300,000 Israelis Left Jobless by Coronavirus Are Running Out of Benefits, Government Says

Finance Ministry officials are hesitant to extend unemployment payments, fearing that it will become too worthwhile for people to stay jobless

Sivan Klingbail
Avi Waksman
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Finance Minister Yisrael Katz at the Knesset in Jerusalem, May 24, 2020.
Finance Minister Yisrael Katz at the Knesset in Jerusalem, May 24, 2020.Credit: Ohad Zwigenberg
Sivan Klingbail
Avi Waksman

The first 50,000 people laid off amid the coronavirus crisis have already run out of unemployment benefits, and another 262,000 people will see their benefits end in June, Israel’s National Insurance Institute estimates.

This means that more than 300,000 people will have lost their income by the end of the month, presuming they can’t find work.

Meanwhile, current signs are that Israel’s labor market will be slow to recover.

Finance Minister Israel Katz and Prime Minister Benjamin Netanyahu are aware of the problem. On June 7 they noted that at the recommendation of professionals, unemployment pay would start being counted from April 19, the day the government started lifting the limitations imposed on the economy, and not March 15, the day the restrictions began, in a bid to extend the period of eligibility by 35 days. This proposal hasn’t yet been officially passed into law, but even if it is, it won’t help many Israelis who won’t be returning to their jobs.

Currently it’s unclear how many people are unemployed in Israel, and how many people on unpaid leave have returned to work. At the peak of the crisis, some 1.1 million people were out of work, or 27% of the workforce.

Even the Finance Ministry believes that at least 100,000 people left unemployed due to the crisis have already used up their benefits. Based on this estimate, by June at least 150,000 people will be both out of work and out of benefits.

If they remain out of work, they can apply for income supplements, which is relatively small compared to unemployment pay. There has been an increase in people who applied for unemployment who are now applying for income supplements. Not all the applicants may be eligible. Income supplement eligibility is calculated on the basis of total household income and takes into account whether the applicant owns assets, such as a car, property or savings. The supplements start at 1,761 shekels a month for an individual with no other property.

Meanwhile, Israel’s Finance Ministry has the goal of getting as many Israelis as possible back to work, and therefore it is offering a grant − paid to employers, not to employees − of up to 7,500 shekels for each worker taken back to his or her job.

However, Finance Ministry officials are hesitant to extend unemployment payments, fearing that it will become too worthwhile for people to stay jobless. Ministry officials report hearing stories of workplaces that sought to bring back employees on unpaid leave, only to be told that the employees preferred staying home until their unemployment pay ran out.

The Finance Ministry does not have any clear forecasts for how many people will be taken back to work thanks to the grant.

Labor and Welfare Minister Itzik Shmueli countered, “In a workforce with 21% unemployment, the problem isn’t workers’ lack of motivation to work, but a lack of jobs. We need to make sure jobs are available, particularly when the Finance Ministry and Bank of Israel are reporting that the economy is contracting,” he stated to TheMarker.

This is even more critical in the wake of concerns about a second wave of the coronavirus, he said. “Who will follow the instructions to limit business operations if we don’t give them a minimal safety net, so they have something to live on?” he stated.

Shmueli, along with National Insurance Institute chairman Meir Shpigler, said Monday that they intend to demand the government increase the period of unemployment eligibility through the end of August.

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