The Privatization of Social Services in Israel: Considerations and Concerns
Author: Reuben Gronau Policy Research

Privatization of social services has become one of the most controversial issues in socioeconomic discourse in Israel.

 This chapter examines whether the statistical data supports this concern. The picture of the scope of social services that have been transferred is unclear: in the past decade there has been no significant change in the transfers from the government to the local authorities, the non-profits and the business sector, or in the relative contribution of public bodies involved in the provision of services. The numbers do not point to a trend of replacing internal activities with purchasing of services – something that would indicate a sharp transition from self-operation to outsourcing. Finally, employment data do not indicate a decline in the number of social service employees as a share of the total number of jobs in the Israeli economy (on the contrary, their share has increased). On the other hand, household contribution to the funding of services (especially health services) has increased, affecting equality. Israel’s government must make improvement in service quality an overarching objective of its policy. Consumers of social services are often unable to assess the quality of the services they receive, and are unable to select a service provider of their choice. Thus, the key to privatization of social services is the existence of appropriate quality control. Where this is not possible, services ought to remain government-run. Too often privatization fails to improve the quality of services and also distorts resource allocations.

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

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