Israel’s Social Welfare System After the COVID-19 Crisis: An Overview

Executive Summary

During the pandemic, social expenditure in Israel hit a high of more than 20% of GDP. In 2021, it was still higher than it had been prior to the crisis, although since then, it has lessened considerably, primarily in the budget areas of social security and housing. Developments in social policy of the last year testify to advances in those areas concerning people with disabilities and the elderly, although due to recent trends to lower social expenditure, fears of a rise in poverty rates and social inequality in Israel are growing. Taub Center researchers Prof. John Gal, Shavit Madhala, and Ori Oberman surveyed the welfare system and its functioning after the COVID crisis, and their findings show that certain parts of the welfare system have improved though problems continue to plague it.

Social expenditure in Israel

In 2021, Israel’s social expenditure was NIS 297 billion, 59% of total government expenditure (not including debt repayment). Social security expenditure, which is a central tool in dealing with the economic crisis, decreased in 2021 by approximately NIS 10 billion compared to the previous year, while expenditure on health, which in 2020 grew by about NIS 21 billion, continued to grow in 2021 by an additional NIS 2 billion.  Expenditure on social welfare (which includes social services but not benefits) decreased by about NIS 2 billion relative to the previous year. Spending on housing also declined in 2021 by about NIS 1 billion relative to 2020 and totaled about NIS 4 billion.

Poverty and inequality in Israel are high in comparison to other welfare states

Poverty rates continue to be high and about one-fifth of the population live in poverty. Arab and Haredi families are at the most risk of living in poverty – with families from these two groups comprising 45% of those families living in poverty, almost double their share in the population. Haredi families are 7.4% of the population and make up 12.7% of the families in poverty, while Arab families are 32% of the families in poverty and their share of the population is only 17.4%.

A considerable growth in the number of elderly citizens eligible for welfare

In 2018, the number of those qualifying for welfare benefits was 176,000. In 2019, this number jumped to 197,000, and in 2020, this was more than 273,000. In mid-2022, the number of elderly welfare recipients rose to about 301,000 – a 71% increase since 2018.

Taub Center researchers attribute this primarily to the rise in the number of those receiving benefits following changes in the area of nursing benefits, including basing eligibility on medical documents and a telephone interview in place of a home visit. Another change was payment directly to the eligible individual instead of to the service provider.

Another significant change in the social security system in the past few years is an increase in the income assurance level for those receiving old-age benefits and survivor’s benefits due to low income. Data from the National Insurance Institute show that the amount of benefits paid out in the first half of 2022 were nearly 70% higher than those paid in the same time period of the previous year. This increase is not the result of a significant increase in the number of those eligible for the benefit rather from a rise in the amount of the benefit itself.

The Equal Rights for Persons with Disabilities Law

The law protecting the rights of persons with disabilities enacted in 2022 encompassed a dramatic change in relation to this population group, say the Taub Center researchers. They consider it “the most important piece of legislation in the area of welfare in 2022.” If it is implemented in full, the law will decrease considerably the number of persons with disabilities living in institutions outside of the community and serve to increase their autonomy. Individuals will be given a personal budget and the freedom to choose the services they consider appropriate to their personal development and their integration into society.