Not for publication until May 28, 7:00
As the new government begins its work, the Taub Center for Social Policy Studies in Israel presents a series of goals and recommendations for the country in the socioeconomic sphere. The authors map out the challenges facing the new government in the areas of macroeconomics, the labor market, education, welfare, and health and give detailed, viable steps that can be taken to make serious improvements in these areas. The paper’s writers are experts in their fields who have based their work on their depth of knowledge in these areas, both in Israel and beyond.
Overall, there is a common theme: Israeli society shows a high degree of inequality and growing gaps among households, which might prove to be the greatest challenge facing Israeli society to date.
These recommendations carry a budgetary price tag, but they are worthwhile and necessary investments. Implementing these changes will serve to strengthen Israeli society for all its citizens.
For the full document, click here.
Among the recommendations:
Reducing poverty and social gaps
Raising the level of the income supplement for the needy elderly to bring their incomes to the poverty line. This income supplement is intended for elderly who have no income other than the regular old-age pension. This allocation is currently lower than the poverty-line income level, leaving a quarter of Israel’s elderly below the poverty line. As Prof. Johnny Gal of the Taub Center points out, the recommended increase in the supplement would not entail a major expenditure; it would, however, significantly ease the plight of Israel’s needy elderly.
Creating a system that encourages people to save money. Prof. Johnny Gal proposes adopting the American model of the “Child Development Account,” which ensures that young people growing up in poverty start their adult lives with a reasonable amount of capital – savings to which the government and their own families both contributed. The matching funds method is used to encourage families to save – for every amount the family deposits, the government adds a supplementary sum. The maternity grant that every Israeli mother receives could serve as the initial deposit for this kind of savings plan.
Expanding access to welfare services
Enact a social services law. The current Welfare Services Law (1958) does not provide an adequate framework for the social services system. It does not ensure the citizen’s right to social services, nor does it specify what sort of social services package Israeli citizens should be eligible for; in fact, its failure to set nationwide norms actually creates inequality between local authorities. Prof. Gal recommends that this law should be replaced by one that is consistent and clear, and that enables the system to operate in an efficient and transparent manner.
Establish citizen rights centers. At present, many needy families do not fully avail themselves of the services and allowances to which they are entitled in the social services, social security, housing and health care systems, due to lack of knowledge or bureaucratic obstacles. Making these entitlements accessible would greatly ease their plight. Prof. Gal proposes that citizen rights centers, staffed by social service professionals, be established alongside all social services agencies.
Necessary reforms in the healthcare system
Shorten waiting times for medical procedures in the public healthcare system. In order to shorten the lengthy waiting periods for medical procedures in Israel’s public healthcare system, Taub Center Senior Researcher and Health Policy Program Chair Prof. Dov Chernichovsky recommends that maximum wait times should be set for each type of treatment. Likewise, a transparent scheduling system should also be established for surgeries and imaging procedures, and measures should be taken to ensure optimal use of underutilized public infrastructures.
Reduce out-of-pocket expenditures on medical treatment. Approximately 40 percent of Israel’s health spending is privately funded, compared with just 24 percent on average in the OECD countries. Prof. Chernichovsky proposed that in order to reduce the necessity of private spending, the needs for which Israelis seek private insurance must be addressed. Firstly, there should be free physician choice in public hospitalization. Secondly, those aged 75 and over should be exempt from copayments for medications to treat chronic disease.
Increase government funding and transfer supplemental insurance payments to the public healthcare system. Taub Center senior researcher, Prof. Dov Chernichovsky suggested that funding for the public healthcare system should be expanded through two sources. First, government funding should be gradually and responsibly increased – subject to structural changes and improved performance – to 75 percent of total funding, a level that is similar to other countries with national health insurance. Second, the money from supplemental insurance sold by the health funds and bought by members – some NIS 3.5 billion per year – should be transferred from the private healthcare system to the public healthcare system.
Improve the negative income tax mechanism. Employment grants (negative income tax) have been proven to be effective in both closing gaps and encouraging employment. Nevertheless, their use is low in Israel relative to other countries in the world. It is possible to use these incentives to encourage work among weaker populations – including minorities, older adults and those with disabilities. Prof. Ayal Kimhi suggests that the size of the grant and the range of qualifying incomes should be increased, and the criteria and application process should be simplified – ideally through the enactment of an automatic mechanism.
Exempt low-wage workers from the pension savings obligation and improve their employment conditions. Low-wage earners are strapped financially and yet they are currently required to pay into occupational pension plans, like most Israeli workers. One problem that arises, though, is that especially low-wage workers are required to set aside money for a future goal that may be less important than their current needs. Prof. Kimhi suggests that the recommended policy change would exempt very low wage workers from the pension payment obligation, while still requiring employers to make contributions on their behalf. Another problem with the pension system is the high management fees paid mainly by small savers. This problem can be addressed by creating a special pension track for low-wage earners under full supervision of a public authority.
Narrowing educational gaps
Make use of substantial differential budgeting. Educational gaps in Israel are high relative to the developed world. The researchers, Prof. Yossi Shavit, Dr. Yariv Feniger and Nachum Blass advise that to address these gaps, educational institutions should be budgeted according to objective and uniform measures of need that take into consideration not only enrollment figures but also the socioeconomic status of the pupils served. Differential budgeting should ensure that every pupil receives all of the tools necessary to succeed, including small classes, adequate study-track offerings, appropriately-trained teachers, well-equipped classrooms, and teaching aids.
Limit tracking in the high schools. In Israel, it is customary to differentiate between academic and technical-vocational tracks at the high school level. Matriculation certification (bagrut) rates and the rates of those who continue to higher education are lower among technical-vocational track graduates than academic graduates of similar educational achievement and social backgrounds. Likewise, more pupils from the lower socioeconomic sectors study in technical-vocational tracks than do pupils from the higher classes. This means that tracking perpetuates class inequality in the school achievement area. Taub Center researchers advise that to avoid this, it is recommended that technical-vocational education be delayed until the post-secondary level and that high school tracking be curtailed.
Reduce educational inequality outside of the school setting. Israel currently has no education policy that addresses educational processes outside of school hours: learning-disability assessment, remedial instruction and tutoring (private instruction). These services depend almost entirely on the family’s ability to finance them privately. Taub Center researchers Prof. Yossi Shavit, Dr. Yariv Feniger and Nachum Blass recommend that a public body be created for the evaluation and management of learning disabilities, to ensure that all social groups have access to this service. Moreover, the Ministry of Education should allocate resources and work with local authorities to establish high-quality learning centers and expand existing centers, and offer eligible pupils tutoring at a subsidized rate.
Long-term demographic trends
Institute core studies in the Haredi school system and sever links between employment, yeshiva study and military service. About 10 percent of Israel’s working-age population is Haredi (ultra-Orthodox), and current demographic trends indicate that this sector’s population share is increasing rapidly and will represent a quarter of the total working-age population within four or five decades. The Haredi school curriculum, especially for boys, does not provide its graduates with skills that enable them to participate in the labor market. Dr. Moshe Hazan and Dr. Noam Gruber recommend the following solution: the immediate introduction of core studies into the Haredi education system as a condition for the system to receive state funding. In addition, the links between employment, yeshiva study and military service should be cut to integrate Haredi men more easily into the labor market.
Tax rental property income and transfer authority for housing, planning and the collection of construction and city property taxes to local authorities. There has been an extraordinary rise in housing costs over the last few years. Dr. Moshe Hazan and Dr. Noam Gruber recommend that in order to improve the situation in the short term, income from rental properties should be taxed at a level similar to income from other sources. In order to ensure long-term change, the marketing of land and the responsibility for developing infrastructures should be transferred to the relevant municipal authorities in the hopes of eliminating some of the bureaucracy that currently slows down building. To encourage local authorities to invest in housing (which is not particularly profitable for them), it is proposed to allow the authorities to set property taxes as well as the taxes for property development.
The full list of recommendations (for details in the complete document, click here):
The economy (Dr. Moshe Hazan and Dr. Noam Gruber) – institute core studies in the Haredi school system; sever links between employment, yeshiva study and military service; tax rental property income; transfer authority for housing, planning, and the levying of construction and city property taxes to local authorities; eliminate taxes and relax regulations on food product imports; establish a single, unified authority to regulate the natural gas market; re-evaluate the level of public expenditure; ease the bureaucratic burden on small businesses and set objectives for the tax collection and enforcement authority; encourage the use of automatically-generated income statements and electronic reporting mechanisms
Welfare (Prof. Johnny Gal)– increase the old-age supplement so that the income of needy elderly reaches the poverty line; raise income assurance allowance to bring recipients to only one-third below the poverty line level; improve coordination between the negative income tax mechanism and the income assurance allowance; create an initiative to encourage saving; enact a social services law; significantly increase the number of social workers in the public welfare system; establish citizen rights centers
Education (Prof. Yossi Shavit, Dr. Yariv Feniger and Nachum Blass)– improve the quality of instruction throughout the system, with particular emphasis on institutions that serve disadvantaged populations; make significant use of differential budgeting; limit tracking in the high schools; reduce educational inequality outside of the school setting; reduce class size; improve discipline
The labor market (Prof. Ayal Kimhi) – encourage employment among Haredim, Arab Israeli women and those with low education levels; move to an employment model that offers flexibility to employers and protection for employees; improve negative income tax; evaluate minimum wage hikes in greater depth, and improve labor law enforcement; exempt low-wage workers from the pension savings obligation and improve their employment conditions; make the retirement age more flexible
Healthcare (Prof. Dov Chernichovsky) – create a hospitalization authority; continue development and increase budgets for the mental health system; expand eligibility for dental care funding; regulate long-term care insurance; shorten waiting times for medical procedures in the public healthcare system; reduce out-of-pocket expenditures on medical treatment; increase the system’s manpower supply; increase government funding and transfer money from payments for health fund supplemental insurance to the public healthcare system
Publication of this Press Release and the material it is based on is under embargo until 7:00, May 28, 2015
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The Taub Center for Social Policy Studies in Israel is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.