Among the many taxes we are about to suffer under the government's emergency economic plan, one important reform in the labor market stands out. The goal of this reform, proposed by Finance Minister Silvan Shalom as part of the emergency package, is to tackle the absurd reality in which we currently live - an economy that sustains a quarter of a million foreign workers, while supporting a quarter of a million unemployed citizens.
The current policy has created a situation in which there is no substantial difference between a working family earning more or less the average monthly salary, and a family living on state income support - without working at all.
The working family, earning approximately NIS 6,000 a month, pays income tax, national insurance and health tax, lowering its net income to some NIS 5,000 a month. By comparison, a family whose heads prefer not to work at all receives a monthly stipend from the state of approximately NIS 3,000, and in addition NIS 1,100 in rent subsidy, a 90 percent discount in pre-school fees, 35 percent discount on public transport, 70 percent discount on city rates, an exemption from television licensing fees, and other benefits and discounts that bring its effective income, in cash and goods, to approximately NIS 5,000 a month as well. So why work?
Indeed, the number of people living on income support has risen significantly in the last few years, reaching an incredible 150,000 people, in effect representing 150,000 households.
The proposed emergency economic package aims to change this reality. It states that people will only be eligible for income support from the age of 21 (for men), or 20 (for women), in other words after completing military service. This change will prevent Haredi yeshiva students and Arab citizens who do not serve in the army, from receiving income support allowances during those years.
The package further cancels all benefits and discounts granted to people living on income support in housing, city rates, public transport and television licensing fees - significantly reducing the temptation to live for extended periods without working.
The plan also proposes a review of the criteria for receiving unemployment benefits. If it is approved by the Knesset, people will only be able to claim unemployment from the age of 21 (for men) or 20 (for women) - the same as with income support.
But the biggest blow will come to those who have made themselves the "professional unemployed". The minimum work period required for unemployment benefits' eligibility will be extended. Currently, the state checks how many months a person worked in the year and a half preceding the application for unemployment. If s/he worked for at least six months (in other words, one third of the period), s/he is entitled to an unemployment allowance. Under the new terms, s/he will have to have worked for 12 of the 18 months to receive unemployment - making it much more difficult to live without working.
In order to make it even more difficult for those trying to cheat the system, another change is to be introduced: Under the new terms, the jobless will have to report to the Employment Service three times a week, instead of the current once, to be eligible for unemployment allowances. This move is expected to significantly reduce the number of impostors, working "under the table" while also collecting unemployment. A recent check of 386 people on unemployment, carried out by the Labor Ministry, revealed that 168 of them in fact worked in unlisted jobs, while at the same time reporting to the Employment Service once a week and receiving unemployment benefits from the state.
Israel's main problem is its low rate of participation in the work force, mainly among men aged 25-54. This is caused by a low participation rate among people with a low level of education and among the ultra-Orthodox. The Haredim have in fact turned not-working into an ideology. Two of every three Haredi men do not work. Among women, the group with the lowest participation rate is that of Arab women - only 30 percent of them work outside the home.
The low participation rate in the work force, compared to the rest of the western world, results in low productivity and low standard of living. It increases poverty and inequality - because when a family does not have even one breadwinner (two are preferable), it is destined to live in poverty, especially if it has many children.
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