Israel's Middle-class to Bear Brunt of Anticipated Budget Cuts

Finance Minister Yair Lapid apparently intends to couple the pain with steps to 'equalize the burden' and crack down on ultra-Orthodox unemployment.

The average middle-class Israeli is expected to bear the brunt of the massive state budget cuts anticipated over the next three years, but treasury officials are hoping they’ll feel at least a little better knowing others will share some of the pain too.

Indeed, as Finance Minister Yair Lapid sets out to close the burgeoning state budget deficit by making painful spending cuts and raising taxes, it’s his very own “Mrs. Riki Cohen of Hadera” − a fictional archetype of the middle class made famous by Lapid in a recent, controversial Facebook post − who treasury officials say will pay the price.

But not to worry, Riki. Lapid and his ministry apparently intend to couple the pain with steps to level the playing field a bit − or “equalize the burden,” as the saying goes.

Among the Finance Ministry’s plans are policies intended to crack down on unemployment, with a particular eye toward bringing the ultra-Orthodox into the workforce. A large proportion of ultra-Orthodox men pursue religious studies and therefore do not work or serve in the army.

Under one new Finance Ministry policy, for example, child support allowances and other benefits, such as reduced municipal taxes and day care tuition, would be conditioned on gainful employment.

Lapid, chairman of the Yesh Atid party, is seeking to make it easier for Haredim to find work, in part by allocating funds to help ease their integration into the labor market.

Meanwhile, Lapid and other lawmakers have made an ambitious attempt to find an alternative to the Tal Law, which exempted the ultra-Orthodox from military service, and to reach a comprehensive agreement to help the Haredim integrate into the job market. Men 21 and over would be exempt from the draft, in order to get them into the labor marker immediately. Additional considerations in the plan address shorter terms of compulsory service and a re-examination of reserve duty.

Lapid is also expected to push a requirement forcing all schools within the ultra-Orthodox community to teach core subjects ‏(this is not currently the case‏), ultimately making Haredi high school graduates better suited to enter the workforce. 

Olivier Fitoussi