Israel's Treasury Seeking to Push ultra-Orthodox, Arab Into Workforce

Finance Ministry hopes to repeat its success in 2003 of cutting allowances, a cutback thought to be the main force behind a significant increase in workforce participation among Haredim, both men and women, and among Arab women.

Meirav Arlosoroff
Meirav Arlosoroff
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Meirav Arlosoroff
Meirav Arlosoroff

Israel's prospective new finance minister, Yair Lapid, will receive a wide-ranging economic reform agenda from treasury officials for allowances aimed at getting more Israelis into the workforce.

The plan should be to Lapid's liking because it focuses on increasing labor force participation of Haredi men and Arab women by tying allowances and other benefits to "extracting the maximum earning capacity" of each recipient.

Under the plan, only those who fully exploit their earning potential would be entitled to a range of government benefits, among them allowances. The treasury is now examining where these conditions can be applied and plans to lay out proposals for the new Finance minister and government.

The assumption is that a government without ultra-Orthodox parties provides a historic opportunity to fix Israel's allowances system and increase incentives for working by slashing payments.

The Finance Ministry hopes to repeat its success in 2003 of cutting allowances, a cutback thought to be the main force behind a significant increase in workforce participation among Haredim, both men and women, and among Arab women. The government in 2003 was led by Ariel Sharon and included the Shinui party headed by Tommy Lapid, Yair Lapid's father. But it didn't include any Haredi party, making possible a historic change to allowances.

The treasury is considering canceling distortions that made Haredim eligible for benefits. For example, the big discount on day care was meant for families with two working parents. Yeshiva students who don't work are considered to be working for the purpose of eligibility. Students in higher education are also eligible for the same benefit, but only for a limited period.

As far as is known, many allowances and benefits are now being given to Haredim without any requirement that they work. The discount on local tax given to families earning less than minimum wage is one. In fact, anyone working and making at least minimum wage loses entitlement to any discount on local tax.

The Trajtenberg Committee recommended that the exhaustion of earning potential be the condition for receiving benefits regarding cheap housing built by the Housing Ministry, but Housing Minister Ariel Atias torpedoed the move.

A jobs fair for Haredim in Haifa, December 20, 2011.Credit: Hagay Frid

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