State Saves NIS 19 Billion Due to Cut in Child Allowances Since 2002

Number is based on National Insurance Institute figures and calculations made by Haaretz.

Shahar Ilan
Shahar Ilan
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Shahar Ilan
Shahar Ilan

The cut to child allowances since 2002 has saved the state NIS 19 billion, according to calculations made by Haaretz based on National Insurance Institute (NII) figures.

The equalization of allowances to all children in a family is almost complete, with 92.5 percent of Israel's children receiving between NIS 150 and NIS 180 per month regardless of their birth order. The rest of the children, who are still entitled to almost double that amount, are mainly from Bedouin or ultra-Orthodox communities.

Payment of child allowances of NIS 7.4 billion a year (NIS 8.2 billion according to 2007 prices) reached a peak in 2001 after the law initiated by MK Shmuel Halpert of the ultra-Orthodox party Agudat Yisrael went into effect.

This law mandated that the allowance for the fifth child and younger would be NIS 856 per month, five times the allowance for first and second children (NIS 171). The law came under fire for benefiting mainly the ultra-Orthodox, where large families are the norm, and for allowing ultra-Orthodox men to refrain from working.

The economic plans by finance ministers Silvan Shalom and Benjamin Netanyahu led to a gradual but drastic reduction in the allowances between 2002 and 2006. The cut went though mainly due to the support of the Shinui party.

First and second children now receive NIS 152 per month, the third child NIS 182 and the fourth and younger - NIS 337.

In 2001, a family of eight children that received an allowance of NIS 4,800 now receives between NIS 1,400 and 2,200.

Starting in 2006, the reductions stopped after the ultra-Orthodox Shas party joined the coalition.

The reform in child allowances also involved granting children born after June 1, 2003 the same sum regardless of what number child they are in the family. Thus out of 2.4 million children receiving allowances, only 177,000 children (7.5 percent) are still receiving NIS 337 because they are the fourth children or younger, born before the cutoff date.

The cuts have generated savings of NIS 19 billion, or an average of more than NIS 3 billion a year for the past six years.

In 2007, the NII paid NIS 4.8 billion in child allowances, savings of NIS 3.4 billion, or 41 percent, compared with 2001.

A senior Shas member has said that when it demands child allowances as a condition for joining the coalition, it means a return to the situation before the cuts.

But even in Shas it is unlikely that anyone believes they will be able to go back to the days before Halpert's law, but only to the period before and after it, when the fourth child and younger received about NIS 600 a month.

The cost of restoring the cuts to a level of NIS 600 a month for the fourth child and younger would be around NIS 1.5 billion. The cost of restoring the cuts for third children and younger to NIS 350 per child would be about NIS 800 million. In other words, the cost of going back to the situation before the Halpert law would be around NIS 2.3 billion.

Shas presents restoring the cuts as an effort on behalf of all of Israel's children. But a study by Michal Ophir of the NII published last year reveals that all communities where there are a high number of families of five children or more are Bedouin or ultra-Orthodox.

These include ultra-Orthodox Beitar Illit, where 42.5 percent of families have five or more children; the Bedouin town of Rahat, where the figure is 40.5 percent, the Arab community of Arara, with 47.4 percent of families in that category, and the ultra-Orthodox Modi'in Illit, with 34 percent of families with five or more children.

In outlying towns such as Or Yehuda, the figure is only 2.7 percent, in Sderot it is 4.5 percent and in Beit Shean, 5.1 percent. In Shoham, only 2 percent of families have five or more children. In the Arab urban population the figure is also relatively low - 14.4 percent.



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