Finance Ministry extends 'return to work' grant eligibility

The amendment to the ministry's long-awaited NIS 6 billion assistance package, announced on Wednesday, follows wide-ranging criticism from the private sector during the past week.

By EYTAN HALON, JERUSALEM POST STAFF
New Finance Minister Israel Katz (photo credit: FINANCE MINISTRY)
New Finance Minister Israel Katz
(photo credit: FINANCE MINISTRY)
The Finance Ministry will extend the eligibility criteria for "return to work" grants to include businesses who brought employees back to the workplace from April 19, rather than the previous date of May 1.
The amendment to the ministry's long-awaited NIS 6 billion assistance package, announced on Wednesday, follows wide-ranging criticism from the private sector during the past week.
Business sector representatives criticized Finance Minister Israel Katz, arguing that solely providing grants to employers who brought back workers on unpaid leave from May is detrimental to businesses who strived to return employees at an earlier date, or did not place employees on unpaid leave at all.
Now, businesses who returned employees to the workplace from April 19 - the date when the first coronavirus restrictions were eased - will also be eligible for an NIS 3,500 grant per employee.
The remainder of the Finance Ministry package will remain intact, with employers also receiving an NIS 3,500 grant for every employee who returned to the workplace during May, and NIS 7,500 for every employee who recommenced work after June 1.
"Once the proposed legislation for encouraging employment was approved by the government and in the first reading in the Knesset without modification, we considered the subject and, in consultations with Finance Committee chairman Moshe Gafni, coalition chairman Miki Zohar and Blue and White faction chairman Eitan Ginzberg, it was decided to add these employers to the grant plan after they opened their businesses in this period in accordance with government instructions," said Katz.
The amendment to the proposed law will be carried out as part of the legislative process in the Knesset and discussions in the Finance Committee, the Finance Ministry said. NIS 500 million will be set aside for employers as part of the plan.
The initial plan proposed by Katz last week to encourage the re-employment of workers was met by opposition from business representatives and within the government itself from Likud MK Nir Barkat, who argued that impacted businesses must be eligible for compensation without strings attached and the latest funds should be “given to Israeli citizens to encourage consumption."
Manufacturers Association president Dr. Ron Tomer also expressed his dissatisfaction with the proposal, claiming that it sent a “very negative message” to employers who worked hard to prevent their employees being placed on unpaid leave at all, or returned their employees to the workforce sooner rather than later.
Tomer called on the government to instead develop a “central compensation plan” based on reduced economic activity and to adopt the “German model” of partial government participation in workers’ wages.
Also on Wednesday, Katz and Accountant-General Rony Hizkiyahu said that they had approached Gafni to request an expansion of the government-backed loan fund for small and medium businesses by an additional NIS 8b., which would increase the fund to a total of NIS 22b.
Loans to approximately 33,000 businesses have been approved within the framework of the fund, the Finance Ministry said, amounting to a cumulative total of NIS 12.6b.
Since restrictions were first eased on April 19, over 275,000 employees have informed the Israeli Employment Service of their return to work. During the same period, the Employment Service has received almost 109,000 new unemployment benefits applications.
Among the approximately 37,000 new jobseekers who submitted applications in May, 27.1% were laid off, while another 49.9% were placed on unpaid leave, 8.8% resigned and 14.2% cited other reasons for leaving work.
"We estimate that we will continue to see tens of thousands of workers returning from unpaid leave to the workforce in the coming days, and it is likely that most of those on unpaid leave and additional unemployed individuals will return to work by the end of the summer," said Employment Service director-general Rami Garor.
"However, even after this trend, we estimate that the unemployment rate will remain a double-digit figure, about 10% with about 400,000 jobseekers - in an optimistic scenario."


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