A bill aimed at improving the lot of single mothers by increasing the amount they can earn before they start losing National Insurance Institute benefits may not be as good for them as it seems, according to a document by the Knesset Research and Information Center.
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The Knesset Labor, Welfare and Health Committee is expected to approve on Tuesday for the final votes a bill sponsored by Social Affairs Minister Haim Katz that would reduce the rate at which NII income support and child support payments are offset from the salaries earned by single mothers, allowing them to earn more money before losing their benefits.
However, under this reform, these women would lose a different benefit they’d been entitled to: the work grant, popularly known as negative income tax. Under the reform, a single mother would not be able to get both NII payments and the negative income tax benefit, but would have to choose between them.
As a result, some families would find their total income lowered by between 300 shekels and 700 shekels ($78 to $182) a month, while others would see their income increased by very little, some 50 to 350 shekels a month, the research center found.
Although Katz had been saying the bill will cost the government 100 million shekels annually, it plans to fund the increased NII payments through the reduced negative income tax payments, which will save the government 95 million shekels. Thus the actual government outlay is only 5 million shekels.
“There is actually no incentive to go out to work or increase one’s hours,” explained Nicole Dahan of Hebrew University’s School of Social Work. “The state is giving with the left hand and taking with the right, and in the end everyone loses.”
According to the research center, parents would have to make complex calculations to figure out which would be better for them, NII benefits or the work grant.
Complicating matters is that NII income/child support is paid monthly, while the work grant is paid only once a year. As a result, many parents might choose the NII benefits even though they will ultimately get less money that way.
Social welfare groups are demanding that the NII’s child support benefit (paid in cases where the child’s father doesn’t pay child support) should not be counted as part of women’s NII benefits, which would allow mothers to earn more without losing benefits.