Public Spending on Social Welfare
Author: John Gal and Shavit Madhala-Brik Policy Research

This chapter examines trends in the budget allocated to social services in the past 15 years. Public expenditure on social services in Israel was about one-fifth of government expenditure in 2015 – standing at NIS 94 billion. Social security programs, most of which are operated by the National Insurance Institute, make up about 80% of the total expenditure.

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.