Israel's Treasury Fights Move to Give Even Temporary Aid to Neediest Coronavirus Layoffs

Finance Ministry claims no budgetary source to cover the cost, estimated at $95 million, and argues jobless people would have reduced motivation to seek work

Lee Yaron
Lee Yaron
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A shopper and a vendor wear face masks at the Carmel market in Tel Aviv, May 7, 2020.
A shopper and a vendor wear face masks at the Carmel market in Tel Aviv, May 7, 2020.Credit: AMIR COHEN/ REUTERS
Lee Yaron
Lee Yaron

Warning that the move will undermine their work ethic and make them “dependent” on the state, the Finance Ministry is fighting legislation that would allow needy people who were fired or furloughed during the pandemic to get full unemployment insurance along with their income subsidies – just through the end of this month.

The Finance Ministry insists that these tens of thousands of people – mainly single mothers, disabled people and women aged 62 to 67 – should still have their state subsidies reduced, as usual, by the amount of unemployment insurance they collect.

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Many of these people had their monthly income subsidies cut by thousands of shekels after asking for unemployment payments, under the terms of the Income Maintenance Law. Amendments to the law being promoted by the Social Affairs and Labor Ministry and by the National Insurance Institute would waive those reductions from March through May.

But the treasury objects to the amendments because it says people will become “allowance dependent” and have reduced motivation to seek work. This, even though the legislation at issue is defined as a three-month measure.

In its official response to the memorandum on the legislation, the treasury said that giving double payments to the disabled and older women would increase “the incentive to leave the workforce because of the improved conditions of leaving compared to the current situation, and is likely to undermine employment.” Similarly, those who receive income maintenance and child support are likely to become “dependent” on the allowances they receive. “It’s possible that this will broaden the poverty trap, rather than reduce it,” the treasury said.

Shoppers wear face masks and walk around a fashion shopping center in Ashdod, as restrictions over the coronavirus disease ease around Israel, May 5, 2020.
Shoppers wear face masks and walk around a fashion shopping center in Ashdod, as restrictions over the coronavirus disease ease around Israel, May 5, 2020. Credit: Amir Cohen/REUTERS

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 since no budget has yet been passed for this year.

But this amount is a miniscule fraction of the government budget being allocated to deal with the coronavirus crisis, which is expected to reach 100 billion shekels.

Attorney Tali Nir, director of 121 – Engine for Social Change, which had approached several government ministries on this issue, was furious. “The inflexibility of the Finance Ministry is breaking records. The treasury is prepared to spend an additional 20 billion shekels on people and businesses who have [money] but not give 1 percent of that to those who don’t. It seems as if the treasury is totally disengaged from the enormous distress on the ground, of people who want to work but the government forbade them to do so. Their response sounds as if the coronavirus doesn’t exist and the government has no responsibility for the guidelines that led to the deterioration and collapse of the weakest unemployed.”

Vardit Damari-Madar, who heads the Center for Clinical Legal Education at Hebrew University, and Ohad Amar from the university’s clinic that represents people on the periphery, said in a joint statement, “The claim of incentive is totally illogical. Is it reasonable that a worker who lives in poverty would quit his job to get exactly the same amount of money for two and a half months?”

First day of school after the easing of coronavirus restrictions in Jerusalem, Israel, on May 3, 2020.
First day of school after the easing of coronavirus restrictions in Jerusalem, Israel, on May 3, 2020.Credit: Emil Salman

The office of Social Affairs Minister Ofir Akunis expressed regret over the treasury’s position, and said it could scuttle the whole move, which they planned to submit to the cabinet for approval at the next cabinet meeting.

Akunis told Haaretz, “In this emergency situation we need determined, clear and speedy moves to help Israeli residents. This legislative change is an expression of concern and of our top priority – the weaker strata and the older population. The Finance Ministry’s opposition to this desirable move will effectively block the only solution that can be provided to society’s weakest people. I call on the budget department’s people in the Finance Ministry to reconsider their position and help advance the bills.”

The Finance Ministry said in a statement that it “sees the double allowances as an issue with significant budgetary consequences – a step that could undermine the rate of [workforce] participation and the incentive for these populations to be part of the workforce. Nevertheless, the treasury and the National Insurance Institute will continue to discuss the matter.”

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