Proposed Bill Would Abolish Benefit Cuts for Most Vulnerable Israelis Affected by Coronavirus

Tens of thousands had benefits cut despite the economic crisis, as Finance Ministry argued reversing the policy would impact motivation to work

Lee Yaron
Lee Yaron
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People queuing to enter a social security office in Jerusalem during the coronavirus outbreak, March 15, 2020.
People queuing to enter a social security office in Jerusalem during the coronavirus outbreak, March 15, 2020. Credit: Emil Salman
Lee Yaron
Lee Yaron

Some of Israel’s neediest citizens – mainly single mothers, disabled people and women aged 62 to 67 – will no longer have their unemployment benefits slashed after losing their jobs during the coronavirus crisis, the Labor and Social Affairs and Finance ministries announced on Tuesday.

The ministries agreed to present a bill to the Knesset next week to stop deducting thousands of shekels a month from the unemployment compensation of tens of thousands of people who receive monthly income subsidies. The Knesset is expected to approve the amendments next week.

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Following the publication in Haaretz of a number of reports on the cuts, former Labor, Social Affairs and Social Services Minister Ofir Akunis and National Insurance Institute Director-General Meir Shpigler proposed amendments to the Income Maintenance Law and National Insurance Institute Law.

Currently, these laws differentiate between income received from work and unemployment compensation, thereby automatically cutting the allowances and subsidies of those entitled to unemployment benefits. The draft legislation proposes recognizing unemployment compensation as income from work for a limited period of time, to prevent this from happening in the wake of the coronavirus crisis.

The treasury originally objected to the changes, arguing it would provide people with a “negative incentive to work.” People would become “allowance dependent” and have reduced motivation to seek work, treasury officials said, even though the amendments would only would waive those cuts from March through June of this year.

The deductions have affected those who receive disability allowance, food assitance and basic income maintenance, as well as  support for unpaid alimony, as well as women who are over the minimum retirement age of 62, but not yet 67.

The Finance Ministry also claimed there was no budgetary source to cover the cost, which it estimated at 335 million shekels ($95.2 million), particularly as a government budget has yet to be passed for this year. But this is a small fraction, less than half a percent, of the government budget allocated to deal with the coronavirus crisis, which is expected to reach 100 billion shekels.

The new Labor and Social Affairs Minister, Itzik Shmuli said the amounts already deducted from March through May will be returned, and there will no further deductions from June. The sum to be returned is estimated at 250 million shekels.

Incoming Labor Minister Itzik Shmuli (L) and his predecessor Ofir Akunis (R) at the ministerial changeover ceremony, May 18, 2020.Credit: Yossi Zamir / GPO

“We are unwilling to leave anyone behind,” he said. “This is an unprecedented achievement for the benefit of the weaker classes.” Shmuli thanked Finance Minister Yisrael Katz and Meir Shpigler for their support and cooperation. His predecessor, Ofir Akunis, also praised the decision: “This is a step in the right direction … It is right socially and morally, especially at this time.”

Vardit Damari-Madar, a lawyer who heads the Center for Clinical Legal Education at the Hebrew University in Jerusalem, and Ohad Amar, an attorney from the university’s legal clinic who represents people in the periphery, pushed for the government to change the law. “We are very happy about the correction of the injustice decreed on families living in poverty in disgraceful living conditions during the period of a widespread crisis,” they said. “We hope that we will succeed in leading to a permanent correction of the injustice of ‘duplicate allowances.’”

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