Israel's Welfare Aid During Crisis Is Among Lowest in the West, Report Shows

Israel spends less than the average of other Western countries on social welfare, the survey finds. 'In countries with generous welfare systems it will be easier to support virus victims compared to the less generous'

Tel Aviv stock exchange during the coronavirus outbreak, March 9, 2020.
Eyal Toueg

An Israeli National Insurance Institute survey finds that the country will be providing less aid than most developed nations to citizens whose businesses and employment have been impacted by the coronavirus pandemic.

The study, a copy of which was obtained by Haaretz, shows government expenditure for public welfare tends to run 20.1% of GDP in most OECD countries. In Israel the investment is one of the lowest at 16%, putting it among the bottom 10 countries. France (31.2 percent), Belgium (28.9 percent), Finland (28.7 percent) and Italy (27.9 percent) top the list. Among the countries trailing Israel are Turkey (12.5 percent) and Mexico (7.5 percent).

According to Israel’s NII France will fully compensate the lost wages of anyone forced to cut back hours due to the pandemic. Belgium is waiving seniority requirements for unemployment benefits, and residents of regions in Italy paralyzed by the virus will receive a monthly stipend of 500 euros.

In France, the period of home isolation will be regarded as sick days, paid by the country’s national health service. Salaried as well as freelance workers will receive full income compensation for up to 20 days of quarantine. The state will make up 100 percent of the loss in pay for workers who have become “partially unemployed” due to COVID-19, compared to 80 percent in Switzerland.

The document written this past week by the NII says Israeli welfare spending in general is “less than average” and that this can be expected to affect aid provided in times of crisis. It says further that “in most European countries, the generosity of social welfare systems will help them cope with the pandemic.  In countries with generous welfare systems it will be easier to support virus victims compared to countries that are less generous.”

Britain announced a Coronavirus Job Retention Scheme, under which employers can apply for grants giving workers up to 2,500 pounds sterling a month ($2,900), in a bid to limit dismissals.

The United States will send all a check for $1,200 to taxpayers earning less than $75,000 a year, and a smaller amount to people who earn more, with an additional $500 per child.

The NII also examined how other countries are handling the matter of taxes. It found that “postponing the dates for tax payments could make it easier on the population but be a strain on the national budget and the social welfare systems.” Italy approved a postponement of all mandatory payments for March until the end of May. In France, all employers affected by the crisis can immediately postpone tax and insurance payments. Similar measures were taken in Japan and Sweden.

In Israel, the main way the state is assisting those who were laid off or put on unpaid leave is through unemployment payments. At the weekend, the unemployment rate in Israel hit 20.4 percent, with 690,000 people having registered for unemployment since the beginning of March – 90 percent of them having been put on unpaid leave. The total number of unemployed in Israel is 847,906.

Rami Garor, director of the Employment Service, said Thursday he estimates that 20 percent of workers who lost jobs during the crisis will not return to them. The government has said it may ease eligibility requirements for receiving unemployment insurance to providing it to those who have been six months on the job, down from the current policy of a minimum of 12 months.

The government is also expected to announce unemployment payments for self-employed workers and freelancers who had to stop working due to the pandemic.

Prof. John Gal, who heads the social welfare policy program at the Jerusalem-based Taub Center for Social Policy Studies in Israel, says these measures are insufficient. He says that since the numbers of unemployed are rising daily, the eligibility requirements for benefits should be changed and the minimum previous employment period canceled altogether.

“We should move to a process based on an independent declaration by the self-employed, so that even if it will be exploited by some, the good of the many who need unemployment payments will be realized and they will receive financial aid from the state,” he says. “Another option is to do something like the United States did by approving a financial grant for most of the adult population.”

Experts also say that unemployment benefits for people under 28, who make up a large proportion of the newly unemployed, are particularly low, based on an assumption that these people will more easily find new employment. Gal says the distinction being made between younger and older unemployed people is misguided. “The trend in other welfare states is to rely on the existing social security systems but to be flexible and expand them in order to provide a reasonable minimal income to anyone who cannot earn a livelihood,” he says.

Currently, unemployment benefit payments to Israelis under age 28 ranges from 31-60 percent of their average wage in the 18 months preceding their layoff. For people over 28 the payment ranges from 42-80 percent of their previous income. As a result, someone under 28 who earned a gross income of 8,000 shekels ($2,234) a month is eligible for benefits equal to 50 percent of their income, while someone over 28 who earned the same will receive 66 percent.

The government has also approved a plan to suspend mortgage payments for families in financial distress, to suspend loan repayments until the end of May for companies and small businesses affected by coronavirus related measures. Value Added Tax and income tax payments for the self-employed workers have also been postponed through the end of May

.