Social Policy Insider Sees Apathy From Netanyahu, Progress From Banks

Advocacy group Yedid is striving to increase the pay of lower-income groups, but deputy director Ron Melamed says not everyone in the government shares that concern.

Ron Melamed, deputy director for communication and social policy at Yedid.
Eyal Toueg

Ron Melamed, the deputy director for communication and social policy at advocacy group Yedid – the Association for Community Empowerment, thinks he has a friend at the treasury in Finance Minister Moshe Kahlon, but the says the government must do more. Prime Minister Benjamin Netanyahu gets his clients’ votes, he notes, but doesn’t deliver the goods, Melamed tells TheMarker.

“The topics that interest us are closing the social gaps by increasing the income of lower-income groups. Apparently that doesn’t interest him,” says Melamed, whose organization operates citizens’ rights centers and satellite offices around the country. The services of the organization, which was founded in 1997 and is based in Jerusalem, are provided by paid staff as well as volunteers.

We hear quite a bit about Yedid, but who are you exactly?

Ron Melamed: “First of all, we don’t hand out either money or food.”

So what do you do?

“Yedid is a combination emergency room and library. Put simply, we help people exercise their rights and solve financial problems.”

Like Livnat Poran, the widely advertised consulting firm that specializes in disability payments?

“Not exactly. We don’t deal with medical issues. In that area, we work in conjunction with the National Insurance Institute’s Guiding Hand organization.”

So you’re like Paamonim, which helps families in distress?

“Not that either. They deal with household financial management, whereas we view ourselves, among other things, as an agency that can reach agreements with banks and telecommunication companies in order to solve debts.”

What does that mean?

“We help our clients to repay their debts in a manner that doesn’t adversely affect their ability to sustain themselves. We fight in cases where we believe the interest rate to be usurious and the amounts awarded for legal expenses to be inconceivable. Last week, for example, we brought down a debtor’s debt to one of the banks from 180,000 shekels ($47,750) to 30,000 shekels, to be repaid in 10 installments. Now he feels good.”

Has the typical client changed over the 20 years since Yedid was established?

“When we started out, most of the applicants were new immigrants from Russia. They were very aware of their rights and they weren’t afraid to ask, either. But very slowly this changed, and today 20% of applicants are Arabs and immigrants from Ethiopia or their descendants. In recent years, 40% of applicants are lower-middle-class, families with a household income of between 7,000 and 13,000 shekels a month. They aren’t dependent on government benefits. They are families with at least one or two breadwinners and an income level that’s higher than we saw in the past.”

What brings them to you?

“They struggle with rising expenses and, above all, with high mortgage payments. Even people from higher-income groups are struggling with expenses more than in the past. We see more than a few employees in high-tech who had bought an apartment when they were bringing home around 20,000 shekels a month. Suddenly one of them isn’t working and their monthly income plummets while their mortgage payment remains at more than 5,000 shekels.”

But in high-tech, people usually find jobs pretty quickly.

“It takes them between four and eight months to find work. The banks give them a period of grace, extending the loan period, but there are people who still find themselves in distress. Like many Israelis, many of them don’t open every envelope the bank sends them. And then they get a letter from a law firm, and later on from the Bailiff’s Office.”

What do you do then?

“We can cope with cases like these. For example, we verify that the debt collection orders were issued in accordance with the law, that the amounts in the demands for payment are accurate, and that the conduct of the bank and its law firm was lawful. In principle, these are cases where we work a little harder to reach an arrangement. The idea is not to erase debts willy-nilly, but rather to help the family out of its distress. In rare cases, we ask the bank to forgive part of the loan.”

Give us an example.

“We have a family where the wife works in a government agency and the husband in a private organization, their combined take-home pay is 20,000 shekels a month – which is high. The problem is that a relative had cancer and they had to fund the treatment. They took out loans, and that’s when they got into trouble. After great effort on our part, we reached a settlement. When a family comes to us, we try to look not only at the specific reason they turned to us, but also at the broader picture. We check: Maybe they qualify for something from the state, such as negative income tax. Up to now, single mothers were eligible for a work grant for salaries of up to 6,400 shekels a month, and that ceiling has been raised to 11,000 shekels.”

Do you see a difference in the banks’ conduct over the past several years?

“I think there’s been some positive change in the past two years. For example, the eviction rate for nonpayment of mortgages fell by 95%. The banks issue eviction orders, but they realize it’s not worth it for them to carry them out.”

Why do you think that is? After all, the banks are commercial entities.

“An amendment to the Bailiff’s Law a few years ago requires them to provide alternative housing to evictees for 18 months. If the banks have to sell the apartment anyway, usually at a loss, and also to pay rent for 18 months, they generally prefer to relent. On top of that, you have to add the issue of their image. It doesn’t look good, so the bank tries to reach an agreement. I assume it also stems from their recognition that if they don’t change their attitude toward customers, especially to households, their profits will erode significantly. There’s no doubt that increasing the number of players in the credit market, as well as the various laws including the new Credit Data Law, also have an effect.”

What about the Bailiff’s Office?

“There’s no change there. A woman came to us. A debt of 12,000 shekels her husband incurred kept growing because of interest. As of three years ago, she paid 65,000 shekels. And when she went to check how much remained for her to pay, she was told she owed an additional 912,000 shekels.”

Are you serious?

“Yes, that the interest the Bailiff’s Office charges. In the end, we settled the case for 8,000 shekels. It’s the state’s responsibility to bring down the interest rates of the Bailiff’s Office.”

You said earlier that you’re an emergency room plus library, and we talked mainly about the emergency room.

“At the library, we give out information about rights – anything from simply translating a letter and explaining welfare payments, unemployment insurance, pensions, up to legal advice or representation in court. We conduct community activities such as vocational training to help the unemployed to return to the workforce. We have a project, which began in Dimona, to get single mothers into the labor market. We handle around 25,000 cases every year, centering around four subjects: debts and financial difficulties – in other words, the Bailiff’s Office, the banks and telecommunication companies; housing issues, including public housing, mortgages and rentals; National Insurance Institute rights; and workers’ rights.”

Are the politicians more sensitive to socioeconomic issues now than in the past?

“Yes. The past two administrations were much stronger in this area. For example, from 2004 until 2013, no government wanted to address the cuts to benefits for single mothers that were imposed by the government of Ariel Sharon back in 2002, even though all the government studies showed that they are the most deprived group. [Former Finance Minister] Yair Lapid and [current Finance Minister] Moshe Kahlon decided to do something about it. The big problem is the absence of governability. If you started but didn’t complete a policy change in one government, in the next one you’ll have to start the process from scratch.”

Which of the two was a more receptive finance minister?

“Kahlon is a good finance minister, but Lapid was also receptive. Kahlon appointed Inbar Yehezkeli Blilious, who was his adviser when he was social affairs minister, to be his adviser for social affairs, welfare and health – and that was an important move, the first of its kind. A month ago, Kahlon sat down with MK Merav Ben Ari, from his own Kulanu party, and allocated 30 million shekels for the care of young people who are homeless. Kahlon told me that significant amounts of money are available for things that are truly necessary. I hope that remark will also have an effect on the clerks in the treasury.”

You don’t like the Finance Ministry clerks?

“I don’t agree with them on everything, but in the current government I find them easy to work with.”

How do you see the esprit de corps that emanates from the Prime Minister’s Office?

“In 2009, when Prime Minister Benjamin Netanyahu tried to push through his ‘balcony reform,’ aimed at cutting red tape for minor home renovations, he invited representatives from social service organizations and appointed teams to work on the issue. I was also invited to his office in the Defense Ministry. In the same period, he met with business leaders in a luxury hotel in Tel Aviv. Three months later, I wrote that Netanyahu deceived us: First, when he used the social service organizations to burnish his public image, and again when he promised to be more open to people’s needs. Maybe social issues aren’t on his agenda. The topics that interest us are closing the social gaps by increasing the income of lower-income groups. Apparently that doesn’t interest him.”

It interests his voters.

“That’s the big problem. A large part of the people who turn to us are Netanyahu voters, who vote for him despite his positions on social issues. I think he counts on their not having another leader. I don’t know how to deal with it. The change must be deeper, it has to go all the way. For now, I’m a believer in promoting policy, in taking one piece and going forward. I’m not asking for everything all at once. Maybe that’s why we’re successful, because we use the ‘salami method’ – one slice at a time. In the time of the Sharon government, we passed a hot-lunch program in public schools at a cost of 480 million shekels. We started a publicity campaign and then Sharon asked that a similar bill be drafted with a different method of funding. I later wrote, with the same MKs, the law creating the National Nutritional Security Council. My method is to speak with the MKs, and not necessarily to demonstrate. If you work methodically over time, it works.”