Revealed: Israeli Ultra-Orthodox Job Centers Inflate Their Success Rates

Sources claim operators take credit and fees for people who don’t need their help and find jobs on their own, but centers deny any problems

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Ultra-Orthodox men at work are seen in a photo for illustrative purposes only.
Ultra-Orthodox men at work are seen in a photo for illustrative purposes only. Credit: JDC Israel

Ultra-Orthodox employment centers operating across Israel under a government program are aimed at encouraging more Haredim to enter the labor force, but a TheMarker investigation points to problematic practices by their operators.

One man who until recently worked at one of these employment centers operated by Lema’aseh for Mafteach said he went into a local store and registered the new employees in the program, even though none of them participated in the center’s activities.

Nevertheless, they would be entitled to 141 shekels ($40.90) for each month of work, or up to 1,700 shekels a year. The center that he worked for received a government grant worth three times that, even though it did nothing to find jobs for those registered.

Under the government program aimed at encouraging more Haredim to enter the labor force, designated ultra-Orthodox employment centers are supposed to require applicants to complete a form and undergo a personal interview. However, the pressure to meet the recruitment targets set by the government and by Lema’aseh led to problematic practices.

Sources who spoke to TheMarker on condition of anonymity about the centers operated by Lema’aseh and by Matara Tova Initiative spoke about constant pressure to recruit new registrants for the programs, to begin new classes and sign up new workplaces, even if it meant retroactively registering workers who were already employed.

At first glance, the pressure being exerted seems legitimate. The government is determined to lure more adults from the ultra-Orthodox community, where workforce participation is very low, into the labor force in order to reduce poverty in the Haredi and boost economic growth. But the stories of Moshe and others raise questions about whether the goal was being met.

“As a Haredi Jew I couldn’t be in a place that is stealing from the government,” said a former official at Lema’aseh.

In 2010 the Israeli government set as a target to have 63% of adult Haredi men working within a decade. The deadline has arrived, but in the fourth quarter of 2019 the rate was just 55.8%.

To reach its target, the government set up through JDC-Tevet a nationwide network of ultra-Orthodox employment centers. Since 2016, they have been operated by two private companies: Lema’aseh, run by Femi Premium, the Maof Human Resources Group and Menucha Gelbard; and Matara Tova Initiative, operated by the employment services firm Pilat and the ITWorks nonprofit organization. Both companies were formed for the purpose of operating the employment centers.

Gov’t-funded placement services

Sources who spoke to TheMarker said the two projects effectively operate as government-funded personnel agencies. They implied that they do little to encourage unemployed Haredim to enter the labor market. For their part, the companies categorically deny the allegations and point to instances where they have placed new workers.

“Usually we working with a person who had no experience in the world of work, and our job was to guide him through the process,” said one former employee of Matara Tova. “Today, a person like that has no resources. No one has any interest in taking care of him, because it involves a long and complicated process.

“We have just one interest today, to take a person who’s ‘green’ but employable and simply find him a job, rather than dealing with a person who needs workshops and long-term assistance. The bottom line in every internal discussion we had ... is how will it bring in money,” the former employee said.

Under a draft agreement between the government and Lema’aseh and Matara Tova, the companies receive a payment of 236 shekels for every registrant beyond a specified quota. For everyone who registered for one of their courses they get 944 shekels after the registrant completes one semester. For each registrant who is placed in a paying job, the companies receive 220 shekels a month for up to a year. If they place someone in a job that pays more than 7,500 shekels a month, the monthly payment rises to 452 shekels.

Under JDC-Tevet, the budgets of the centers were fixed in advance and transparent. They cost the state about 10 million shekels annually, with JDC-Tevet adding in another 3 million. But under private control, according to most of the individuals who spoke to TheMarker, the focus of the centers had changed to increasing revenues by constantly adding new registrants.

One former Lema’aseh employee said the system was called “the funnel,” the idea being that of a big database of names gathered by the company, some of the individuals would find a job, for which the center could take credit.

“They said, ‘First you register them, so you have lots of names. Now, you follow them and the minute they get a job, fantastic, they bring you pay slips,’” he explained.

“We ceased do any professional work and were constantly telephoning the names in our database to see whether they had found work,” said a former Matara Tova staff member. “Most of them would only cooperate with us when they expected to receive a grant.”

The preference was for Haredim who were already in the labor market, rather than those trying to get into it. Those who had begun working a month or two earlier could be back-registered into the database and everyone would get a government grant, he said. Alternatively, the center could apply for a grant for a registrant who had done nothing more than to change jobs.

According to figures shown to TheMarker, every Haredi man placed in a job receives a grant of 1,692 shekels in two parts – the first, after submitting four monthly pay stubs, and the second after one year at a workplace. The centers receive payments for their direct role in finding him employment and/or their indirect role in improving his employment credentials.

Problematic reporting

The payments are made to the centers, which in turn pass on the money due to the registrant, reporting their totals quarterly to the quarterly to the Labor, Social Affairs and Social Services Ministry.

Although it audits the reports and conducts spot checks, the government is aware of the problems the system creates. “There’s no single report – no single payment claim – that is paid out automatically,” said one ministry official, who asked not to be named.

The centers are allocated operating budgets of about 850,000 shekels a quarter for personnel, marketing, rent and other expenses. They are also allocated an additional 1 million shekels (Lema’aseh) and 950,000 (Matara Tova) per quarter. Of these amounts, 60% is supposed to go toward classes in core subjects such as math and English that most Haredi men did not study adequately in school. The rest goes toward job-hunting and -keeping skills, job testing and other classes.

But there are ways of providing these services cheaply. “I can dress up a course that isn’t mine,” said one former employee of a Matara Tova center. “For instance, I say I’m starting an English course for a group that was in any case going to take one somewhere else, and register it as my group.”

Another former employee describes a different system for inflating the center’s activities. “Sometimes I would find a job opening, advertise in the newspaper and 50 people would come to me. I would registered all of them as participating in the center because they came in response to my ad. In reality, they don’t know anything about the center. They never sat with an employment advocate. When will they remember me? When they get a job, they’ll call me to get the grant.”

Not surprisingly, Labor Ministry data show a sharp increase in the number of applicants to the centers and those receiving services.

The fact that two private-sector organizations are operating the centers is an accident. JDC-Tevet was supposed to turn over the centers to the government eventually, but after a plan to set up two additional centers under Femi Premium and Pilat was canceled, the two were awarded the centers without competitive bidding, as compensation.

“When the companies got started they naturally acted like businesses, and you can understand that,” said a source who was involved in the transition process. “They wanted to add names as quickly as possible and therefore approached people from whom they could get results fast, not people who would take a year’s investment just to get them ready for the workforce,” he said.

Success rate

In response, the Labor Ministry points to the rising number of ultra-Orthodox men in the Israeli labor force over the last decade and said the examples of abuse were exceptions to the rule.

“According to ministry data, since the end of the JDC-Tevet’s experimental program and its move to the government through the ministry, the program’s success metrics, including participant satisfaction, have improved,” it said.

Lema’aseh said that its mandate was conducted “honestly, consistently and as required by our contract with the Economy Ministry, under the strict auditing by an outside company that works for the firm and has full access to all information systems.”

It said it had conducted two audits since it was first alerted by TheMarker to its planned story and uncovered no problems. Femi Premium similarly denied any problems.

Matara Tova defended its operations, saying in a statement: “We make great efforts to identify relevant employers to hire ultra-Orthodox workers, with full support and in accordance with the provisions of the supervising ministry. We conduct internal and external audits. As to the cases cited in the article, the allegations are unknown to us.”

Pilat said that given all the controls Matara Tova operates under, the practices cited by TheMarker could not have happened.

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