The Welfare System During a Period of Dramatic Political Change

Since the end of the COVID-19 crisis, political changes in Israel have significantly impacted the welfare sector, leading to notable developments and policy shifts. Researchers from the Taub Center, Professor John Gal, Shavit Ben-Porat (Madhala), and Adi Tarabeih, point to an increase in government spending, a significant decrease in the number of unemployment benefit recipients, and a simultaneous rise in the number of those receiving subsistence allowances. They also note a continuing shortage of social workers in social service departments, especially in areas with the greatest social distress.

Social expenditure

An analysis of social spending in 2022 reveals an expenditure of approximately NIS 298 billion, a decrease in real terms of about NIS 17 billion compared to the previous year. This continues the trend of reduced spending that began in 2020. A breakdown of the expenditure shows a decrease of about NIS 13 billion in social security spending and an increase of about NIS 1 billion in education spending. In the health sector, there was a reduction of about NIS 5 billion in spending, although it still reflects the increase required during the COVID-19 crisis. Social welfare spending in 2022 increased by about NIS 1 billion, but a significant portion of this increase is due to the expanded budget of the Ministry of Aliyah and Integration for integrating immigrants from Ukraine and Russia.

Although Israel’s social spending relative to GDP is low compared to other welfare states, the share of this spending in total government expenditure is relatively high, and it increased further in 2022: 61% of government spending was dedicated to social issues. A breakdown of social spending reveals that 26% of government expenditure was allocated to social security, 16% to health, 15% to education, and 3.9% to social welfare.

Social security

Spending on allowances provided by the National Insurance Institute decreased significantly, from about NIS 128 billion in 2021 to about NIS 113 billion in 2022. The main reduction was in unemployment insurance spending, which dropped from about NIS 20 billion in 2021 to about NIS 3.2 billion in 2022. This decrease reflects the dramatic reduction in the number of unemployed individuals and those on unpaid leave as the labor market returned to normal functioning after the pandemic.

Additionally, there was a decrease in spending on the income support program, intended for working-age individuals with particularly low income who struggle to integrate into the labor market or whose income from work is insufficient. In 2022, only 1.5% of social security spending was allocated to this safety net. The cumulative decline in the number of recipients of this allowance since 2015 stands at 39%. In other areas of the National Insurance Institute’s activity, however, spending increased, particularly in allowances intended for senior citizens and those with disabilities. For example, since 2015, there has been a 37% increase in the number of general disability pension recipients.

Unemployment insurance, general disability benefit, and income support

Income support and general disability allowances are both designed to assist those without income from work or with very low income, but the research shows a significant disparity in the generosity of the two programs. In August 2023, the average monthly allowance for income support recipients was NIS 2,226, while the average disability allowance was NIS 4,013 per month — a monthly gap of NIS 1,787.

Status of social workers

The shortage of social workers continues to concern the Knesset and the Ministry of Welfare and Social Affairs, mainly due to the difficulty in filling positions in social service departments at the local level. In 2022, the average staffing rate in these departments was 87%, meaning 786 positions were vacant. In 23 local authorities, a quarter or more of the positions were unfilled, particularly in areas with the greatest social distress, such as Beitar Illit, Jisr az-Zarqa, Kseife, Lakiya, Safed, and Rahat.

Local authorities’ participation in financing welfare services

Research conducted by the Taub Center in preparation for a conference on local authorities in Israel examined the issue of inequality in access to welfare services in 2021, focusing on the role of local authorities in financing welfare services and its implications for welfare inequality. The research showed that local authorities in the lowest socioeconomic cluster spent an average of NIS 4,596 per welfare service user per year, compared to an annual average of NIS 10,898 (more than twice as much) in local authorities in the highest cluster.

When broken down by population groups, the disparities are even more pronounced. The average annual expenditure on welfare services per recipient in Bedouin local authorities is only NIS 5,103, compared to NIS 13,148 in the most economically well-off cities.