“The War Against Poverty” – Where do things stand?

In 2014, the Committee to Fight Poverty in Israel (the Elalouf Committee) presented a detailed list of recommendations to cut poverty in Israel in half within a decade through policy in the areas of welfare, social security, employment, housing, health, and education.

In a study published in the State of the Nation 2016, Taub Center researchers Prof. John Gal and Shavit Madhala-Brik examined the implementation of this plan and found that while about half of the recommendations of the committee have been implemented, the major aims are still far from being fully realized.

Israel has the highest poverty rate in the OECD when looking at disposable income (i.e., income that is available for spending after taxes and transfer payments) and social gaps have grown substantially over the past few decades.

The Committee, headed by MK Eli Elalouf, was an initiative of the Minister of Social Affairs and Social Services, MK Meir Cohen, in 2013, to recommend ways of dealing with poverty and to strengthen equal opportunity in Israel. The goals of the committee were ambitious: to reduce poverty in Israel by about half, bringing the Israeli rate in line with the OECD average poverty rate of about 11%.

So far, the recommendations of the Committee have been implemented to varying degrees as detailed below, with a number of recommendations not implemented at all. Spending on implementation is slated to increase in 2017, primarily in the area of welfare and social security.

Welfare and Social Security: A number of recommendations have been implemented in this area, including adding 150 family social work positions and increasing the budget for distressed families. The government also increased income support for the elderly by amounts ranging from NIS 130 for individuals to NIS 540 for couples in 2016 (the budget has grown in 2017 and should continue to grow in 2018).

In January of 2017, the government began the roll-out of another committee recommendation: opening a long-term savings account (Child Development Account) for every Israeli child under the age of 18. The government puts a monthly sum of NIS 50 into each account, which can be matched by the child’s family.

An important recommendation that has not yet been implemented is increasing income support for those below the poverty line to the level suggested by the committee.

Employment: Since the committee issued its recommendations, legislation has expanded eligibility for work grants (negative income tax) for single-parent families, those with disabilities, and the self-employed.

Vocational training courses have been expanded as have employment programs for populations that have difficulties participating in the labor market and for people with disabilities. There was also an increase in publicly subsidized day care centers for children of working parents.

Housing: Rent subsidies increased by NIS 600-900 a month for those eligible to receive them. However, though the committee recommended that the eligibility requirements be extended so that more households could qualify for rent subsidies, this has not yet come to fruition. The government has increased the supply of public housing, but not enough to meet the demand, leaving many families still waiting for public housing.

The proposed “Equal Neighborhood” program to revitalize underprivileged neighborhoods through infrastructure, investment, and other community programming has thus far not been implemented.

Health: Public subsidies for dental care are in the process of being implemented for seniors over the age of 75 who also receive income support, as well as for children up until the age of 14 (in the coming years this will be expanded to cover children until the age of 18).

Health services for students, which had been privatized, were returned to the authority of the Ministry of Health for some districts of the country, following dissatisfaction with the service of private providers. However, the nurse/student ratio has not been improved.

Additional recommendations that are currently under consideration are establishing health promotion and prevention centers for the elderly and a reduction in the co-payment for medicines and medical services.

Education: In the realm of education, about NIS 100 million per year were added to the budget in order to add study hours in schools serving socioeconomically weak populations. On the other hand, the recommendation to invest in preschool education was not implemented.

Spending on implementing the recommendations has increased in 2017

The price tag of the Elalouf Committee’s recommendations stood at NIS 7.4 billion per year. Due to elections in 2015, the government put few of the recommendations into effect and added only NIS 434 million to the relevant budget areas in that year. In 2016, NIS 1.9 billion was added to the budget — about 26% of the additional sum recommended.

By the end of 2017, the additional expenditure is expected to reach NIS 4 billion – or about 54% of the recommended amount. The majority of the increase is being devoted to welfare and social security.

More specifically, the money is being used for the Child Development Account program, for work grants (negative income tax) and for an additional increase in the old age income supplements. These steps are an improvement in the implementation of the committee recommendations, though they still seem insufficient to attain its declared goal.

One of the main challenges to implementation stems from the fact that the government has not as of yet established a centralized authority for combatting poverty to more efficiently manage processes that are currently spread out among multiple government bodies.

Furthermore, due to budget constraints, the additional government expenditure in 2017 is still only about half of the expenditure addition recommended by the Elalouf Committee, which was NIS 7.4 billion annually.

As a result, the government did not implement some of the central recommendations of the committee, such as increasing income support for those living below the poverty line, and it allocated very limited resources to programs like work grants, vocational training, and the purchase of additional homes for public housing.