in vocational training has been increased; vocational programs targeting specific sectors have been created; holistic programs have been operated to help families living in poverty enter the labor market; and the Savings for Every Child program has been implemented.

However, there is still no indication that other major elements of the social investment approach have been adopted – elements that aim to ensure the quality of life of those who are ejected from the labor market (and their optimal re-entry), or that provide a buffer for those who are unable to integrate in the labor market.

 

Israel’s Exceptional Fertility

It is widely known that fertility levels in Israel exceed fertility levels in all other developed countries, and that this is the main factor driving Israel’s unusually high rate of population growth.

However, Israel’s fertility is not only exceptional because it is high. It is exceptional because strong pronatalist norms cut across all educational classes and levels of religiosity, and because fertility has been increasing alongside increasing age at first birth and education—at least in the Jewish population. From an international perspective, these are atypical patterns.

Fertility levels and trends

Israel’s Period Total Fertility Rate (TFR) in 2015 was 3.1, which is unusually high, and well above the population “replacement level” of 2.1. While there have been widespread and recognizable reductions in fertility over the last 150 year – the “Fertility Transition” pulling TFR to around 2-3 children per woman, and the “Second Demographic Transition” pulling it below 2 since about the 1970s – Israel is unique among OECD countries in not having followed the second of these international trends.

Total fertility rates ENG

  • Israel’s TFR is the highest among the OECD countries, and is almost one full child above the next highest fertility countries, Mexico and Turkey. Israel’s TFR is also much higher than that of BRIC countries and other emerging economies.
  • Despite a magnitude of differences on a number of other characteristics, Israel’s fertility is closest to that of its direct geographic neighbors, and falls between that of Egypt and Syria.
  • Israel’s TFR has never dropped below 2.8 children, and actually increased by 0.2 children between 1995 and 2015. With the exception of Israel, every country with a TFR greater than 2.0 in 1995 experienced a reduction in fertility by 2015.

There is considerable heterogeneity in fertility across different subpopulations within Israel, and the rise in Israeli fertility by 0.2 children over the last two decades is largely driven by the secular and traditional populations.

  • Between 1960 and 2016, the TFR of Christians dropped from 4.7 to 2.1; Druze fertility fell from 7.3 to 2.3 between 1970 and 2010; and Muslim fertility also dropped precipitously from an estimated TFR of 9.2 in 1965 to 3.3 fifty years later.
  • Since 2005, national fertility levels have risen—even as Muslim and Druze fertility have fallen and Christian fertility has remained stable—because of increases in the fertility of Israeli Jews (whose fertility declined slightly between 1960 and the 1990s, but has since increased).
  • Among Jews, the TFR among Haredim has fluctuated around 7 children per woman since the 1980s, and around 2.5 children per woman among the secular and the traditional who identify as not religious. However, Haredi fertility in the 2007 to 2013 period was lower than in the 1990s, while fertility in the non-Haredi Jewish population has increased since then.
  • Even among Jewish women who self-identify as secular and traditional but not religious, the combined TFR exceeds 2.2, making it higher than the TFR in all other OECD countries.

Israel’s unique fertility profile

Israel’s fertility is exceptional in a number of characteristics, including those relating to non-marital fertility, age at first birth, childlessness, and education levels.

Non-marital fertility

  • Across the OECD and other developed countries, there is a positive correlation between TFR and the percentage of children born outside marriage. However, this is not true for Israel: Israel has high fertility despite having one of the lowest rates of non-marital fertility (less than 10%, compared to about 40% on average in the OECD).
  • Nonetheless, non-marital fertility in Israel is rising. Across all births to women aged 25-39, the percentage born to never-married women increased from about 3% in 2000 to about 5% in 2016. Among never-married women aged 40+, it rose from 7% to 17% of all births.

Age at first birth 

  • Age at first birth has continued to increase in the OECD—driven largely by improved access to effective contraception and rising levels of women’s education and employment – and is negatively correlated with fertility levels.
  • In Israel, between 1994 and 2016, age at first birth increased by about 3 years for Christians and Druze, and by 1 year for Muslims, accompanied by an overall reduction in TFR in these populations.
  • Among Jews, age at first birth increased by about 2.8 years between 1994 and 2016, even as non-Haredi Jewish women’s TFR rose by about 0.2 children. This means that gains to fertility at older ages have outweighed reductions in fertility at younger ages.

Childlessness

  • Across countries with high contraceptive prevalence, there is no clear relationship between prevalence of childlessness and TFR. Countries in Eastern Europe tend to have both lower levels of childlessness and lower TFR than countries in Western Europe and the US, Canada, and Australia.
  • Within Israel, childlessness is comparatively low, but is more prevalent among Israeli Arabs than among Israeli Jews: 13.7% of Israeli Arab women in the 45-59 age group compared to 6.4%.

Education

  • Women’s education has long been one of the most important determinants of fertility. Because educated women have largely continued to have lower fertility than their less educated peers, rising levels of education—desirable for many reasons at both the individual and societal level—impose a fertility “cost” on societies.
  • In most population groups in Israel, as education increases, fertility declines. However, the situation is different for two population groups. For non-Haredi Jewish men, the number of children among academics and those with lower levels of education is the same. Haredi women with an academic degree give birth to their first child at a relatively late age, but by their late thirties their fertility rates converge with those of Haredi women with lower levels of education.
    Fertility ENG

The main difference in fertility between Israel and other developed countries does not only stem from the fact that, in Israel, relatively educated families – who make up a large and increasing share of all Israeli families – are having more children than their counterparts in Europe.

It’s that the difference in fertility between college-educated Israelis and their European counterparts is much greater than the difference between non-educated Israelis and their Europeans counterparts. As a direct result of these fertility patterns, a higher percentage of children in Israel are born to older parents and to more-educated parents (compared to any other OECD country).

 

Today’s Workers, Tomorrow’s Retirees Understanding the Pension Gender Gap in Israel

Executive Summary

In recent years there has been much public discussion about a variety of issues relating to pensions in Israel, including concern about the performance of pension funds and the implications of an aging population on the pension system.  

In Israel, pension income comes primarily from two sources: old-age allowances (provided by the National Insurance Institute to retirees and elderly living in poverty) and occupational pensions (mandatory since 2008). The differences between men and women for each of these pillars are expected to dictate the degree of future gaps in pension income. 

Pension savings by gender 

Data for 640,000 people who held a pension fund with Menorah Mivtachim (the largest new pension fund in Israel) in 2017 indicate that there is indeed a gender gap in private pension savings and this gap increases with age. The most significant gap was found among those aged 45-54: men in this age group have 28% higher occupational pension savings than women.

Pension gap by age group ENG

Among older age groups (44 and older) the average pension gender gaps are higher among Arab Israelis than the rest of the population, but for those aged 44 and under, the expected gaps are similar. This seems to reflect an intergenerational shift – younger Arab Israeli women are employed at higher rates and therefore their pension contributions are expected to be higher than those of the previous generation.  

The private pension savings of Haredi women in the 25-34 age group is 26% higher than that of Haredi men, reflecting the higher employment rates of women in this population group. 

What affects the gender pension gap? 

A comprehensive index that measures the expected future pension gender gaps in European countries provides a framework for comparing the situation in Israel to that in Europe. 

Employment data: The employment rate of women in Israel is relatively high: about 66% among women of working age and policies encourage women’s employment; for example, women receive higher tax credits than men. Since private pension funds play a very important role in post-retirement income, the higher magnitude of employed women reduces gender disparities relative to the world. 

However, other data widen the gap; the hourly wage gap between men and women in Israel falls in the middle of the OECD ranking (standing at about 19% as of 2016), and there is a relatively high gap (16%) between the number of weekly working hours for women (about 37 hours) and for men (about 44 hours). 

Continuity of employment: Paid maternity leave in Israel (15 weeks) is considered an insured period for the purposes of calculating the accrual of pension entitlements, but if a woman chooses to extend into unpaid leave, as many do, this period is not insured. In Israel, the protection of pensions during periods of childcare is relatively limited compared to countries in the OECD, most of which have policies for reducing these gaps. 

Retirement age: Israel is among the nine OECD countries that have retirement age gaps between men and women, and one of only three that are expected to maintain this gap through 2060. The conditional retirement age for men in Israel (67) is the highest in the OECD, while for women it is 62, though many women continue to work after this age. The difference in working years due to the gap in retirement age contributes greatly to reducing women’s pension income relative to men’s.  

Government allowances: Allowances actually provide an advantage for women. While a man and a woman who paid NII contributions for at least 35 years and retire at the official retirement age will receive an identical monthly allowance from the NII, employees can opt to defer the allowance until the age of 70 (the absolute retirement age) and receive an additional 5% for every year of delay. Because of the gap in the conditional retirement age, a woman who chooses to retire at age 70 will receive 22% more than a man who does the same.  

Pension payment coefficient: Israel is among only four OECD countries that take into account gender when calculating the monthly sum to be paid to each insured individual in the fund, a practice that is not legal in many other countries. Since the life expectancy of women is higher, pension companies divide the total savings into a higher number of payments – thus, unmarried women receive a lower sum each month than unmarried men. (It is important to note that, among married couples, the coefficient is also influenced by the calculation of survivor’s pension benefits should one’s spouse pass away. Due to the fact that a woman is more likely in practice to benefit from a survivor’s pension than is her husband, the coefficients used for married men and women are fairly similar.) 

The future pension gender gap 

A simulation to estimate future pension gender gaps finds that, among married individuals who retire at the age of 67, a man will receive about NIS 2,000 more a month from a pension (occupational and old-age allowance) than a woman: NIS 15,300 compared to NIS 13,300, on average. Among single individuals, the gender gap is even larger in favor of men: about NIS 3,000. 

Monthly pension income gaps ENG

The simulation also shows that retirement age has a significant impact on pensions: a woman who retires at age 62 will receive about NIS 3,800 less per month than one who retires at age 67, both because of lower total accrual in her pension fund and because she will not receive additional funds for postponing the old-age allowance. 

In general, it seems that gender plays a more prominent role in retirement policies in Israel than in other OECD countries. A 5-year retirement age gap, the pension payment coefficient, and the lack of pension accrual during breaks in employment for childcare are just a few examples of how gender shapes retirement policies in a uniquely profound way in Israel that has a large effect on pension gaps between men and women. 

The Hadassah Foundation has provided generous support for the creation and implementation of this project.  

 

Mapped out: welfare nonprofits in Israel

Civil society organizations (nonprofits) play a major and growing role in the provision of welfare services in Israel. Organizations active in the welfare field constituted 15% of all the civil society organizations registered in Israel, and the sum spent on their annual activity is approximately NIS 14 billion. These organizations provide a broad range of social services to a variety of target populations, yet, to date, there has been a lack of data on the scope of their activities and funding.

In response to the need for comprehensive data, Taub Center researchers Prof. John Gal and Shavit Madhala, along with Dr. Michal Almog-Bar from the Center for the Study of Civil Society and Philanthropy at the Hebrew University, conducted an analysis of active organizations working in the field of welfare between the years of 2013 and 2016 whose annual revenues exceeded NIS 500,000 – a total of 748 organizations.

The study maps out various characteristics of civil society organizations working in the field of welfare in Israel as well as their level and sources of revenue.

What do we know about these organizations and who they serve?

A little under a quarter of the civil society organizations examined in the study serve the general population, while the majority of the remaining organizations serve youth, the elderly, and people with disabilities.

Some organizations provide services intended for particular sectors within Israeli society. 23% of the organizations in the study are intended for the Haredi sector (Haredim make up about 12% of Israel’s population), while 7% have services designated for the Arab Israeli population (which constitutes about 21% of the total population).

 

Welfare EN

The study also finds that about one-fifth of the nonprofits examined are national organizations, operating in five or more locations throughout Israel, and a similar percentage of the total organizations are new – that is, they have been operating for under 15 years. Among organizations serving the Arab Israeli and Haredi populations, specifically, the share of new organizations is even higher.

In addition, among the Arab Israeli organizations, there is a relatively low share of organizations classified as large – with annual revenues exceeding NIS 10 million.

Where is the money coming from and where is it going to?

The total revenue of the welfare nonprofit organizations examined in the study amounts to NIS 13.8 billion a year. The main source of this revenue is through the sale of services (39%), followed by government funding (34%) and donations and bequests (25%).

Out of the total revenue, 23% goes to organizations working with children and youth, and a similar percentage goes to those focused on the elderly, and to those addressing the general population. When examining revenue by sector served, the study finds that only 2% of the total revenue goes to Arab Israeli organizations, while 20% goes to the Haredi organizations.

A notably high percentage of revenue going to Arab Israeli organizations comes from government funding, while, among Haredi organizations, revenue from donations is prominent.

The researchers found that funding disproportionately goes to the organizations with more resources. The vast majority of the government funding that goes to welfare nonprofits (85%) goes to organizations with an annual revenue of over NIS 10 million (including government allocations). Similarly, about half of the philanthropic donations go to the organizations with the highest revenues (in the top 10%), and only 2% of donations go to Arab Israeli organizations.

 

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What do these data tell us?

Mapping out Israel’s welfare nonprofits sheds light on the disparities that exist among them. The study finds substantial gaps between older and newer organizations, between large and small organizations, and between organizations active in Jewish society and those active in Arab Israeli society. For example, the largest and most veteran organizations receive most of the governmental and philanthropic funding that is available.

Moreover, the shortage of organizations serving the Arab Israeli society and the sector’s limited share of resources, limit Arab Israeli citizens’ access to the social services provided by nonprofits, despite the sector’s many welfare needs. These findings indicate a need to strengthen the civil society organizations in the Arab Israeli sector so as not to further increase the existing social gaps between Jewish and Arab Israelis.

Welfare Nonprofits in Israel: A Comprehensive Overview

Executive Summary

Civil society organizations (or nonprofit organizations) are playing a growing role in the field of welfare in Israel. In 2016, 43,000 nonprofit organizations were registered, a particularly high share of organizations per capita. Of them, 15% were active in the field of welfare.

However, to date, there has been a lack of data on the scope of these organizations’ activities and funding. A new Taub Center study, conducted in cooperation with the Center for the Study of Civil Society and Philanthropy at the Hebrew University, maps out the welfare nonprofits in Israel.

The study includes an analysis of active organizations working in the field of welfare between the years of 2013 and 2016 whose annual revenues exceeded NIS 500,000 – a total of 748 organizations. The research examines characteristics such as sources of revenue, the number of paid staff and volunteers, and the target populations they aim to reach.

The organizations are classified according to how long they have been operating, the scope of their economic activity, their geographic distribution, and other characteristics.

Many organizations are intended for the Haredi society, but few for the Arab Israeli society

Of the welfare organizations analyzed in the study:

  • 7% have services designated for the Arab Israeli population, while 23% are intended for the Haredi sector.
  • About one-fifth of the organizations serve the general population, about one-fifth are intended for children and youth, and the remainder focus on target populations such as people with disabilities and the elderly.
  • About one-fifth of all organizations are new (have been operating for under 15 years) and, among the organizations focusing on the Arab Israeli and Haredi populations, the share of new organizations is relatively large.
  • About 20% of the nonprofits are national organizations operating in five or more locations throughout Israel. About 20% of Arab Israeli organizations operate nationally, compared with 13% of Haredi organizations.

Organizations’ financing comes primarily from the provision of services and from public sources

The total revenue of the welfare nonprofit organizations examined in the study amounts to NIS 13.8 billion a year. 23% of that sum goes to organizations working with children and youth, 22% to those focused on the elderly, and 21% to those addressing the general population. The main sources of revenue are the provision of services (39%) and public funding sources (34%). Additional funds come from donations and bequests (25%).

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  • Among Arab Israeli organizations, the majority of funding is public (57%) whereas, among the Haredi organizations, funding from donations is prominent (38%).
  • Most of the revenue of more longstanding organizations (operating for more than 15 years) comes from the provision of services and public funding while, among newer organizations, most revenue comes from donations.
  • The vast majority of government funding (85%) goes to large organizations with an annual revenue of over NIS 10 million. Similarly, about half of philanthropic donations go to organizations whose revenues are in the top decile of the income distribution (the top 10%).

  • Only about 2% of donations go to Arab Israeli organizations, while the share of donations received by Haredi organizations is relatively high – 30%.

Personnel in organizations is largely reliant on volunteers

Personnel in the examined organizations stand at 370,000, of which 66% (243,000) are volunteers.

  • Most of the volunteers can be found in nonprofits that focus on families (31%) and working-age adults (17%). A particularly high percentage of paid staff can be found in organizations that care for the elderly (33%).
  • About 87% of the organizations’ personnel are concentrated in the large organizations, and it seems that among small organizations, the proportion of volunteers is higher.
  • Only 1% of total personnel are either employed or volunteer in Arab Israeli organizations, compared to 11% in Haredi organizations.

The places that need welfare funding the most are getting the least

How much of lical authorities budget is spent on welfare services

In Israel, local authorities are primarily responsible for providing the welfare services needed by individuals, families, and communities.

Social workers and other professionals employed in the local authority social service departments deal with the problems of around 464,000 households in distress who receive a range of services including care for the elderly, individuals with disabilities, and children at risk.

Currently, these services are funded by what is called the “matching” method: for every shekel invested by the local authority, Israel’s Ministry of Labor and Social Welfare allocates three shekels. In practice, this means that 75% of the local authority’s welfare budget is financed by the Ministry of Labor and Social Welfare and 25% by the local authority itself, though municipalities can, and do, add additional resources.

This funding method is the topic of much public debate. While many argue that, under the current method, the funding for social services is inequitable across local authorities, there is not much data available on the topic. Many of Israel’s decision makers agree that the “matching” method should be abolished or modified, though there is little consensus about what type of funding method should be adopted in its place.

A recent Taub Center study, conducted by Prof. John Gal, Shavit Madhala, and Haim Bleikh, sheds light on the extent of funding gaps between different local authorities and explores possible explanations for these gaps.

When looking at the percentage of a local authority’s budget that goes towards welfare services for its residents, localities of low socioeconomic ranking spend about 11% of their budgets on welfare services, as compared to about 6% among localities of high socioeconomic ranking.

There are also large differences among localities in Israel when looking at average welfare spending per client. While Israel’s strongest localities (a group of localities called the “Forum-15” that do not require central government development grants or balanced-budget grants) spend an average of NIS 9,095 per client annually, Arab Israeli localities spend an average of only NIS 3,387 per client.

In the Haredi localities, the average expenditure is NIS 8,749, compared to NIS 7,318 in the remaining Jewish localities.

Total annual expenditure per client by localityThe study explores a number of possible explanations for these funding disparities. One possibility that the researchers raise but do not find to be compelling is that weaker authorities are unable to meet their share of the funding costs in order to receive the full budget from the Ministry of Labor and Social Welfare.

Given that over 90% of local authorities do indeed spend the entire budget earmarked for them at the beginning of the year (or more) and that the few who don’t include authorities in both low and high socioeconomic clusters, this does not seem to be a major reason for funding disparities.

However, it is quite possible that authorities with fewer resources request a relatively small sum from the national government in order to avoid a situation where they cannot meet their share of the funding later in the year.

The researchers find that another possible explanation – differences in the types of care frameworks localities use to provide social services – does indeed explain over half of the difference in initial funding that localities receive from the Ministry of Labor and Social Welfare.

Different types of frameworks can have substantially different costs from one another. Localities of lower socioeconomic standing tend to use fewer out-of-home residential services, which are the most expensive type.

This, in turn, has an impact on the initial sum allotted to them by the Ministry (and, presumably, on the quality of care provided to clients): in the initial allocation, NIS 3,170 per client is allocated to localities of low socioeconomic standing, on average, as opposed to NIS 5,400 per client to the other authorities.

Haredi localities are an interesting exception. Though Haredi localities belong to lower socioeconomic clusters, they tend to use out-of-home care frameworks more and, as mentioned above, end up spending more per client than other Jewish (non-Forum-15) localities.

In addition to differences in the original allocation by the Ministry of Labor and Social Welfare, a third explanation for funding gaps is that more affluent localities tend to allocate more additional resources to welfare issues, beyond those required to receive funding from the Ministry of Labor and Social Welfare through the matching method.

Here again the Haredi localities stand out. They supplement the budget beyond what is required by the matching method, despite belonging to lower socioeconomic clusters.

Since the study’s publication, the researchers have continued to meet with national and local leaders, sharing their findings and adding much-needed data to the policy discussion on this topic.

 

 

The Income-Expenditure Gap and Household Debt in Israel

Executive Summary

This study analyzes the gap between Israeli household income and expenditure, and examines this gap alongside characteristics such as socioeconomic status, age, marital status, and expenditure on housing. The data show that expenditure on housing is the most significant factor in determining the gap between income and expenditure among those who are unmarried, and socioeconomic status is the most significant factor among married couples. The study also finds that there has been a rapid increase in the total liabilities of households in recent years, though an international comparison shows that the situation in Israel is relatively good.

A negative gap

A negative current gap – when expenditure is greater than income – is liable to increase a household’s risk of economic difficulties. In Israel, the share of households with a negative gap in the Jewish population stands at about one third of all those aged 25-60: 35% of households among married couples and 39% among unmarried persons (as of 2015).

Housing expenditures

One of the most significant household expenditures is the expenditure on housing (rent or mortgage). The study finds that when households are classified according to the type of their expenditure on housing: rent, mortgage payments, rent and mortgage payments, or no housing expense, households that pay both rent and mortgage payments, have a higher negative gap than those who pay only rent, only mortgages, or neither.

What influences the size of the negative gap? Married and unmarried households

Among unmarried persons, the combined expenditure on mortgages and rent is the most influential factor in determining the size of the negative gap: this expenditure increased the per capita negative gap by 156% relative to households without housing expenditures (when other characteristics are held constant).

In contrast, among households of married couples, socioeconomic class is the most influential factor in determining the size of the negative gap. Having a lower socioeconomic standing (belonging to the bottom income quintile) increases the negative gap by 23% relative to households with a high socioeconomic status (belonging to the top quintile).

In terms of the effect that consumption categories have on the size of the negative gap, the study finds that expenditures on “personal expenses” – including clothing and footwear, laundry services, haircuts, and cosmetics – increases the negative current gap at the highest rate both among those who are married (7.2%) and those who are unmarried (4.6%).

Household indebtedness

In addition to the above analyses on household income and expenditure, the study includes an analysis that classifies liable households by the entity to which they owe money: (1) banks (2) commercial bodies, and (3) family and friends. Most households in debt (93%) owe money to banks, 46%-51% owe money to friends and family, and between 21% and 37% owe money to commercial entities.

An analysis by age group found that total average debt (to all three types of entities) increased with age: the average debt in the 25-29 age group was NIS 150,000, compared to NIS 315,000 in the 50-60 age group.

Comparing total debt by socioeconomic status (income quintiles) shows that there is no significant gap between the quintiles in the amount of debt owed, but there are gaps in the distribution of the entities to which households are indebted.

While the top income quintile owed the highest amount to banks (approximately NIS 174,000), the bottom quintile owed the highest amount to family and friends (approximately NIS 110,000). These data show that, due to the low income of households in the lowest quintile, banks do not grant them high credit ratings, but they manage to raise funds from friends and family.

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An international comparison

An analysis of total liabilities taken by households in Israel shows that since 2007 there has been an increase in the growth rate of liabilities. An international comparison shows that the leverage (the ratio of total liability to GDP) of households in Israel is very low compared to other developed countries: the share of liability stands at 41% of GDP in Israel, compared with an average of 66% of GDP in the OECD.

 

Developments in Israeli Social Welfare Policy

The full chapter can be accessed using the link on the right.

 

Israeli social welfare policy, as reflected in social spending and service provision, has been very stable over the past decade. Besides continued stability, two developments of the past year illustrate the manner in which policy change happens. One is the new Savings Plan for Every Child program – an outcome of the Committee for the War Against Poverty in Israel (the Elalouf Committee), and of coalition-agreement commitments. The other is an agreement to increase general disability benefits, reached in the wake of a lengthy public and political struggle. Despite these measures, current policy and the present level of social spending, which is considerably lower than that of other welfare states, are not expected to reduce inequality or poverty in Israel substantially over the coming years.

Overall expenditure stability, but increases in real-term spending

  • In 2016, social welfare expenditure came to NIS 101 billion, accounting for half of all Israeli social spending (which includes spending on health and education) and about one-third of total government expenditure.
  • Despite the apparent stability in expenditure relative to total government spending and GDP in 2016, there was actually a NIS 7.7 billion increase, in real terms, compared with the previous year – an 8% increase in a single year, compared with an average annual increase of 4% since the beginning of the decade.
  • Social security spending accounts for about 85% of total social welfare spending, and spending in this area rose from NIS 82 billion in 2015 to over NIS 86 billion in 2016 in real terms (in large part due to a rise in expenditure on old age pensions and child allowances by the National Insurance Institute (NII)).

The Savings Plan for Every Child program

  • According to estimates, the annual cost of this program is expected to be approximately NIS 2 billion per year. However, National Insurance Institute data as of September 2017 indicate that the total expenditure on payments and grants in the framework of this program came to NIS 3.66 billion for the current year, apparently due to retroactive payments from the prior year and a half.
  • Centralization in the framework of bank savings accounts used for the program is apparent: of the 21 financial institutions that manage the plans, the most preferred is the Altschuler Shaham provident fund (24% of all of savings plans), followed by Bank Hapoalim (12%).

Increase in general disability benefits

  • The second-largest component of NII expenditure is spent on general disability benefits (20%).
  • A September 2017 agreement contains a number of different provisions translating into a disability benefit increase to NIS 4,000 monthly for people whose degree of incapacity is 100%, a substantial increase in labor market earning capabilities before benefits are reduced (“disregard”), and linkage of benefits to the minimum wage. The agreement is supposed to go into effect in January 2018, and the sum allocated to its implementation through early 2021 is NIS 4.2 billion.

Ministry of Labor and Social Welfare and Ministry of Construction and Housing budgets

  • Recent years have witnessed a continual increase in the Ministry of Labor and Social Welfare’s budget, which in 2016 amounted to NIS 6.43 billion (10% more than the 2015 budget). Most of the Ministry of Labor and Social Welfare’s budget (77%) is transferred to local authorities (see: “Social Service Budgeting in Israeli Local Authorities”).
  • The Ministry of Construction and Housing’s 2016 budget doubled relative to 2015 – from NIS 1.8 billion to NIS 3.9 billion. In 2016, there was a substantial increase in the sales and purchases of apartments for those entitled to public housing, and an additional NIS 150 million beyond the fund’s income was allocated for the purchase of public housing apartments.

Implementing the Recommendations of the Committee for the War Against Poverty

  • In 2016, there was an increase in expenditure on income supplements for the elderly, on the Ministry of Economy’s expenditure related to employment and on public housing. The expenditure allocated for the implementation of the committee’s recommendations was about 30% of the total recommended expenditure (NIS 7.4 billion per year), compared to 6% in 2015. It is estimated that in 2017, the actual expenditure will also be about 31% of the recommended annual expenditure.
  • Though implementing a Savings Plan for Every Child did indeed appear in the committee’s recommendations, it was not priced out and was not included in the total recommended expenditure. Including the cost of this program significantly increases the total expenditure for the implementation of the recommendations to about 90% of the recommended expenditure.
  • In other areas – particularly in healthcare and in efforts to increase the income of the working poor – the government’s progress in implementing the committee’s recommendations has been slow. Among the most prominent of the committee’s main recommendations that have not been implemented is the recommendation to increase the benefit level provided by the Income Support Program, which serves as a safety net for Israelis living in poverty.

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Philanthropy in Israel: An Updated Picture

The full chapter can be accessed using the link on the right.

 

Total philanthropic donations reported to the Israeli Tax Authority between 1999 and 2011 increased by almost four times in real terms: from NIS 153 million to NIS 606 million a year.

This study examines the characteristics of modern Israeli philanthropists based on data from all donors who requested tax credits for charitable donations to recognized non-profit organizations in Israel. The chapter examines the amount of money donated and the generosity of donors (measured in terms of donation as a percent of income), and explores the relationship between personal characteristics and the likelihood to donate.

Philanthropist households differ from the general population in virtually every category examined, including annual income, family composition, and occupational classification. Israelis with higher incomes, individuals with earned (active) income, and those employed in real estate or organizations (e.g., NGOs, NPOs, and public organizations) are more likely than others to be philanthropists. Immigrants from America and Europe are more likely to be donors than those born in Israel, Africa, and Asia. In addition, philanthropists in Israel have more children, on average, than the general population.

Households headed by women and immigrants tend to donate more

  • Households headed by women tend to be more generous in their contributions, in terms of donating a higher percentage of household income.
  • Philanthropists who immigrated to Israel donate more money than Israel-born philanthropists, and are also more generous. New immigrants are more generous than veteran immigrants and donate larger sums on average, whereas immigrant philanthropists who have lived in Israel for 21 years or more tend to have similar contribution patterns to Israel-born donors. A possible explanation for this is that immigrants bring with them a different giving culture, but this gradually converges over time to the level that is customary in the local culture.

Only a small share of Arab Israelis and high-tech employees donate

  • Philanthropists employed in high-tech, manufacturing, banking and finance are the largest donors and are the most generous relative to philanthropists from other industries. On the other hand, only a small minority of employees in the high-tech sector are donors, and it is possible that philanthropic norms have not yet been established in this young industry, as they have in the traditional industry sectors.
  • There is a significant underrepresentation of Arab Israelis in officially reported philanthropy in Israel – despite the fact that they make up about 20% of the total population in Israel, only 1% of reported philanthropists are Arab Israeli.
  • Jerusalem and Tel Aviv are not among the top ten localities with the most generous residents. The study finds that the most generous localities in Israel include some of the more wealthy localities such as Kfar Shmaryahu and Savyon, as well as localities of low socioeconomic ranking such as Modi’in Illit, Hatzor HaGlilit and Tiberias.

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Social Service Budgeting in Israeli Local Authorities

The full chapter can be accessed using the link on the right.

 

Welfare services in the local authorities are budgeted according to the “matching” method: for every shekel invested by the local authority, the Ministry of Labor and Welfare allocates three shekels. Thus, in practice, 75% of the welfare budget is financed by the Ministry of Labor and Welfare and 25% by the local authority. Israel’s Supreme Court is currently examining a petition against this funding method that claims it is unequitable. The chapter examines budgetary patterns and indicates that there is indeed considerable inequality in budgeting between strong and weak local authorities, but most of this gap is explained by differences in expenditure on out-of-home care frameworks, which are particularly expensive. The gaps seem to be related to the resource constraints of the weaker communities, the absence of out-of-home care frameworks tailored to the Arab Israeli population, and localities’ preferences for addressing their residents’ needs.

There is considerable inequality in the financing of welfare services between strong and weak local authorities

The primary responsibility for the welfare of individuals, families and communities rests with local authorities, yet the allocation of resources is not uniform across all localities.

  • The average welfare expenditure stands at 11% of the total budget in localities of low socioeconomic ranking, and at 6% among those with a high socioeconomic ranking.
  • The average expenditure on welfare (including the allocation from the Ministry of Labor and Welfare at the end of the year and self-generated supplements allocated by the localities) in strong localities without balanced-budget grants and government development grants (Forum-15 localities) is NIS 9,095 per client, while in Arab Israeli localities the expenditure is only NIS 3,387 per client. In the Haredi localities, which are categorized as part of the low socioeconomic cluster, the average expenditure is NIS 8,749, compared to NIS 7,318 in the remaining Jewish localities.

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Thus, there is considerable inequality between various local authorities, and those who require assistance the most and live in localities of low socioeconomic status are the ones to which the fewest resources are allocated.

Explanation 1 for the inequality: weaker authorities are unable to fulfill the funding costs required on their part in order to receive the full budget from the Ministry of Labor and Welfare

The researchers find that it is difficult to attribute inequalities to this factor, given the following:

  • The vast majority of authorities (92%) utilize the entire budget earmarked for them at the beginning of the year, and even spent more than the required sum.
  • Of the 20 localities that do not utilize the budget allocated to them, only eight are ranked in a low socioeconomic cluster (all are Arab Israeli localities), while the other 12 authorities are ranked among the high socioeconomic cluster.

Though most authorities did manage to meet the funding level, it is quite possible that authorities with fewer resources request a relatively small sum from the national government in order to avoid a situation where they cannot meet their share of the funding later in the year.

Explanation 2 for the inequality: weaker authorities receive less funding because of the initial allocation from the Ministry of Labor and Welfare

The researchers find that about 64% of the explained variance in the initial funding that localities receive from the Ministry of Labor and Welfare can be explained by differences in the types of care frameworks localities use to provide social services.

  • A gap that disadvantages the weaker authorities emerges already with the initial allocation by the Ministry of Labor and Welfare: NIS 3,170 is allocated to the localities of low socioeconomic standing, on average, as opposed to NIS 5,400 to the other authorities.
  • Gaps in the average allocation earmarked by the Ministry are also prominent when examining localities by their demographic composition: NIS 2,682 in Arab Israeli localities, NIS 5,483 in Jewish localities, and even higher sums in Haredi and Forum-15 localities.
  • Most of the gap between localities in per-client budget allocation can be explained by types of care frameworks: the weaker authorities use fewer out-of-home frameworks, which are the most expensive.

Explanation 3 for the inequality: stronger local authorities are able to supplement the budget beyond what is required to receive Ministry funding

  • Wealthy localities tend to allocate many more resources to welfare issues, beyond those required to receive funding from the Ministry of Labor and Welfare through the matching method: the rate of self-generated income out of total welfare expenditure is 30% on average in Arab Israeli localities, 36% on average among the Forum-15, and 37% on average among Haredi localities (though they belong to lower socioeconomic clusters).

These supplements mean that in overall per-client expenditure for welfare services, there are even greater gaps than were seen in the original budgetary allocation by the Ministry of Labor and Welfare.

Does more competition make social services better? Outsourcing by the Ministry of Labor and Welfare

The privatization of social welfare services in Israel has been an on-going process since the 1980s, and has not been curbed in recent years. A study conducted by Researcher Shavit Madhala and Principal Researcher John Gal sheds light on this phenomenon and concentrates on the Ministry of Labor and Welfare’s outsourcing of welfare services to non-governmental agencies, whether for-profit businesses or non-profit organizations. The outsourcing process is carried out by government tenders inviting agencies to compete for a contract.

The assumptions underlying the outsourcing of social services are that this system allows for greater flexibility and more effective operation, and that competition between different specialized service providers will improve the service to Israeli citizens.

Understanding the outsourcing of public welfare services

There has been a considerable increase in public welfare services outsourced by the Ministry of Labor and Social Welfare since the turn of the century. In 2000, the Ministry spent about NIS 2.3 billion, or about 70% of its total budget, on outsourcing services (in 2015 prices). Yet by 2015, when the Ministry’s budget amounted to about NIS 6 billion, outsourcing spending rose to 80% of the Ministry budget, reaching NIS 4.8 billion. This money was dedicated to outsourcing in the areas of rehabilitation, intellectual developmental disabilities, correction services, and personal and social services.

To what types of institutions are these services outsourced? Service providers to the Ministry of Labor and Social Welfare include nonprofits alongside for-profit businesses. In 2015, the number of social service providers to the Welfare Ministry was 2,697, two-thirds of which were private businesses and one-third of which were nonprofit agencies.

Nonetheless, the payments to these different types of providers were similar: about half the payments went to nonprofits and half to private, for-profit providers. In the years that were examined in this study, there was a rise in the number of nonprofits providing services to the Ministry as well as a rise in the spending allocated to these organizations while, simultaneously, there was a drop in the number of for-profit providers.

Most of the service providers for the Ministry of Labor and Welfare are long-time providers, meaning they have worked with the Ministry for at least one year prior to 2015. While only 56% of the providers are considered long-time, these providers receive 94% of total outsourcing payments. This reflects the fact that the Ministry puts an emphasis on the experience of service providers and that, in various areas, it is important to the Ministry to keep the same providers they have used in the past so as to maintain consistency and not harm those receiving the services.

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Concentration and competition in the welfare services market

Despite the fact that the 50 largest suppliers (receiving more than NIS 20 million each year) constituted only 2% of all the outsourced service providers used by the Ministry of Labor and Welfare in 2015, they received about 46% of the total resources allocated to outsource payments (compared to 49% in 2000). 48 of the 50 largest suppliers are also long-time providers. Overall, 58% of the largest providers in 2015 were long-time for-profit businesses, 38% were long-time nonprofits and 4% consisted of new organizations.

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The study’s findings relating to concentration levels indicate that there is limited competition among service providers in the field. However, the data show that there has been a decrease in the number of welfare fields that are highly concentrated and an increase in the number with low concentration, meaning that, though competition remains low overall, outsourcing is becoming more competitive over time. This trend can be expected to have a positive effect on pricing and, possibly, on the quality of social services.

It is important to note that the competition between the providers takes place at the stage of being contracted by the government, and in most cases there is no competition between the providers over the service-receiving clients. Clients are generally referred to service providers by the Ministry or the local authority and often have little choice over which provider to use.

This study raises a question about the importance of competition in social welfare. On the one hand, the existence of competition between service providers is one of the justifications for privatization. On the other hand, in the series of interviews conducted for the study, it emerged that the Ministry selects providers mainly on the basis of their experience and expertise in providing the services.

Therefore, where the provider is satisfactory, competition is of little importance. Furthermore, it is widely argued that continuity of care in social services is more important than promoting competition through turnover. Continuity of care is meant to prevent upheavals due to staff changes, for instance, that could harm Israeli citizens receiving the services.

Israel as a Welfare State: A Visual Essay

For the full publication (in Hebrew) press here

In recent decades, the “welfare state” concept has become popular among academics, journalists, policymakers, and the general public. It is used to explain efforts to address poverty, exclusion, and economic gaps, and is a term that has entered the public debate on many social issues in Israel.

Researcher Noam Tarshish examines Israel as a welfare state over time. Israel’s welfare state today is more similar to the liberal model – which can be found in countries like the U.S., Canada, and Australia – but includes a few conservative and social democratic elements that are rooted in the country’s past. The contradictory paths that Israel’s welfare system has undergone during its short history can be explained, in part, by Israel’s similar characteristics to the “extended family” of the Mediterranean welfare regimes. These characteristics include an emphasis on family and religion, as well as the differential allocation of welfare resources among ethnic, national, or other population groups.

“The War Against Poverty” – Where do things stand?

In 2014, the Committee to Fight Poverty in Israel (the Elalouf Committee) presented a detailed list of recommendations to cut poverty in Israel in half within a decade through policy in the areas of welfare, social security, employment, housing, health, and education.

In a study published in the State of the Nation 2016, Taub Center researchers Prof. John Gal and Shavit Madhala-Brik examined the implementation of this plan and found that while about half of the recommendations of the committee have been implemented, the major aims are still far from being fully realized.

Israel has the highest poverty rate in the OECD when looking at disposable income (i.e., income that is available for spending after taxes and transfer payments) and social gaps have grown substantially over the past few decades.

The Committee, headed by MK Eli Elalouf, was an initiative of the Minister of Social Affairs and Social Services, MK Meir Cohen, in 2013, to recommend ways of dealing with poverty and to strengthen equal opportunity in Israel. The goals of the committee were ambitious: to reduce poverty in Israel by about half, bringing the Israeli rate in line with the OECD average poverty rate of about 11%.

So far, the recommendations of the Committee have been implemented to varying degrees as detailed below, with a number of recommendations not implemented at all. Spending on implementation is slated to increase in 2017, primarily in the area of welfare and social security.

Welfare and Social Security: A number of recommendations have been implemented in this area, including adding 150 family social work positions and increasing the budget for distressed families. The government also increased income support for the elderly by amounts ranging from NIS 130 for individuals to NIS 540 for couples in 2016 (the budget has grown in 2017 and should continue to grow in 2018).

In January of 2017, the government began the roll-out of another committee recommendation: opening a long-term savings account (Child Development Account) for every Israeli child under the age of 18. The government puts a monthly sum of NIS 50 into each account, which can be matched by the child’s family.

An important recommendation that has not yet been implemented is increasing income support for those below the poverty line to the level suggested by the committee.

Employment: Since the committee issued its recommendations, legislation has expanded eligibility for work grants (negative income tax) for single-parent families, those with disabilities, and the self-employed.

Vocational training courses have been expanded as have employment programs for populations that have difficulties participating in the labor market and for people with disabilities. There was also an increase in publicly subsidized day care centers for children of working parents.

Housing: Rent subsidies increased by NIS 600-900 a month for those eligible to receive them. However, though the committee recommended that the eligibility requirements be extended so that more households could qualify for rent subsidies, this has not yet come to fruition. The government has increased the supply of public housing, but not enough to meet the demand, leaving many families still waiting for public housing.

The proposed “Equal Neighborhood” program to revitalize underprivileged neighborhoods through infrastructure, investment, and other community programming has thus far not been implemented.

Health: Public subsidies for dental care are in the process of being implemented for seniors over the age of 75 who also receive income support, as well as for children up until the age of 14 (in the coming years this will be expanded to cover children until the age of 18).

Health services for students, which had been privatized, were returned to the authority of the Ministry of Health for some districts of the country, following dissatisfaction with the service of private providers. However, the nurse/student ratio has not been improved.

Additional recommendations that are currently under consideration are establishing health promotion and prevention centers for the elderly and a reduction in the co-payment for medicines and medical services.

Education: In the realm of education, about NIS 100 million per year were added to the budget in order to add study hours in schools serving socioeconomically weak populations. On the other hand, the recommendation to invest in preschool education was not implemented.

Spending on implementing the recommendations has increased in 2017

The price tag of the Elalouf Committee’s recommendations stood at NIS 7.4 billion per year. Due to elections in 2015, the government put few of the recommendations into effect and added only NIS 434 million to the relevant budget areas in that year. In 2016, NIS 1.9 billion was added to the budget — about 26% of the additional sum recommended.

By the end of 2017, the additional expenditure is expected to reach NIS 4 billion – or about 54% of the recommended amount. The majority of the increase is being devoted to welfare and social security.

More specifically, the money is being used for the Child Development Account program, for work grants (negative income tax) and for an additional increase in the old age income supplements. These steps are an improvement in the implementation of the committee recommendations, though they still seem insufficient to attain its declared goal.

Elalouf committy

One of the main challenges to implementation stems from the fact that the government has not as of yet established a centralized authority for combatting poverty to more efficiently manage processes that are currently spread out among multiple government bodies.

Furthermore, due to budget constraints, the additional government expenditure in 2017 is still only about half of the expenditure addition recommended by the Elalouf Committee, which was NIS 7.4 billion annually.

As a result, the government did not implement some of the central recommendations of the committee, such as increasing income support for those living below the poverty line, and it allocated very limited resources to programs like work grants, vocational training, and the purchase of additional homes for public housing.

Long-Term Care in Israel: Funding and Organization

Long-Term Care in Israel: Funding and Organization

The share of Israelis aged 70 and older is projected to double in the coming decades, and the needs for long-term care among this generation will increase accordingly. A new Taub Center study presents a concerning picture of long-term care and poses the challenging question: how can the healthcare system prepare to cope with these inevitable demographic changes? According to the study, the first one comparing Israel and the OECD on this topic, Israel’s long-term care system is unequitable and inefficient, and the share of private funding in Israel is three times higher than the OECD average. The authors offer several potential solutions for restructuring long-term care, including the option of defining long-term care, which is not solely for the elderly, as part of a universal basket of coverage that is protected by law and managed by a designated authority.

Israel’s population is expected to age substantially in the coming decades. The share of elderly in the population, particularly those aged 75 and older, is expected to double from about 610,000 today to about 1.24 million by 2035, while the rest of the population is projected to grow by about 31%. Consequently, the disability level, which is by nature higher among the elderly, is expected to grow by 43%, a growth rate that is 16% faster than that of the general population during this time period. While the increased life expectancy among Israelis is a welcome development, it requires better preparation for the growing health needs of those who are living longer. Illness and functional impairment drive a growing need for in-home care, and in more severe cases, inpatient nursing homes. The changing ratio between the age groups – more of those aged 70 and older compared to those aged 15-69 – is expected to exacerbate the challenges related to caring for one’s parents and increase the burden on Israeli households.

The new Taub Center study by Prof. Dov Chernichovsky, Prof. Avigdor Kaplan, Eitan Regev, and Prof. Yochanan Shtessman examines the issues of funding and organization in long-term care. In addition, the study compares the long-term care system in Israel to those in OECD countries for the first time. Based on these comparisons and the experiences of other countries, the researchers propose potential solutions to regulating the market for long-term care in Israel.

Projected population growth by age group and in the total level of disability

Only half of spending on long-term care is publicly funded, and responsibility for the area is spread across several ministries

The long-term care system in Israel faces a number of challenges, including a lack of sufficient coverage for the entire population, funding issues, a multitude of authorities responsible for matters related to long-term care, and a lack of preparedness for the future. The Taub Center study shows that Israel’s total national expenditure on long-term care – including community care, institutional care, and premiums on long-term care insurance – is estimated at NIS 15.3 billion in 2014, and the government covers about half, or NIS 8.3 billion, of this expenditure.

Public funding is currently distributed among the following agencies:
• The National Insurance Institute covers funding and subsidies for in-home nursing care for about 160,000 elderly Israelis at a cost of NIS 5.31 billion, about 64% of total public funding in this realm.
• The Ministry of Health and the Ministry of Social Services fund assisted living facilities for about 14,000 of Israel’s elderly. These cost around NIS 2.1 billion, representing about 26% of public funding for long-term care.
• Through kupot holim (health funds), the state finances complex nursing care (for those with both complex medical problems and long-term care needs) for about 1,600 elderly Israelis, costing NIS 891 million and representing some 10% of public funding for long-term care.

The fragmentation of responsibilities between the different ministries leads to inefficiency and hurts the continuity of care. Most importantly, this leads to suffering among elderly Israelis and their families. Furthermore, the right to institutional care is not universal and is means-tested. This financial structure leaves behind middle class households who are not poor enough to qualify for financial assistance for long-term care, but are not wealthy enough to afford privately funded assisted living facilities.

The burden on households is great and growing

The Taub Center study shows that household expenditures on long-term care are divided among a number of different areas: payment to employ caregivers (often foreign workers), which costs about NIS 2.6 billion per year (about 39% of private spending on long-term care) and assisted living, which costs NIS 2.5 billion (about 37% of private spending). The remaining NIS 1.6 billion in private spending, which represents some 22% of total private expenditures on long-term care, goes toward insurance premiums.

In considering these expenses, it is important to note the lack of clarity in the number of people covered by long-term care insurance. As of 2014, according to estimates by the Insurance Commissioner, 5.31 million people had long-term care insurance in Israel, including both individual and group plans. However, according to the Central Bureau of Statistics’ Family Expenditure Survey, the rate of those covered by long-term care insurance is much lower. It appears that the gap between the two estimates stems from underreporting and a lack of awareness of insurance policies that are available through both the health funds and workplaces. Regardless, not all Israelis have access to long-term care coverage. Extensive reliance on private funding combined with the sharp increase in the anticipated need will exacerbate the issue of care for family members and increase the burden on Israeli households.

Where is Israel relative to OECD countries? Less equal and less effective

The Taub Center research presents, for the first time, Israel’s long-term care situation as compared to OECD countries. The researchers suggest that, in terms of spending on long-term care relative to GDP, Israel falls near the Nordic countries (about 1.4% of GDP) – but these countries have introduced universal long-term care insurance while Israel has introduced no such coverage. Conversely, Israel’s expenditure level is higher than countries like Australia or Germany, where the long-term care system is similar to that of Israel’s. Israel’s expenditure is particularly high considering that its elderly population is smaller (as a share of the total population) than that of the other countries assessed. As such, the international comparison shows that Israel is not effectively distributing or providing care given the resources it allocates.

Another prominent characteristic in Israel’s long-term care system is that the share of private expenditure on care is nearly 45%, almost triple that of the OECD, which stands at 16% on average. The study also shows that Israel stands out in the share of care for patients aged 65 and older that is provided in the community: about 19% versus 9% for the OECD countries for which data is available. This figure may indicate a greater commitment to caring for Israel’s elderly in the community, but it could also reflect the relatively limited options and access to institutional care available in the country. In such situations, a large amount of the burden falls on families to fund care independently – whether by paying for care provided by foreign workers or by missing work days to care for their elderly family members. This extensive reliance on households furthers inequality between families at different income levels: households that are unable to afford long-term care at home or in assisted living facilities must bear the burden on their own.

As part of its international comparison, the Taub Center study examined long-term care solutions in place around the world. The data show that nearly all countries with social service funding structures similar to Israel’s chose publicly-oriented solutions, combining compulsory insurance payments with public funding and thereby enabling the existence of an efficient and equitable universal long-term care system.

Expenditure on extended long-term care by funding sources, OECD countries, 2010-2011

Government proposals for handling long-term care contradict one another

In an attempt to regulate the funding of long-term care, the government has presented two contradictory initiatives. A reform introduced by Israel’s Ministry of Finance would transition the long-term care insurance that is based on group premium payments (through pensioner associations and workplaces) to a system that revolves around individual premium payments. The Ministry of Health’s proposed reform would institute universal long-term care insurance through use of funds from the health tax and by transferring the full responsibility of long-term care to the health funds, thus reducing the burden on families. In the words of the researchers, “the two proposals fail to address the fundamental issue in the area of long-term care: the selective entitlement to institutional care and the split among the various agencies involved in organizing and providing long-term care.”

Taub Center researchers found that the Ministry of Finance and Ministry of Health proposals do not sufficiently address the primary problems associated with long-term care in Israel. The Ministry of Finance’s approach, which seeks to further privatize long-term care, has not proven effective in other parts of the world. The funding available through a private insurance system is relatively limited, as low-income earners cannot afford the premiums and high-income earners often prefer to make other arrangements, such as paying for in-home care. Additionally, private insurance premiums are relatively high due to the high risk associated with accurately projecting the growth of the population and anticipating its long-term needs. Young people do not tend to purchase long-term care insurance. A system that would require young adults to be insured would prevent them from living without care in their old age, while simultaneously enlarging the funding sources for the care of the older generation.

Regarding the Ministry of Health’s aim to universalize long-term care, at least partially, Prof. Chernichovsky states that this approach is “compatible with international trends and suitable in terms of public finance,” but noted that it lacked certain basic elements. “This proposal focuses on the medical aspects of long-term care without meeting other needs such as social support. In nearly all other OECD countries, long-term care is managed separately within the welfare system, not in the healthcare system. As such, the current proposal of the Ministry of Health does not sufficiently address fragmentation in the Israeli system and the funding sources that are required in order to expand long-term care.”

Possible paths to long-term care reform: mandatory long-term care for all, public funding from existing sources, and raising the retirement age for women today and for men over time

In light of the issues raised while mapping the system and comparing Israel to other developed countries, Taub Center researchers offer considerations for reform, including the regulation of the long-term care system. Possible options include:
• Including long-term care in the universal basic healthcare basket.

• Financing: the basic basket could be funded through existing public sources in addition to a mandatory fee collected from all Israeli citizens. Given the expanded life expectancy of Israelis, raising the retirement age presents another opportunity for funding. At the same time, given the high cost of long-term care and increased needs, Israel may need to maintain income tests for certain entitlements, as is done in a number of OECD countries.

• Private insurance: supplementary long-term care insurance may be made available alongside universal care.

• Establishment of a single, dedicated authority: the responsibility for all long-term care management could be designated to a single authority. The authority would provide long-term care services offered by independent providers and medical services through the health funds, as is the norm today. The authority could ensure continuity of care and that the system operates more equitably and efficiently than it does today.

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

 

The Outsourcing of Welfare Services: Trends and Changes

The privatization of social welfare services is a process that has been on-going since the 1980s. This chapter sheds light on the phenomenon and concentrates on the privatization process as it relates to an array of services of the Ministry of Labor and Social Affairs. At the center of the analysis stand two questions: (1) What are the activity patterns of for-profit and nonprofit agencies working in this field? (2) Can we identify trends in market concentration in welfare service provision?

The study’s findings indicate that the extent of services that are outsourced by the Ministry has grown over the years: from 70% of the Ministry’s total expenditure in 2000 to about 80% in 2015. The majority of service providers to this ministry are veterans in the field, and they garner about 96% of the total payments for outsourced services. The findings relating to concentration levels indicate that competition among service providers in the field of personal social services is limited. The majority of the 50 largest providers, whose share among all of the outsourced service providers is about 2%, have provided services for many years and they garner about 46% of the total expenditures for outsourced services.

It is evident that there is no particular preference for nonprofit agencies in this process, and that in the eyes of policy makers there is no essential difference between for-profit and nonprofit agencies. The analysis of providers showed that most of them are for-profit providers. Nonetheless, the distribution of payments between the two kinds of providers indicates that about half of the payments went to nonprofits. In the years that were examined, there was a rise in the number of nonprofits working with the Ministry, and a simultaneous drop in the number of for-profit providers.

While competition among service providers is limited, the concentration indexes tested for the various departments indicate that competition does exist and is actually increasing with time. The research and results of the analysis raise the question of the importance of competition in the social service markets. On the one hand, the existence of competition between service providers is one of the justifications for privatization. On the other hand, in the series of interviews conducted for the study, it emerged that providers are selected mainly on the basis of their experience and expertise in providing the services. Thus, in a domain of services where there is a satisfactory provider, competition is of little importance. Moreover, it is argued that, in the social services, it is important to maintain continuity of care by a single service provider instead of encouraging turnover. This is meant to prevent upheavals due to staff changes, for instance, that could harm service recipients, especially when it comes to institutional settings.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

Poverty and Inequality in Israel: Trends and Decompositions

This study examines the trends in inequality and poverty rates between 2002 and 2014. Most of the analyses relate to the working age population, whose contribution to income inequality and to long-term changes in it is the greatest, as well as to the elderly population. The method used in this analysis is an estimation of the share of the three central population groups – Haredim (ultra-Orthodox Jews), Arab Israelis and non-Haredi Jews – in changes in the poverty and inequality indices over time.

Among the working age population, market income inequality (inequality in income from employment, occupational pensions and capital, before the deduction of compulsory payments) decreased consistently over the period examined, but the decline was only reflected in disposable income (income plus transfer payments, after the deduction of direct taxes) in recent years. The decline coincided with the adoption of two key policy measures after 2003: pension cuts and a reduction in direct taxes. Because of these policy changes, there was a change in the composition of household income (income from work increased, while government support decreased).

The findings show that the overall poverty level in Israel has not changed between 2002 and 2014. However, the composition of the poor population has changed substantially. In 2002, the share of poor Haredi and Arab Israeli households out of all poor households stood at 44%; in 2014, they comprised 54% of poor households. This represents an increase that exceeds the rise in this group’s share in the overall population of working age households.

The chapter also presents findings relating to the population over age 60. Over the years, there has been a decline in the inequality and poverty indices in market income among the elderly population. Large discrepancies were found in the income levels between different groups in this age segment, particularly between long-time Jewish residents and new immigrants and Arab Israelis. Most of the gap can be explained by differences in income from occupational pensions and work between each group, even though there was an increase in private pension eligibility among new immigrants. In addition to differences in income, there are large disparities in home ownership between the groups: high rates of home ownership among long-time residents and Arab Israelis, compared with low rates among new immigrants.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss.

Public Spending on Social Welfare

This chapter surveys developments in government welfare services over the past fifteen years. Israeli public spending on welfare services – spending that funds a variety of benefits and social services (alongside healthcare and education) – constituted one-fifth of Israeli governmental expenditure in 2015, and amounted to 94 billion shekels. Social insurance programs, most of which are operated by the National Insurance Institute, account for 80% of the total expenditure. Over the past year, expenditure on social security programs increased, and additional changes in this area are expected for 2017. Some other welfare spheres also witnessed moderate spending increases in 2015, most notably expenditures on negative income tax, day care centers, and employment programs.

Social welfare spending declined by 30% in the early 2000s, and then stabilized at relatively low levels relative to GDP and to total government expenditure. Among the components of social welfare spending, there was a major—80% —drop in Ministry of Construction and Housing expenditure between 2000 and 2015. However, during that period the Ministry of Labor and Social Welfare expenditure per service-recipient-household and as a share of total government expenditure increased, as did Ministry of Economy expenditures on daycare centers and home daycare (mishpachtonim).

Overall, Israel’s welfare expenditure level remains low, relative both to other welfare states and to the needs of the target populations.

This chapter also analyzes implementation of the Elalouf Committee (War Against Poverty) recommendations. The findings indicate that, during the first two years after the Committee submitted its report, half of the recommendations were implemented in part or in full. During 2015 and 2016, the anti-poverty budget additions to all Israeli government ministries amounted to 434 million shekels and 1.9 billion shekels, respectively, in comparison to the 7.4 billion shekels per year that the Committee recommended. It is doubtful whether this addition, only a quarter of the recommended sum, will bring about the substantial reduction in Israeli poverty rates, which was the Elalouf Committee’s overarching goal.

Welfare expenditure data, as surveyed in this chapter, point to stability and moderate growth in government spending in the various welfare spheres. Most of the growth reflects demographic changes, while a small portion stems from legislative developments (due to the social justice protests and the Elalouf Committee recommendations) and changing demand for services (exemplified by the declining number of new immigrants).

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

Introduction: Developments in the Social Welfare Field

Social welfare and social security issues have not been at the center of the Israeli government’s agenda in the last two years. Although inequality and poverty levels in Israel remain especially high, with no real decline recorded since the beginning of the century, social spending in Israel has not grown appreciably during this period. Even the Committee for the War against Poverty, which was established by the government and submitted its conclusions in mid-2014, has not succeeded in placing poverty at the center of social discourse and governmental activities. Nevertheless, political circumstances have resulted in the adoption (or planned adoption) of some of the committee’s recommendations.

This introduction appears in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

Implementation of the Elalouf Committee Recommendations

The Committee for the War Against Poverty in Israel (the Elalouf Committee) was established in November 2013 at the initiative of the Minister of Social Affairs and Social Services, MK Meir Cohen. The Committee, headed by MK Elie Elalouf, sought to formulate a comprehensive, long-term plan to alleviate the economic distress affecting a substantial portion of the Israeli public, and to address the country’s worsening levels of inequality. The Committee represented a unique effort to examine Israel’s poverty problem in a comprehensive manner, to propose clear objectives for dealing with it, and to draw up concrete recommendations for attaining those objectives. No attempt of this kind had been made since the early 1970s, when the Prime Minister’s Commission on Children and Youth in Distress set the tone for Israel’s welfare state. Developments in welfare policy since that time, widening social gaps and a large increase in the incidence of poverty underscored the need for a new and broad-based approach if the situation is to change. Accordingly, the Committee for the War Against Poverty set ambitious goals, among them a drastic decline in Israeli poverty figures within a decade. The aim was to bring Israeli poverty rates down to the OECD average – i.e., a 50% drop in the poverty rate, from one-fifth to one-tenth of Israeli families.

A helping hand: social welfare spending in Israel

Government social welfare expenditures in Israel come in two forms: first, through cash transfers intended to ensure the social security of all residents of the state, and second, through services targeting disadvantaged and vulnerable populations. Israel’s public expenditure on welfare was about 86 billion shekels (22.8 billion USD) in 2014. As can be seen in the graph below, this expenditure has shown slow, steady growth since the middle of the past decade, principally due to an increase in state old-age pensions (cash transfers) provided through Israel’s social security programs. By contrast, the expenditure on other social service programs dropped slightly between 2000 and 2014.

social-welfare-expenditure

About 80 percent of the overall expenditure on welfare is devoted to social security, which includes a wide range of programs, primarily distributing cash benefits, aimed at providing a safety net for those with little or no income from labor, or for those with additional expenses caused by a variety of circumstances. This category of social welfare expenditure is mostly comprised of allowances from the National Insurance Institute but also encompasses expenditures for Holocaust survivors and for the rehabilitation of disabled veterans and payments to bereaved families.

The vast majority – 90 percent – of social security expenditure is for National Insurance benefits. These benefits, both the universal ones and those targeted to low income individuals, reach a very large percentage of Israelis and include such benefits as general disability, work injury, unemployment, and maternity. The largest share of National Insurance benefits goes toward funding old-age and survivor pensions and long-term nursing care. There has been a clear upward trend in the share of spending channeled to the elderly population who received these benefits, which is likely a reflection of an aging Israeli society. The number of old-age and survivor pension recipients rose from 657,000 in 2000 to 868,000 in 2014 (a 32 percent increase), while the number of long-term care benefit recipients rose during this period from 96,000 to 159,000 (a 66 percent increase). In contrast, the figure below shows that National Insurance spending on child allowances has decreased due to a sharp decrease in the value of each allowance (though it rose again in mid-2015 due to policy changes).

national-insurance-institute-transfers-for-various-allowances

A dramatic rise in spending on pensions and benefits for the Holocaust survivor population began in 2008. The increase was sparked by amendments to the law that allowed disabled Holocaust survivors who had not filed claims in the past to do so, and expanded eligibility for survivor benefits. However, due to the substantial increase of 28,000 eligible survivors, the budget per eligible person decreased between 2008 and 2010.

In addition to social security benefits, the social services element of social welfare expenditures is designed to further social objectives, such as assisting new immigrants or people with physical or mental disabilities. These programs offer diverse social services that are provided by the state, local authorities, or external entities, with state funding or supervision. The services are administered by the Ministry of Social Affairs and Social Services, Ministry of Economy (spending on employment and early childhood), the Ministry of Housing, and the Ministry of Immigrant Absorption.

distribution-of-social-welfare-expenditure

The Ministry of Social Affairs and Social Services provides personal social services to vulnerable population groups. Although total Ministry of Social Affairs and Social Services expenditure accounts for just 1.2 percent of total government expenditure, the Ministry’s budget as a percentage of GDP has increased in recent years. This trend reflects a major increase in the Ministry budget, due, in particular, to an increase in the number of households served by the Ministry: 331,000 households served in 2000 compared to 464,000 in 2014 – or 20 percent of all Israeli households.

The Ministry of Economy has made a special effort in recent years to bring specific target populations, such as Arab Israelis, Haredim and people with disabilities, into the labor market. Despite this effort, Israel invests less than other welfare states to encourage overall employment rates—an argument raised in OECD reports on employment in Israel. Early childcare, however, is a different story. This was a major topic of discussion during the 2011 social justice protests and expansion of government-sponsored early childhood education was included in the recommendations of the Trajtenberg Committee. Accordingly, spending in this area has increased in recent years. Government expenditure for the Day Care Centers Department amounted to one billion shekels in 2014. In particular, there was a 40 percent increase in expenditure related to subsidizing the fees paid by working parents for their children’s afternoon programs, day care centers and family child care.

Despite intensive public preoccupation with the issue of housing in recent years, government expenditures by the Ministry of Housing have declined. A dramatic contraction of the public housing supply and cutbacks in rent subsidies are factors that may explain the downturn in spending.  Instead the government has sought to deal with the housing shortage in Israel by increasing private housing stock by lowering the cost of public land and enforcing lower prices for houses sold on these lots.

The budget of the Ministry of Immigrant Absorption traditionally accounts for the smallest share of Israel’s social welfare expenditure. This trend was reinforced over the past decade, with the number of immigrants to Israel declining sharply.

In conclusion, Israel’s public expenditure on social welfare has been growing since the middle of the last decade, due primarily to increased spending on social security. The changes in expenditure stem mostly from demographic changes, while a small portion is due to legislative change and changing demand for public services.

Looking to the future, the Israeli government will be introducing new child development accounts in January 2017. This program will put aside 50 shekels every month for each Israeli child until the age of 18. Government plans for 2017 also include raising cash benefits for the elderly and adding 300 million shekels to the funding of disability benefits.

Child Development Accounts in Israel: Background and Review of Options

Welfare states have in recent years emphasized social investment as a major focus of their activity. Using a variety of tools, these welfare states aim to advance social development, to combat inequality and poverty, and to see their populations prosper. One of the essential means to realize this goal is to increase the material and human capital of all citizens in society. Specifically, in order to ensure that citizens will be able to realize their potential and thereby both improve their own condition and contribute to society, the state must guarantee that young people beginning their adult lives have access to vital systems, including the education and professional training systems, tools for optimal integration into the workforce, and resources to acquire housing and start families.

In the current Israeli reality, thousands of young adults who complete their high school education and/or military or national service must begin their adult lives without sufficient resources to fulfill their maximum potential. Child development accounts, based on a government-individual partnership, are one way to address this reality. These programs seek to ensure that every young adult has the basic financial resources to integrate optimally into society and the economy.

The idea of savings accounts for children has been implemented in various countries for more than a decade, and, in recent years, has also been under discussion in Israel. The legal basis for adopting such a plan was recently included in the Economic Arrangements Law. This policy brief will examine four different options for child development accounts and show the social and budgetary implications of each option.

The Young Unemployed and Unemployment Benefits in Israel

Unemployment insurance is intended to help those who are temporarily unemployed to maintain their standard of living while encouraging them to return to the labor market. The rate of young adults under the age of 30 who receive unemployment benefits in Israel is about 16%. The past few years have witnessed a number of changes to the unemployment benefits program, some of which have worked against the younger age groups. Most recently, there has been a proposal that would make entitlement even more difficult for younger adults who find themselves unemployed, due to a tightening of the qualifying period requirement (the amount of time one must work in order to be eligible for unemployment benefits). In the proposal, the qualifying period for a young adult under 30 would be 24 months of employment out of the 30 months preceding unemployment; the qualifying period for an individual between the ages of 30 and 35 would be 18 months out of the preceding 24 months. This comes in place of the current qualifying period requirement which is the same for all ages and requires an employment period of 12 months within the 18 months preceding unemployment.

This policy brief discusses the relevant Israeli law and the changes that have been proposed with respect to younger unemployed people, and compares them to the provisions for older people and to accepted practice in other social welfare countries. Our findings show that while the envisioned change would undoubtedly bring about a budgetary savings, it would nevertheless alter the entitlement conditions for young adults in Israel in an unprecedented way relative to other social welfare countries. What is more, the change would widen existing disparities between older and younger Israeli adults in terms of their entitlement to unemployment benefits. It is estimated that if this change is adopted it will affect about 15% of the young and unemployed (about 11,000 people), and that the impact on women, those with families, and Arab Israelis will be particularly severe. In light of this, the proposal would undoubtedly disrupt, to a substantial degree, the desired balance between the functions and aims of unemployment insurance.

Social Welfare Expenditure

This chapter surveys developments in government allocations for social welfare since the beginning of the millennium, with an emphasis on the past year. Over the last year, housing and cost of living difficulties stood at the center of public political discourse. The Committee for the War on Poverty, established at the initiative of the previous government, released its recommendations, and these included a significant expansion of the social welfare system. Despite this, the government budget did not include the planned increase in social security and social services expenditures. In fact, recent years have seen either a continued decline in actual spending, or a stable low level of expenditure for a substantial portion of the social welfare system. Striking examples of this are National Insurance Institute expenditures for child allowances and income support, as well as the expenditure of the Ministry of Construction and Housing. In contrast, there has been a continuous increase in expenditures on social security for the elderly and for those with disabilities, on spending by the Ministry of Social Services and Social Affairs on households under its care, and on assistance to Holocaust survivors.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

Poverty and Inequality in Israel: An International Perspective

This chapter examines the rates of poverty and inequality in Israel over time and in comparison with other OECD countries. It looks at two main groups: those aged 59 and under and those aged 66 and over. In the age 59 and under population, Israel’s poverty and inequality rates are among the highest relative to other developed countries in both market income (household income from work, occupational pensions and capital, before taxes) and gross disposable income (including transfer payments) minus taxes. From 2002-2011, employment rates among the population in Israel rose, leading to a reduction in market income inequality (though this was not accompanied by a substantial decline in poverty rates). Disposable income inequality rates rose until 2006 and have since stabilized, while poverty rates have increased fairly consistently, especially among Arab Israelis and Haredim. Among the retirement-age population, disposable income poverty rates are substantially higher than in OECD countries. Nevertheless, the overall resources (public and private pension arrangements) that are available to the elderly, place Israel in a relatively good position among the developed countries. That is, the level of public and private pensions is not low compared to the rest of the world, but its distribution among the elderly is not equitable. The relative tax revenues in Israel are among the lowest in the Western world, and this is one of the reasons that the average overall public expenditure is relatively low. This inseparable relationship between tax revenues and public expenditure has critical implications for the closing of poverty gaps.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

Made in Israel: Characteristics of the Israeli Food Market

From the cottage cheese and “Milky” chocolate pudding protests to the recent international comparisons of “Pesek Zman” chocolate bar prices, it seems that the price of food in Israel has caught the public’s attention. As such, in last year’s State of the Nation Report 2014, the Taub Center published worrisome findings on price trends in Israel as compared to the OECD. In 2005, most food items were much cheaper in Israel than in the OECD, while by 2011, the picture had reversed itself. For instance, meat and chicken, which were 8 percent cheaper, became an average of 21 percent more expensive in Israel than in the OECD; milk products, which were only 6 percent more expensive, became 51 percent more expensive.

As the analysis of Taub Center researcher Eitan Regev shows in the Picture of the Nation 2015, one of the reasons for the drastic increase in food prices is the structure of the food market in Israel. The food industry is very centralized, and this lack of competition allows manufacturers to charge high prices on many food items.

In addition to little local competition, there is also not much competition in terms of imported foods; the rate of food imports lags far behind imports in other sectors. As the first figure shows, in many of the private import sectors, the import rate increased greatly over the past two decades. For instance, imports of shoes rose from 42 percent in 1996 to 80 percent in 2011, and in the area of cosmetics, imports rose from 35 percent to 58 percent. Overall, expenditure on imported goods in 2011 stood at 70 percent – an increase of 17 percentage points from 1996. In contrast, in the food sector, the import rate was only 15 percent in 2011 – a rate that is remarkably low in relation to other sectors, and which has changed little since 1996.

Eng figure 1

Exposure to imports brings more competition to local industry and applies pressure to bring prices down and raise efficiency. Likewise, low import rates are likely to allow prices to remain high. The second figure shows the importance of imports in setting prices in various sectors. In sectors where the import rates are high, like furnishings and home goods, prices dropped substantially. The index of food prices, on the other hand, rose during the same period by 53 percent – much more than the rise in the Consumer Price Index which stood at 32 percent.

Eng figure 2

According to Regev, there are many reasons why the import share in the food sector has remained low, beginning with the requirements of kashrut and health regulations as well as protective tariffs that are intended to protect local industry. As the third figure shows, though, there is no uniformity among import rates in the various food categories. In the main category for food expenditure (meat, milk products, and bread and grains) import rates are very low. In contrast, in those categories where the general expenditure is lower (like fish, sugar and alcoholic beverages), import rates are higher. The significance of this is that in the smaller areas of the food industry, imports are more substantial, while in those areas with greater demand, there is almost no importing taking place. This hints at the possible pressure placed on policy makers by larger interest groups.

Eng figure 3

Low import rates also seemed to serve an important role in the rapid increase in prices. In light of this, Regev notes that opening the food market is an important step whose time has come which will considerably cheapen expenditure on food, a central component to the high cost of living in Israel. One possibility in this direction is to lower protective tariffs paid by importers; first steps in this area are, in fact, taking place (like opening the market to imported hard cheeses). Nevertheless, to lower food prices significantly, bureaucracy and regulation of imports will have to change even if this step arouses the opposition of powerful interest groups in the marketplace.

 

 

The Economic Condition of the Elderly Population in Israel

The population of the West is constantly aging. This trend is linked to poverty and inequality, since most elderly no longer participate in the labor market and live for the most part from their savings – whether from pensions or from personal capital – or on entitlements from the welfare system. A study published in the State of the Nation Report 2014 by Prof. Haya Stier (Tel Aviv University and Shoresh Institute), and Taub Center researcher Haim Bleikh, examines the issue of poverty among the elderly population in Israel.

The study divided the elderly population into three main groups: long-time Israeli residents (65 percent of the elderly population), immigrants from the former Soviet Union (21 percent), and Arab Israelis (8 percent). Over the years, the percentage of FSU immigrants within the overall elderly population has grown. Many of these immigrants arrived in Israel when they were already older and unable to accumulate full pension rights, and therefore their growth as a percentage of the elderly population increases the share of the population reliant mainly on state support.

An examination of the poverty rates among the elderly in the years 1997-2011 in the first figure shows the substantial differences between the various populations. The poverty rate among elderly Arab Israelis is the highest – about 60 percent of them are beneath the poverty line – in comparison to much lower poverty rates in the Jewish population of about 18 percent among FSU immigrants (similar to the overall elderly population) and only 11 percent among the long-time Israeli citizens. A look at the long-term trends shows that here, too, the condition of elderly Arab Israelis is worse. In recent decades, there has been some decline in the poverty rates among elderly long-time Israeli residents, and in recent years, the same is true among FSU immigrants. In contrast, among the elderly Arab Israeli population, poverty rates have remained stable and even risen, with the rate sitting at about 50 percent in most of the years measured, although declines were noted at the start of the period.  The poverty rate rose to 60 percent in 2010, and since then, the rate has seen a slight decline.

Economic elderly figure 1 eng

The Taub Center’s study shows that entitlement to a pension is one of the major factors in preventing poverty among the elderly. The poverty rate among households in which at least one household member is entitled to a pension stands at only about 2 percent over the period in the last two decades. In contrast, in households with elderly members who have no pension income at all, the poverty rates are relatively high.

The drop in the poverty rate among households of long-time Israelis apparently reflects the growing percentage of elderly who accumulated pensions during their work life. As can be seen in the second figure, about two-thirds of all the elderly in the long-time Israeli Jewish population enjoy a pension as a portion of their household income. In contrast, only 20 percent of elderly FSU immigrants and less than 15 percent of elderly Arab Israelis reside in households with income that includes some form of pension payments. Among the immigrants, there is a rise in the rate of entitlement to pension payments that parallels their length of time in Israel and a corresponding decrease in the poverty rate.

Economic elderly figure 2 eng

The study’s conclusion on this subject is that without income from a pension it is very difficult for the elderly to live at a reasonable standard of comfort, further supporting the significance for future generations of the implementation of the Compulsory Pension Savings Law (2008). Special attention should be paid to the population groups – mainly Arab Israelis and to some extent elderly FSU immigrants – in which many members do not benefit from this added income.

One of the ways to contend with poverty and economic deprivation among the elderly, as well as with various physical and social difficulties, is joint living arrangements of the elderly with their extended family members of working age. There is a question as to whether such living arrangements can be viewed specifically as a strategy employed by families to cope with the hardships of poverty.

From a comparison of the rate of poor households in the various groups as measured by disposable income (i.e., after taxes and transfer payments from the government are taken into account), it emerges that in extended families headed by a working-age member, the rate of poor households is significantly lower than among households headed by an elderly person. As the third figure shows, this picture of differences in the poverty rates according to living arrangements has remained consistent in all the groups. Among the long-time residents, the rate of poor households headed by an elderly person is 13 percent, in comparison to a rate of 8 percent among households in which elderly reside, but which are headed by a working-age individual. Among FSU immigrants, the corresponding poverty rates are 21 percent as opposed to 5 percent, respectively, and among Arab Israelis, the rates are 68 percent and 40 percent, respectively.

Economic elderly figure 3 eng

These findings indicate that extended family living arrangements contribute substantially to improving the living conditions of the elderly, especially among the more economically vulnerable groups – as in the case of Arab Israelis and immigrants, who have not accumulated any real income from pension savings. This conclusion holds even when taking into account the fact that, among these groups, a large portion of the households headed by younger persons in which elderly reside are not necessarily well-off. Furthermore, the extended family living arrangement contributes to improving the standard of living not only of the elderly individual, but of the younger family members as well, due to the addition of a pension and state transfer allowances to the family income. Therefore, this type of living arrangement can be seen as a strategy for avoiding poverty for all the family members, younger and older alike.

Poverty Within the Elderly Population in Israel

While there has been an increase in poverty among the general population, the findings point to a decline in poverty rates among the elderly over time. These lower poverty rates relative to the younger population are achieved primarily through the National Insurance Institute old-age benefits that constitute a safety net for many people, as well as through income from retirement pensions. In practice, poverty rates among those entitled to pensions are extremely low. When the elderly population is broken down into three groups, long-term residents, immigrants from the former Soviet Union and Arab Israelis, poverty rates were found to be higher among the two groups with low pension entitlement – immigrants and Arab Israelis. One way that some of the elderly deal with poverty and hardship is to live with younger, working family members. Such living arrangements are especially typical among Arab Israelis and Russian immigrants, granting them a higher economic standing than they would have living on their own and helping them avoid poverty.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2014, Dan Ben-David (editor).

Welfare Budgets for Israel’s Elderly Population

The review points to an increase in the allowances provided by the National Insurance Institute and the success of these benefits in distancing the elderly from the poverty line. Yet, the level of transfer allowances has deteriorated over time in relation to the rise in the standard of living in the economy. Along with the allowances, many services are provided for the elderly, some of which serve a large portion of the elderly population (i.e., long-term care benefits), while others, such as assistance with housing, are intended for more specific groups. The dispersion of budgets and services intended for the elderly among different government ministries adversely affects the ability to follow up on the implementation of funding, leads to wasted resources and causes incomplete utilization of benefits by the intended beneficiaries of the allowances and services.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2014, Dan Ben-David (editor).

Patterns of Expenditure on Food in Israel

This chapter attempts to define the normative per capita expenditure on food in Israel; the normative expenditure refers to one that is neither insufficient nor excessive. It also examines the composition of food expenditure by income levels in order to assess the possible consequences of that composition on nutrition. In this manner, the chapter aims to help formulate policies that could alleviate the distress of households that are unable to meet the normative expenditure. The findings indicate that the normative per capita expenditure on food in Israel – not including the costs of “dining out” and alcoholic beverages – is about NIS 600 monthly. Families in the lowest decile need an additional NIS 170 per capita per month to reach this amount, while families in the second lowest decile need about NIS 90 to reach it. Likewise, differences were found in the various foods that were avoided when necessary. As per person income declines, households tend to maintain their expenditures on meat and poultry, bread and baked goods, and vegetable oils at a relatively stable level, but tend to forgo eggs, milk and dairy products, and especially fruit and vegetables, even though they constitute the basis for a healthy Mediterranean diet.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2014, Dan Ben-David (editor).

Social Expenditure Tables

For the most recent fiscal year, original budget data is provided.The tables include expenditures on education, health, income maintenance, welfare (personal social services), housing, employment, and immigrant integration.

Back to Basics: Material Hardship in Israel

While this figure helps illuminate the extent of the poverty problem within Israel, what does it actually mean to live in poverty in terms of daily living conditions? In other words, how much material hardship do the poor experience on a regular basis and how does this hardship differ across income and population groups within society? In The State of the Nation Report 2013, Chair of the Taub Center Social Welfare Policy Program and Tel Aviv University Professor Haya Stier, along with Dr. Alisa Lewin, Taub Center Policy Fellow and Haifa University sociologist, have documented new findings on material hardship in Israel using data from the Central Bureau of Statistics’  2007 Social Survey.

While poverty rates are measured by an individual’s income relative to other individuals in a country, material hardship is a subjective measure based on one’s financial difficulties in several basic areas: paying bills and purchasing food, health services and housing. Previous studies have identified that families with a larger number of children, single mothers, the unemployed, and the lower-educated are more likely to suffer from material challenges. Furthermore, material hardship is not just problematic for those experiencing long-term poverty, but even those who find themselves temporarily or suddenly poor might experience material hardship.

Stier and Lewin’s study shows that Israelis across the income distribution are forced to forgo basic necessities for financial reasons. For example, 40 percent of Israelis forgo dental care and 35 percent do not adequately heat or cool their homes due to the cost. These sacrifices are much more evident in the bottom half of the income distribution. The first figure shows the share of the population forgoing basic needs (food, heating or cooling, telephone or electricity
services) and medical needs (medical care, drugs, dental care) by income quartile. A large share of individuals in the bottom quarter of the income  distribution regularly experience material hardship, with almost half of them (44 percent) limiting food expenses, two-thirds (64 percent) bypassing heating or cooling, and one-third (31 percent) limiting telephone or electricity use. Individuals in the second income quartile also forgo various basic needs in surprisingly high numbers, with nearly half limiting heating or cooling in their homes, and one-third limiting food consumption.

Eng Hardship Figure 1

Even with universal healthcare coverage in Israel, out-of-pocket and private spending is still required for various services. Among the lowest income  quartile, one-third bypassed medical treatment due to cost and 38 percent could not afford their medications. About a fifth of individuals in the second income quartile bypassed medical care and medications due to financial reasons. Among medical needs, dental care stands out in particular; because it is expensive and mostly privately financed, it is often neglected. Two-thirds of those in the bottom income quartile, and over half of those in the second income quartile did not seek needed dental care. In this case, even those in the top half of the income distribution are affected by the high cost, with a third of those in the third income quartile and 14 percent of those in the top income quartile going without some dental care.

There are certain groups in Israel that are particularly afflicted with poverty: 50 percent of Arab Israelis and 57 percent of Haredim (ultra-Orthodox Jews) live below the poverty line. However, poverty is not experienced the same way among people in these groups. Stier and Lewin investigated the extent of material hardship among individuals in the lowest income quartile, according to the following three groups: Arab Israelis, Haredim and non- Haredi Jews.

The results indicate that the poorest Arab Israelis experience significantly higher levels of material hardship than other low-income populations in Israel, across all areas studied. For example, while 18 percent of Haredim and one-quarter of non-Haredi Jews in the lowest 25 percent  income group had trouble paying for telephone and electricity, almost half of Arab Israelis did. Similarly, the poorest Arab Israelis were more likely (78 percent) to forgo heating or cooling their homes than were the lowest-income Haredim (55 percent) or non-Haredi Jews (56 percent). When it comes to medical care, the same phenomenon is observed. While over half of the poorest Arab Israelis did not purchase needed medications due to cost, only 21 percent of the
poorest Haredim bypassed medications.

Eng Hardship Figure 2
The difference between Arab Israelis and Haredim in terms of material hardship is particularly interesting because these groups share some similar characteristics: they are relatively young, with large families and low levels of employment. Stier and Lewin suggest that certain factors may contribute to the increased hardship experienced by low-income Arab Israelis. One key factor is that a larger share of Arab Israelis than Haredim grew up in a poor household. If the Haredim are the “new poor” compared to Arab Israelis, they may have more existing family resources to rely upon. Poor Haredim are more likely to feel that they have someone to count on in times of need than do poor Arab Israelis (93 percent versus 74 percent, respectively, expressed this
feeling). Haredim are also more likely to feel they can rely on their relatives and friends if they need financial assistance. It is postulated that the strong networks of Haredim and their sense of obligation to support each other and their community may make them better able to withstand the effects of poverty.

This Taub Center study helps illuminate the relationship between income and material hardship in Israel. It demonstrates that economic challenges are not limited to the poor, with even people in the second income quartile suffering substantial amounts of material hardship.

That said, it is nonetheless important to add a cautionary note with regard to the interpretation of these findings. One of the basic tenets in economics is the need for individuals to decide what to purchase and what to do without in view of the budget constraints faced by nearly everyone. Hence, by definition, the existence of a budget constraint for all but the extremely wealthy implies that individuals have to make decisions about what to consume and what to forgo.
Therefore, the question of where simple budget constraint issues end and actual material hardship begins is a very subjective one.

And yet, the forgoing of spending on food, medical and dental care described here is substantial and has important policy implications. It highlights the importance of universal healthcare in the country, without which the frequency and implications of bypassing medical care would be even worse. In addition, the study identifies that poor Arab Israelis suffer from higher levels of material hardship than do other poor populations, and have fewer family
and communal resources to support them. These findings draw attention to the importance of considering material hardship in devising social welfare policies to address poverty and overall well-being in Israel.

Gaping Gaps: Income Inequality in Israel

A study by Taub Center Executive Director, Prof. Dan-Ben David, and Taub Center researcher Haim Bleikh in the State of the Nation Report 2013 unveiled the depth of challenges Israel faces with regards to inequality.

In comparison to 22 OECD countries, Israel is second only to the United States in terms of disposable income inequality – that is, after government taxes and transfers. Israel does not perform much better when it comes to market income inequality (income before government taxes and transfers), coming in fifth highest among the 22 countries.

There are certain population groups – namely the Haredim (ultra-Orthodox Jews) and Arab Israelis – that are particularly afflicted by poverty. In 2011, 70 percent of Haredim and 57 percent of Arab Israelis lived under the market income poverty line. Even in terms of disposable income, 57 percent of Haredim and 50 percent of Arab Israelis still live under the poverty line. The low incomes of these populations greatly contribute to Israel’s high inequality levels. However, Ben-David and Bleikh stress that income inequality is not due to the existence of extensive poverty in these populations alone. As shown in the first figure, even after exclusion of these two groups from the sample, income inequality among non-Haredi Jews in Israel is still greater than the inequality in all of the developed countries sampled except the U.S. and the U.K.

Eng Inequality Fig 1
Part of Israel’s challenge seems to be its relatively less effective government welfare system. For example, while the median OECD country is able to reduce inequality by 40 percent (as measured between market and disposable incomes) with taxes and welfare benefits, Israeli government involvement only reduces inequality by 25 percent. This is the second smallest reduction – following the United States – between market and disposable income inequality.

Much of the public focus in the inequality discourse, both within Israel and abroad, is on the very highest earners and high concentration of wealth at the top of the income distribution. Ben-David and Bleikh’s study shows, however, that in contrast to the conventional wisdom, this issue is not particularly unique in Israel. In terms of market income, Israel’s top 1 percentile earned 6.3 percent of total income in the country, which is a smaller share than in  fourteen of the 22 OECD countries in the sample. In comparison, the highest earners in top-ranked Norway and bottom-ranked Spain accounted for 9.8 percent and 4.3 percent of all market income, respectively. In terms of disposable income, Israel’s top earners account for 5.3 percent of all income in the country, placing the country eighth out of the 22 OECD countries. This is substantially less than top-ranked Norway (8.8 percent) while noticeably higher than bottom-ranked Luxembourg (3.4 percent). In short, the share of total incomes going to Israel’s very wealthiest is not exceptional by developed world standards and this, too, is an insufficient explanation for Israel’s particularly high degree of income inequality.

Eng Inequality Fig 2
A vivid example of how widespread income inequality is in Israel is provided by a look at the country’s middle class. Though there is no formal definition of the middle class, Ben-David and Bleikh examine income gaps among the non-wealthy and non-poor population. For example, the ratio of disposable income between an individual in the 90th percentile and one in the 50th percentile (i.e., the median) in Israel is 2.32. This ratio is higher in Israel than in all 22 OECD countries examined. Similarly, the ratio between an individual in the 50th percentile and one in the 10th percentile in Israel is 2.75. Here too, Israel tops the list in terms of the largest gap between the two.

Even when removing the extremes and focusing on what might be considered the lower and upper middle class (25th – 75th income percentile), the income gaps in Israel stand out. The income of an Israeli in the 75th percentile is 2.81 times that of an Israeli in the 25th percentile. This is a 12 percent larger ratio than that observed in the second-ranked country, the United States (at 2.50) and almost a quarter more than third-ranked Australia (at 2.28).

Eng Inequality Fig 3
Ben-David and Bleikh help shed light and expand on the issue of income inequality in Israel. Their study explains that such inequality is not limited to certain population segments, and it is not due to very high concentrations of wealth at the top. Instead, extensive inequality exists across the entire spectrum between the 10th and 90th percentiles of the income distribution, and even more so within the middle 50 percent (i.e., between the 25th and 75th percentiles) of the income distribution. Israel stands out relative to 22 other OECD countries with regards to the large gaps across the income distribution, and public attention and policies need to address this very real social and economic issue.

 

Family Structure and Well-Being Across Israel’s Diverse Population

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 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.

Pensions, Poverty, and the Elderly in Israel

Welfare and social security policies eliminate almost 90% of elderly poverty in the vast majority of countries examined, but have much less of an impact in Israel.  This brief examines this surprising dichotomy: why do Israel’s elderly have the second lowest poverty rates in terms of market income, but the highest poverty rates in terms of disposable income relative to the 21 OECD countries?

Material Hardship in Israel

The study, based on the Central Bureau of Statistics Social Survey data, reveals that a large number of Israelis experience economic difficulties in buying food, paying for basic needs, and obtaining medical care and prescribed drugs.  As was expected, those who suffer from poverty also suffer material hardship, although economic difficulties are not limited to the poor.  It was found that different groups of the poor are distinguished by the number of concessions they are forced to make.  Poor Arab Israelis consistently experience more severe material hardship than Haredim, since many of them also grew up in poverty and they have fewer support networks relative to Haredim.  These findings have important implications for social policies, especially due to the long-term consequences of economic hardship on health and the inter-generational transmission of poverty and they draw attention to the need to lessen material hardships among the poor.

This paper appears in the Center’s annual publication State of the Nation Report – Society, Economy and Policy 2013.

The Cost of Social Welfare: Israel in Comparative Perspective

Compared to the five Western European countries included in this research, Israel’s public social expenditure is low, and in most areas except health, it is similar to the United States.  The Israeli government spends relatively little in areas which have the potential for improving the long-term economic well-being of citizens: active labor market policies, housing and support for families with children.  The retirement income provided by the state through the social security system is much less generous than in Europe, but spending on public employee pensions is high.  The overall magnitude of public social expenditure in Israel fell during the 2000s, at a rate without parallel in the other countries.  Retrenchment has been marked in programs that mainly serve the economically vulnerable.  Private spending on health and pensions is rising, but remains far below the US and some European countries.

This paper appears in the Center’s annual publication State of the Nation Report – Society, Economy and Policy 2011-2012.

The Economic Background of the Social Protest of Summer 2011

 The centrality of this group in the protests may be explained by trends in their socioeconomic position. Analysis of the period between 1995 and 2010 shows that in the five years prior to the summer of 2011, the income of the typical working family headed by a young Israeli-born Jew, relative to all Israeli households, declined to unprecedented levels.  The main cause was wage erosion among young adults.  This decline also occurred among those with higher education, and their chances of attaining an income in the highest quintile fell substantially, especially among women.  Among young Arabs and ultra-Orthodox Jews, both individual wages and household income – already very low in earlier years – declined even further.  Of all the population groups, only Russian-speaking immigrants improved their relative income position.  Overall in the period studied, there was a decline in the value of those advantages that previously assisted young families in Israel to attain a middle-class standard of living: higher education, two working partners, residence in the Tel-Aviv area, and being an Israeli-born Jew.  At the same time, the rising cost of housing has made income erosion a bigger problem.  The proportion of young adults living in their parents’ homes increased, and the share of young home-owning families fell.

This paper appears in the Center’s annual publication State of the Nation Report – Society, Economy and Policy 2011-2012.

Behind Israel’s Middle Class Protest – Not Just a Gut Feeling

Spontaneous protests over economic conditions usually break out among disadvantaged populations, as occurred in Israel with the “Black Panther” riots at the beginning of the 1970s.  But the mass housing protests of the summer of 2011, which drew hundreds of thousands of participants, were led primarily by educated young people from middle class backgrounds.  While some have questioned whether the protestors really suffered from economic distress, a new study by Prof. Michael Shalev, outgoing Chair of the Taub Center Welfare Policy Program, documents that members of this group did indeed experience a substantial decline in their relative economic standing during the years leading up to the protest.

The research – using data from the annual Income Survey of Israel’s Central Bureau of Statistics – examines income distribution in Israel across population sectors over a 15-year period.  Shalev’s main finding is that young (25-34 year-old), educated Israeli-born Jews living in the center of the country – in the past, a fairly privileged group in terms of their economic standing – have, as a group, lost ground in relative terms, and in some cases even in absolute terms, over the last decade.

Figure 1 shows the decline in fairly sharp relief.  It focuses primarily on the group that was the backbone of the 2011 protests: young working families of Israeli-born non- ultra-Orthodox Jews.  (A “family” here refers to a couple with at least one child and at least one working spouse.)  The blue line in the figure shows the average real income of such families over the past fifteen years (i.e., in 2010 shekels, discounting inflation).  While incomes rose steadily from 1995 through 2005, they have since stagnated and even declined slightly.  The red line shows an even starker contrast – focusing on the relative income of this group in comparison with the entire population, which is divided into 100 equally sized percentiles (shown along the left vertical axis in red).  The position of the median young family – relative to the overall population – is depicted by the red line.  From 1995 through 2005, which could be termed as “the years of the young,” the income of the median young working family of Israeli-born non-Haredi Jews rose in comparison to the rest of Israeli society.  By 2005, this median young family rose to the 64th percentile of all Israeli families, and then came the downturn.  It continued fairly steadily, falling to the 54th percentile by 2010, wiping out all of the relative improvements since 1995, and then some, leaving these families earning barely more than the median Israeli family.

The 2011 protests in Israel were not centered in or on the development towns or the poor neighborhoods; the largest of the tent cities was set up in close proximity to Israel’s primary financial district.  Figure 2 suggests one possible explanation.

The figure shows nominal wage growth for individuals of different age groups from the relatively affluent 2005-2008 period to the post-crisis 2009-2010 period.  The Taub study shows that wage growth for virtually all cohorts failed to keep up with the cost of living, but for young employees (under the age of 35) with higher education living in Israel’s central region, things took a particular turn for the worse: they saw 1-2 percent declines in their nominal wages at a time when prices rose by 9 percent.

The Tel-Aviv protests focused mostly on housing.  The study finds that an increasing proportion of young adults continue to live at home with their parents, although this mainly reflects the tendency among all groups (except Haredim) to postpone marriage and children.  Figure 3 shows that home ownership has been declining among young, educated native-born non-Haredi Jews – the majority – who have established their own families.  While the share of families in the lowest income quintile who owned an apartment remained relatively unchanged over the past decade – just over half – the share of home-owners declined substantially for the middle and upper income quintiles in recent years.  In 2000-2004 almost 80 percent of young families in the top income quintile owned in apartment; by the end of the decade, in 2009-2010, this share declined to just over 60 percent.  However, it may be that the retreat of middle and upper income young families from home ownership is due not only to rising prices, but also to changing lifestyles that have drawn rising numbers of even the most affluent young couples into rented housing.

Young Arab and Haredi families, who ranked very low to begin with, also moved down the national income hierarchy.  On the opposite end of the spectrum, young, educated Israelis born in the former Soviet Union (FSU) have seen impressive economic advances in recent years.  Figure 4 displays the main reason for this: their rising individual earnings in the labor market.  The graph shows the hourly wage of median young earners from different population sectors with an academic education, measured in percentiles relative to the entire workforce.  It highlights two five-year periods, 1995-1999 and 2000-2004, with the subsequent six years broken down into the pre-crisis years 2005-2008 and the post-crisis years 2009-2010.  Both men and women from the FSU saw large, steady increases in their relative incomes during these years; these individuals overtook 17 to 20 percent of their fellow young working Israelis in a period of only sixteen years.  Shalev attributes these gains to the adjustment of early young immigrants to local conditions, and to the increasing numbers of young Russians who grew up and were educated in Israel.

By contrast, university graduates among Israeli-born Jews and Arabs lost ground.  The fact that non-Haredi, Israeli-born Jews have suffered declining relative personal and family incomes is indicative of the economic erosion that has affected even previously privileged sections of the younger generation.  Shalev points out that in the past young members of the Israeli-born group benefited from a number of advantages in entering the middle class: higher education, residence in Israel’s center, later marriage and more dual-earner couples.  Shalev finds that these “middle class advantages” continue to confer an income bonus compared to other Israelis, but that the relative amount of this bonus has eroded in recent years.

Israeli Single Mothers – Smaller in Number and Poorer in Income

Single mothers are among the most vulnerable members of society. These mothers have a significantly greater burden of household duties than others, with no one to share in the tasks of housework and childcare; they also have considerably fewer economic resources since the amount of economic support they receive from the father is often quite minimal. In “Welfare and Employment among Single Mothers,” the former Chair of the Taub Center’s Social Welfare Policy Program, Professor Haya Stier, a Tel-Aviv University sociologist, examines how such mothers in Israel fare compared to single mothers in other developed countries.

One aspect of the study is demographic. Stier reveals that while the number of single mothers in Israel is rising, their share of the total population is still low on an international basis. The first figure shows that 8.9 percent of mothers in Israel are single, lower than the rate in three-quarters of the countries studied and less than half the rate of England, Sweden, Ireland, and the US. Another finding regards the composition of single mothers in Israel. Stier finds that only 14 percent of Israeli single mothers have never married; only two countries in the sample had a lower rate.

Eng single mothers fig 1

The study then turns to the economic circumstances of the mothers and to government policy. In the 1990s, Israeli policy was considerably more supportive of single mothers than it is today; the 1992 Single Parent Families Law granted special eligibility conditions for income support to single mothers. This legislation substantially improved the economic status of families headed by single mothers. It was also accompanied by a certain decline in single mothers’ labor market participation rates, but this decrease mainly characterized women whose chances of success in the labor market were already low.

In the early 2000s, benefits were considerably reduced, while programs encouraging greater women’s participation in the labor force were implemented. Labor force participation of Israeli single mothers rose and is currently high; in 2004-2005 it was 67 percent, greatly exceeding the 59 percent rate for mothers with partners.

A narrow focus on employment, though, may ignore the constraints faced by single mothers seeking employment, including for example, the presence of young children in the home, childcare costs, a lack of quality, subsidized childcare options, limited labor market mobility, and the like. Research findings indicate that although the early-2000s policy changes did help raise single mothers’ labor force participation rates, they nevertheless failed to improve their household incomes in a significant manner.

Accordingly, Prof. Stier shows in the second figure that Israeli households headed by single mothers have a poverty rate of 35 percent, about twice the rate for households where the mother lives with a partner. The Taub Center study concludes that Israeli single-parent families are relatively poor, compared both with Israeli two-partner families and with single-parent families in other Western countries. One reason is a comparatively low level of public support: single mothers in Israel obtain about 25 percent of their income from transfer payments, a rate lower than that for most countries studied by Stier. Israel was found to be among the lower ranking countries (e.g., US, Canada and Ireland) in terms of the level of support that it offers to single mothers, and in terms of the resources that it devotes to raising these mothers out of poverty.

Eng single mothers fig 2

Stier notes that Israeli policy has been oriented towards increasing employment of single mothers, yet due to the meager level of government benefits, increased employment has not been reflected in a commensurate increase in income and standard of living. She recommends that a comprehensive policy should be implemented. Such a policy would include ensuring the availability of quality childcare so as to empower single mothers to genuinely improve their standard of living through paid work, as well as guaranteeing an adequate level of income for all single mothers.

A Work in Process or a Much Needed Change? Regulation in the Personal Welfare Services in Israel

The current study examines the regulatory patterns of the Ministry of Social Affairs and Social Services. The findings show that despite changes in service provision and despite continuous discussions on the question of supervision in the social services, there is still room for strengthening the regulatory policies of the Ministry.

Welfare and Employment Among Single Mothers: Israel from a Comparative Perspective

Women raising their children alone attract considerable public attention as a group, due primarily to their economic vulnerability. This comparison will focus on the demographic characteristics of single mothers, both between Israel and other countries and within each country relative to mothers in two-partner families; the study will also look at single mothers’ economic status and their degree of reliance on state assistance. The family-type comparison will facilitate an understanding of the difficulties and constraints faced by single-parent families. The inter-country comparison will shed light on the causes of this group’s poverty, the group’s economic vulnerability, and possible ways of improving its economic status.

This appears as a chapter in the Center’s annual publication State of the Nation Report – Society, Economy and Policy 2010.

Working and Poor

The poverty rate among Israel’s working population is high and trending upward; working families currently account for most of Israel’s poor. Poverty among the employed stems from a combination of economic factors, in particular: low wage jobs and a lack of opportunities for low-skilled workers; demographic/family characteristics such as large families and a low percentage of two earner families; and, political factors, particularly the level of support provided to large families and to workers with employment difficulties. These factors lead to exceptionally high poverty rates among the working Arab population, which is characterized by barriers to employment, low levels of female participation in the labor market, and large families.

This appears as a chapter in the Center’s annual publication State of the Nation Report – Society, Economy and Policy 2010.

The Working Poor

A phenomenon that has become increasingly common in the developed world and in Israel, in particular, is that of the working poor. Today in Israel, in the majority of poor households headed by a person of working age, that person is employed. Professor Haya Stier, Chair of the Taub Center’s Social Welfare Policy Program, undertook an in-depth study of this phenomenon. The study will appear in its entirety in the upcoming State of the Nation Report 2010.

Poverty in Israel is defined by having a household income of less than half the national median household income, adjusted for family size. It is easy to see that families without any earners are very vulnerable to poverty, unless they have significant sources of income other than from work. Government assistance programs are not generally designed to keep recipients out of poverty but rather to guarantee a very basic level of subsistence or to supplement families with low income from work.  But families with wage earners can also find themselves below the poverty line. This will happen if earnings are low, or if there are many household members.

In terms of net incomes – that is, after taxes and welfare payments – Israel has a very high poverty rate, among the highest in the developed world, and poverty rates have risen considerably since the beginning of the decade. The proportion of poor families headed by an employed person (among those headed by a person between the ages of 25 and 64) has also risen considerably, so that overall, the number of working poor has seen a particularly sharp rise. The first figure shows the total portion of poor households headed by a person at work. In Israel today, the majority of poor families in this age group fall into this category.

3_3_fig_4_eng

One reason for this trend is the deliberate government policy of encouraging poor people to work rather than to live off of public assistance. The objective of this policy was to help people escape poverty, but so far one effect has been to move many families from the idle poor to the working poor, without much change in their standard of living. It is likely that the inducements to work involved too much “stick” (reduction of benefits) and too little “carrot” (improving the compensation from the return to work) and as a result, the program may have saved money for the Treasury but has not made a major impact on poverty levels.

Using disaggregated data, Stier discovered that the rise in the working poor has been to a large extent concentrated among Arab Israelis. The second figure shows that among Jewish Israelis, the proportion of working poor is considerably lower, and virtually unchanged. But among Arab Israelis, the share of poor rose since 1995 from about 20 percent to about 40 percent.

3_3_fig_5_eng

Among the reasons Stier finds for the high rate of working poor among Arabs are:

  1. Low labor force participation rates for women. In those Arab households where the woman is employed, poverty rates are actually quite low. Thus, the gap in working poor between Jewish and Arab Israelis is due in large measure to the low proportion of two-earner couples among Arab Israelis.
  2. Deterioration in earnings. Arab men are concentrated in low-skill jobs which have faced sharply lower demand in recent years, and in addition have faced competition from cheaper foreign workers who, in many cases, are employed in virtually identical jobs. (See the March 2011 Bulletin which presents findings that foreign workers have been displacing Arab men.)
  3. Demographic differences. As a whole, the Arab population is younger and a larger proportion of household heads in this community are younger. Forty-two percent of Arab household heads are under 35 years old and thus before their peak earning years, compared to only thirty three percent of Jewish household heads. Furthermore, the Arab families have more children on average, and for a given household income, households with more children are poorer.
  4. Loss of child allowances. Since Arab households with a working head of household tend to have more children than comparable Jewish households, the marked decline in child allowances in recent years has had a disproportionate impact on Arab Israeli working poor.

The complete findings of Professor Stier also include a detailed study of poverty in families with a working single-parent. Her study will be published in full in the Taub Center State of the Nation Report 2010.

Making Fathers Care – Parental Leave for Fathers in Israel – Policy Recommendations

This program has become a failure. Through a survey of comparative analysis of the policy regarding such leave in other welfare states and through an analysis of other leave programs, this paper attempted to understand the reasons that the leave is not used by fathers and possible obstacles to its full use. Recommendations for improving the program in Israel are also made.

The Social Security System

This system focuses on providing allocations to varied population groups. Despite the growth in parts of the system’s components in the past years, the overall expenditure is lower than that of OECD countries and in terms of output it is lower than its average level a decade ago.

In some areas of social security, changes were made which increased accessibility to allowances and their overall level of support, especially with regard to the elderly and persons with disabilities, and, of late, also for families with children and the unemployed.

Conversely, the programs designed for people who live in poverty in Israel provide very limited assistance. The limited assistance by the social security system in various areas seriously restricts it ability to cope effectively with very high levels of disparity and poverty in Israeli society.

This paper appears in the Center’s annual publication State of the Nation Report – Society, Economy and Policy 2009.

Trends in Welfare Benefits and Services

In the area of welfare benefits and services, 2009 was a year of changing trends alongside the creation of a basis for more substantive changes that may affect the face of welfare services in years to come. These changes are described by John Gal in the Taub Center’s “The State of the Nation Report: Society, Economy and Policy 2009” and the main findings follow.

Welfare Benefits in Israel – The Broad Picture

Alongside gradual, persistent growth in the total amount of transfer payments since 1990, it is possible to discern certain trends. Child allowances, which were cut sharply from the beginning of the decade until 2008, began in 2009 to rise again and are continuing to rise in 2010. Even so, their share of total allowances has been gradually declining since 1990 (see figure). At that time, child allowances were 20% of total allowances; their share declined to 19% in 2000 and to 13% in 2010.

Welfare_New_fig_1
Expenditures on unemployment insurance grew by more than 20% in 2009 compared with 2008. The increase stemmed from an increase in the number of unemployed due to the economic crisis which began at the end of 2009, as well as an easing of some restrictions on entitlements. In 2010, as Israel emerges from its recession, a near 5% decline is anticipated in this component. Even so, as evidenced in the figure, the share of unemployment in total benefits in the recession year 2010 was only about half what it was in the boom year 2000.

One area which grew substantially in recent decades was general disability. In 2008, general disability benefits were NIS 2.3 billion (in 2008 prices). In 2010, the total amount of benefits is expected to reach NIS 10.3 billion (in 2008 prices). The share of disability benefits rose from 11% of total benefits in 1990 to 14% in 2000 and 20% in 2010.

Despite these increases, the assistance provided for individuals living below the poverty line by transfer allowance programs is limited.  This constraint reduces the government’s ability to deal effectively with high levels of income inequality and poverty in Israeli society and it reduces the likelihood of raising families with children above the poverty line.

Income Maintenance and the Supreme Court

The income maintenance program was intended to provide a safety net for those of working age who lack sufficient means for a minimum, dignified standard of living. The program was built around those who seek yet are unable to find paid work. Assistance was conditioned on efforts to enter the labor market. Recipients were required to report to the employment office or employment center at fixed intervals, to investigate employment opportunities, and to make an effort to accept employment opportunities.

With the institution of this program in 1982, a parallel program was established for Haredi (ultra-Orthodox) men who study in kollel (advanced Torah study academy). This program provides an allowance to Haredi men with at least three children and studying on a full-time basis in a recognized kollel. A relative low percentage of those studying receive this allowance: of the 63,000 kollel students in 2009, some 11,000 were eligible for the program. In 2000, this track was challenged in the Supreme Court on the grounds that it discriminated unfairly in favor of one group of students – kollel students – to the disadvantage of other students, particularly college students. The Supreme Court delayed a decision on this petition for ten years, in the hopes that the government would formulate an arrangement that would make a legal resolution unnecessary, but no such arrangement was reached. In June 2010, the Supreme Court ruled that the arrangement is illegal. The program will be able to continue only if the Knesset legislates a program that sets substantive criteria that justify the preference given to kollel students.

Welfare Services

Welfare services are provided to a wide variety of weakest populations. Assistance is in the form of programs as well as individual, family and group therapy and supervision and provision of community and institution-based services. These services are provided by municipal welfare departments, the Ministry of Social Affairs and Social Services, as well as through non-government organizations (NGOs and the business sector).

Government expenditure on welfare services has been rising continuously since the beginning of the decade. Judging by the proposed budgets for the next two years, this upward trend is expected to continue.

Services for the elderly are an important component of personal social services with the majority of the budget designated to funding long-term care services for the elderly and elder people with disabilities who continue to live in the community. Alongside these services, one of the important developments in the area of welfare services is “supportive communities for the elderly” located in geographic areas with high concentrations of elderly. Individuals are provided with “panic buttons,” assistance from a community coordinator, emergency medical services when needed, and participation in social activities.

The communities were developed following an initiative of JDC Israel’s “Eshel” organization during the years 1995-1996, and are operated with the aid of the Ministry of Social Affairs and Social Services. The following figure shows that there has been a rapid increase in the number of such communities over the past decade, from only 28 in 1998 to 220 in 2008. While 6,400 households took part in these communities at the beginning of the decade, the number neared 30,000 towards the decade’s end.

Welfare_fig_2

A policy move that may have major ramifications for the future of welfare services in Israel was the creation of a public commission under the auspices of the Minister of Social Affairs and Social Services, Isaac Herzog and chaired by Yekutiel Sabah. The recommendations of the reform commission constitute a comprehensive effort to re-examine the existing personal social services system, with all its characteristics, variations and limitations, while defining the outlines of a new policy suited to the coming years. Central to the recommendations is the preservation of the division of responsibilities and financing between the Ministry and the social services departments; support for a Social Services Law; and increased involvement in dealing with issues of poverty and unemployment in Israeli society. These recommendations are not accompanied by a detailed timetable. However, it is anticipated that their impact will be felt in the coming years, and they will lead to a social service system better suited to the needs of the service users and the abilities of the providers.

Unequal and Unsustainable

In 1979, roughly one-fourth of the families in Israel would have lived under the poverty line had they not received welfare assistance.  Today, approximately one-third of families would live below the poverty line were it not for welfare.  However, after welfare and taxes – that is, according to net incomes – about one-fifth of the families then and now live under the poverty line.

That, in a nutshell, summarizes what is missing in public debates in Israel and in other Western countries.  The primary focus in Israel and abroad is on the extent of poverty and income inequality in net incomes and it misses the underlying trends in gross incomes (i.e. before welfare and taxes) that slip under the public radar.
The problem is that the latter reflects the true extent of the issue: a large and growing share of the public is unable to cope in a modern and competitive economy.  Once the welfare and tax safety net is spread, it is possible to reduce these rates of poverty and inequality in terms of net incomes – and it is fortunate that such a net exists.

But a country that ignores what is happening in gross incomes must spread an ever larger social safety net – i.e. pay more and more money – dealing with the symptoms rather than dealing with the root causes of these problems and reducing them at their source.  As the figure indicates, preventing rates of poverty and inequality from rising in net incomes – while they continue their steady multi-decade climb in gross incomes – has translated into steadily rising welfare payments.  While per capita incomes in Israel (as reflected by GDP per capita) have doubled since 1970, welfare payments per capita rose almost six-fold by 2001.

This balloon burst with the massive wave of terrorism against Israeli civilians – which required substantial defense expenditures above and beyond the regular budgets – and the accompanying deep recession that took a deep bite out of tax income.  The result was a substantial drop in welfare payments, and a concomitant rise in poverty and inequality in net incomes – which finally began to reflect what had transpired behind the scenes for decades in gross incomes.
Though welfare budgets per person for 2009 and 2010 are once again expected to rise, and will presumably alleviate much of the rise in poverty and inequality in net incomes, not enough is being done to deal with the primary problems causing poverty and income inequality to be so high in the first place.

More to the point, if far-reaching comprehensive policies are not enacted soon to deal with these basic problems, then Israel will be faced with an intractable economic and social dilemma in the future.  On the one hand, it is simply not economically sustainable for welfare payments per capita to continue rising during the next four decades as they have over the past four decades.  On the other hand, with rates of poverty and inequality in Israel already among the highest in the Western world, non-treatment of the sources of these problems will mean that it will no longer be possible to hide the multi-decade poverty and inequality increases in gross incomes and prevent them from being reflected in net incomes.  As one of the other articles (The People of the Book and their Children’s Education) in this e-Bulletin shows, the country’s public policies indicate that the long-run implications of these issues have yet to be fully internalized.

The findings on long run trends in poverty and inequality, together with changes in welfare payments over time, will be part of the new macro section in the upcoming Taub Center report on the state of Israel’s society and economy.  The primary problems underlying these issues will be detailed in the other sections of the report as well – from the section on employment through to the sections on education and social welfare.

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 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).

 

 

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).

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 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.

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.

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.

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.

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.

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 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).

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).

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).

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).

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 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).

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).

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).

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).

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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.