Painful cuts

The history of child allotments in Israel has been one of adjustments and changes since it was introduced in 1959 in an attempt to address the already pressing issue of poverty.

August 20, 2013 21:11
3 minute read.
Yair Lapid addresses the Knesset.

Lapid addressing the knesset 370. (photo credit: REUTERS)


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The substantial cuts in National Insurance Institute child allotments, which went into effect on Tuesday, are a painful but necessary step on the road to the country’s economic recovery and future health.

The cuts – part of the government’s program and to slash the budget and jump start the economy by saving NIS 2.75 billion a year – are not cosmetic. Families with children born after June 1, 2003, will receive a flat NIS 140 for each child. For children born before previously, the payment for the first two remains the same, but families with three children born before the deadline will receive NIS 172 per child, and increase proportionally.

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In practice, a family with three children ages three, five and seven who had been receiving NIS 701 will now receive NIS 420. In the haredi and Arab sectors, where larger families are more prevalent, the cuts will be felt even more. A family with seven children aged three, four, eight, 11, 12, 14 and 17 who had received NIS 1,894 will now receive NIS 1,208.

The history of child allotments in Israel has been one of adjustments and changes since it was introduced in 1959 in an attempt to address the already pressing issue of poverty.

During the mid-1980s, various restrictions and requirements were introduced taking away child allotments for most families and focusing on helping the Arab sector.

But by 1992, the child allotment program for all children was reintroduced for good, with various increases and cuts along the way.

Finance Minister Yair Lapid – the mastermind of budget cuts that will impact the defense and education budgets as well as various ministries and public sector employees’ wages and benefits – is insisting that the child allotment cuts will end a cycle of poverty for families who have gotten used to relying on the benefits to supplement their low wages.

“There is only one thing that allows families to get out of the cycle of poverty – work. The poverty rate in families with two working parents is under 5 percent. This is the meaning of parental responsibility and social responsibility,” he wrote on his Facebook page over the weekend.

According to a 2008 study by the Bank of Israel and the National Insurance Institute, there was a correlation between an increase in child allotments and an increase in birthrates among the Arab and haredi sectors. The study says the decision in 2004 to grant a monthly allotment of NIS 500 for a family’s fourth child and NIS 560 for a family’s seventh child increased the birthrate in the Arab sector by 6%-7%, and caused a 3% rise in the birthrate in the haredi sector compared to a period in which no child allotments were granted.

Whether or not the extra income from child allotments results in more babies, it’s clear that the cuts will force parents who are currently not working to search for employment.

The current child allotments represent a significant percentage of some large families’ monthly budget, and it will certainly be a crushing blow to their ability to make ends meet.

However, Labor leader Shelly Yacimovich pointed out in opposing the cuts that, according to recent studies, 65% of families labeled “poor” are actually working families, although it’s unclear how many of those families are one-parent families or families with both parents working.

The question, of course, remains how the affected families will cope with having less monthly income. As we pointed out in Tuesday’s editorial, Israelis are increasingly finding it difficult to impossible to “finish the month.”

We pay more for apartments and cars than our OECD counterparts, and prices in general have increased while wages have not.

In a humane society, it’s incumbent on the government to bolster the weaker sectors. But at the same time, as Lapid has stated, people should not get used to “handouts” as the solution to their financial difficulties.

He promised that the government will provide assistance to families affected by the cuts by setting aside “hundreds of millions [of shekels] to make sure no children go hungry.”

That must go hand-in-hand with programs to create more jobs, retrain potential members of the work force and a law to raise the minimum wage.

If the cuts in child allotments can really help families begin to stand on their feet, then it will benefit not only them but Israeli society and the economy. But measures must be implemented that will insure a safety net for those that start free-falling through the cracks.

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