New NII director-general Esther Dominissini reassures the public that money has been put aside for those affected by the global financial crisis.
By RUTH EGLASHdominissi 248(photo credit: Ariel Jerozolimski)
Esther Dominissini, the new director-general of the National Insurance Institute, is surprisingly nice and down-to-earth for someone who heads perhaps the country's most bureaucratic and frustrating government office.
"I know what people say about the NII, but we deal with a difficult public, and no one ever publicizes the thank-you letters we receive," states the 50-something Kiryat Ono resident, who took over less than eight months ago. "Of course, I will never say that everything is perfect with our service. I know there are points that have to be fixed.
"The NII was set up in 1954 and since then a lot has changed in this country. The institute must evolve with it; we have to constantly check ourselves to see what the people want and how we can improve."
Of course, that is not always easy, acknowledges Dominissini, who can even recall her own brush with NII bureaucracy not that long ago.
"When I first started here, I was still working another job, and I did not understand why I received two requests for my national insurance [contribution] in less than one year," she recalls. "I went downstairs and opened my own file to discover that, sure enough, because I had two jobs, the payment had been split into two. When I asked the clerks why this had been done, they could not give me a clear answer, only that 'it had always been done like that.' They were doing twice the amount of work for the sole reason that it had always been that way. Since taking over, I now encourage my staff always to ask themselves why, and tell them that things, even if they've always been like that, can be changed."
WHILE SHE might still be familiarizing herself with some of the intricate practices of the NII, which is described on its English-language Web page as being the body that "guarantees weak populations and families who are in temporary or long-term difficulties with a financial basis for existence," it is clear that Dominissini, who previously headed the Employment Service for four years, is no stranger to economics or its impact on society.
During our one-hour interview, we talk at length about Israel's preparation for absorbing the effects of the current global economic crisis. Will the economy fall into a recession like so many other countries? Will unemployment, which recently dropped to its lowest in 24 years, continue on a positive decline? Are our pensions safeguarded against the crash? And does the NII have the resources to deal with large-scale poverty?
"From the current economic crisis, we can really see how small the world is today," observes Dominissini, who spent the majority of her career working for the police. "What happens in one country affects many other countries, and this is the first time that Israel could be facing a recession because of what is happening elsewhere.
"We are still not sure about what will take place here, but at the moment, Israel's economy is in better shape than it's been for some years. The main question for me is, if recession does hit us, how it will affect the workforce and, in turn, the NII, which is the social welfare safety net of the Israeli people."
Although the country is still not seeing huge rises in unemployment - figures released last week by the Employment Service show a slight increase of 0.8 percent in the number of unemployed during the past four months, and the Central Bureau of Statistics recently reported that the unemployment rate stood still in September at 5.9% - there are indicators that benefits enjoyed over the past five years could soon come to an end. Several large companies have already announced some layoffs and forced early retirements for employees.
"In September, we saw a rise of 6% in the number of people claiming unemployment," confirms Dominissini, adding, however, that "even if there is a rise in unemployment in the next few months, it will still be very low compared to what it was five years ago, when it was 11%.
"The NII has the tools and resources to support the social-services network in difficult times. Of course, we might need to create some additional tools to deal with such a difficult situation, but we do have a reserve budget to make sure that everyone is supported."
According to Dominissini, the institute has some NIS 128 billion set aside to support those who lose their jobs in the near future. (Last month, the Employment Service warned that an estimated 3,600 people could lose their jobs by the end of the year, with an additional wave of layoffs expected in 2009.)
"We have conducted our own research, which suggests we could see a rise in unemployment by the middle of 2009, even reaching as high as 6.5% or 7%," says Dominissini. "But that will still not bring us to where we were in 2003/4.
"Of course, people always ask why, if we have money saved up, do we not increase pensions or distribute more child allotments? Our job is to make sure that this reserve is always there, so that the citizens of Israel are assured they will be cared for during times of need."
TALKING ABOUT difficult times brings Dominissini to the issue of pensions and providing for the country's growing elderly population.
A study released last year by Mashav - a research body run by the Joint Distribution Committee's Brookdale Institute and JDC-Eshel, the association for planning and development of services for the elderly - indicates that the elderly population could reach 13% by 2025. Currently, those in retirement make up 10% of the population. Experts from the Organization of Economic Cooperation and Development have warned that a lack of long-term planning for pensions could lead Israel into an economic decline.
Dominissini says she recognizes this problem, but is hopeful that a recent law demanding all employers invest in private pension programs for their workers will improve the situation.
"The average life span is much longer than in the past, and people need to rely on their pensions for a longer period of time," she points out. "In all countries, not just ours, there has been a rise in the number of older people and a drop in the number of people working who contribute [via national insurance] to paying the benefits for those who have retired. And we are not just talking about money, but also about other essential equipment that is needed to keep people living their lives independently.
"In addition to that, we have to remember that in all countries the state pension is never enough on its own to support a person; there have to be additional layers of pension planning," continues Dominissini, outlining the three main prongs of old-age investment: social security, a work-based pension and personal savings.
"All those need to be in place to help a person in retirement," she says.
However, with reference to the current economic environment, Dominissini is aware that many private savings and work-based pension plans have depreciated over the past two months, since the collapse of two large US investment banks and several others worldwide.
"NII pensions are pretty safe, despite the economic crisis worldwide. However, private pension plans have certainly devaluated due to the drop in international world investment," she explains. "That does not really affect those who are leaving their pensions in place for the long-term period, but it could have adverse consequences for those who are retiring soon. If this becomes a serious problem, the state will have no choice but to intervene and help these people."
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