The cuts in child allowances approved as part of the 2013-14 budget will take effect Tuesday. Consequently, allowances for all children born from June 2003 onward will fall to NIS 140 a month, down from NIS 175-263 (the old rate depended on how many children a family had). This means a family with two children under 10 will lose NIS 1,900 a year.
For children born before June 2003, the allowances will fall to NIS 140 for the first two children (down from NIS 175-263), NIS 172 for the third child (down from NIS 295), NIS 336 for the fourth child (down from NIS 460) and NIS 354 for the fifth child onward (down from NIS 389).
The National Insurance Institute opposed the cuts, warning that they will drive some 35,000 children into poverty and thereby increase the poverty rate among children from 36 to 40 percent.
Finance Minister Yair Lapid countered in a Facebook post that “Over the years, it’s been proven over and over that child allowances don’t extricate people from poverty, they only perpetuate poverty. There’s only one thing that enables families to leave the cycle of poverty – and that’s work. In families where both parents work, poverty falls below 5 percent.
“Of course we’ll help any needy family, and we’ve allocated hundreds of millions of shekels for nutrition security,” he added. But the nutrition security program doesn’t yet exist: The Social Affairs Ministry set up a committee to devise it, but the panel hasn’t submitted its conclusions.
Moreover, an NII report from 2011 found that the last cuts in child allowances, in 2003, actually increased poverty despite the fact that they also prompted many more people to find jobs. The employment rate indeed rose significantly in the following years, it said, but the poverty rate rose, too, because “the hit to income caused by the loss of allowances wasn’t sufficiently offset by income from work.”
At the beginning of the last decade, the report added, child allowances and other government stipends lifted about 30 percent of children above the poverty line. But by 2011, the rate had fallen to 15.1 percent.
Currently, Israel has the highest poverty rate in the OECD (19.9 percent in 2011), as well as the highest child poverty rate (35.6 percent in 2011). Moreover, its poverty rate has grown faster than that of any other OECD country in recent years.