Caesarea team to offer 4 anti-poverty plans [pg.4]

By DANIEL KENNEMER
Published: JUNE 10, 2006 23:38
Researchers behind the upcoming Caesarea Conference, as the Israel Democracy Institute's Annual Economic Forum is known, have provided journalists with an early glance at four plans for combating poverty that they will present to Israel's decision makers at the event. The forum will be held June 20-22 in Jerusalem. It has been held annually since 1993, but this is the first time eliminating poverty will be a major focus. Hebrew University researcher Momi Dahan - the Caesarea Forum's poverty pundit - drafted one of the alternatives, while the others come from policy analysts at the Bank of Israel, the National Insurance Institute and the Finance Ministry. "All four will be presented to decision makers at the conference," said Dahan. To bring more parents into the work force, Bank of Israel researcher Karnit Plug makes the following recommendations:
  • Implement a negative income tax.
  • Increase resources dedicated to enforcing minimum wage laws.
  • Continue reducing the number of foreign workers.
  • Expand the activities of the Mehalev welfare-to-work program while shifting the companies' primary focus from getting people off welfare to finding them jobs.
  • Subsidize the cost of entering the labor market, for example day care.
  • Expand professional training and adult education programs.
  • Ease criteria for welfare eligibility while extending the maximum period of time for which allowances may be received and including a professional training period.
  • Redraw the map of National Priority Areas (for incentives detailed in the Investment Encouragement Law) according to each community's socioeconomic profile - instead of using a purely geographic basis as is done today - while ensuring that discrimination against Arab settlements is ended and that incentives are paid according to success in creating jobs. Plug also advocates: instituting obligatory pensions while subsidizing the premiums of low-income earners; making care for the elderly poor more progressive in terms of individual physical needs and financial situations; pegging welfare allowances to standard of living and income; including income from all sources and assets in relevant calculations; and expanding school meal programs to all relatively underprivileged kindergartens and elementary schools. Plug's entire program would cost the Israeli budget about NIS 2.5 billion annually. "In the long term, the key to fundamental change is in the educational system, which requires fundamental handling that will lead to the provision of appropriate skills to assure all sectors of the population the ability to earn a proper income," reads her contribution to the Caesarea Forum compilation. The National Insurance Institute is calling on the government to: gradually peg welfare payments to the average wage; introduce a uniform child allowance of NIS 200 per child, reversing plans for further cuts; increase income supplements; add another 20,000 elderly to the population eligible for income supplements; increase basic old-age allowances; ease criteria for receiving unemployment allowances; institute a negative income tax; and increase welfare payments for those unable to work. Such a plan would cost about NIS 3.3b per year. The Finance Ministry, whose program does not include a cost estimate, advocates: easing entry into the work force by enforcing minimum wage laws; making public transportation cheaper; and expanding day care subsidies. Professional training, the ministry proposal says, must be encouraged through providing: scholarships for single-parent families; grants for training in preferred professions; programs to involve employers in the training; and though expanding the Mehalev program and other efforts meant to empower the unemployed and integrate them into the work force. The number of foreign workers in the country must be also be reduced, and the cost of employing them brought closer to the cost of employing Israelis, the Treasury says. Other sections of the Finance Ministry's proposal seek to improve economic conditions for the country's Arab, Beduin, and haredi populations in terms of education, professional training, and employment opportunities. More of the elderly would be eligible for allowance programs and there would be increased funding for care services and daytime activities, as well as efforts to provide more of them with long-term housing. Increased funding would also go to improving school programs and boarding schools, subsidizing preschools, and expanding school meal programs and scholarships, alongside other measures to widen opportunities for children later in life. The Finance Ministry also advocates changing the structure of university tuition and financial aid programs, as well as increasing academic research budgets. Dahan will tell decision makers to save more than NIS 8.8b. by: cutting the defense budget; halting tax cuts; reducing taxation discounts on mutual funds and pension deposits; "drastically" reducing Investment Encouragement Law tax incentives; canceling Eilat's VAT exemption; lowering interest payments; and canceling tax breaks for foreign athletes. Of the money saved, Dahan would direct less than NIS 4.4b. to: providing free preschool education; increasing old-age allowances and pegging them to average wage; ending budgetary discrimination against the Arab sector; introducing obligatory pensions; expanding eligibility for unemployment allowances; increasing child allowances for the first three children; enforcing the minimum wage; and creating a high-school matriculation track for yeshiva students. Additional recommendations, which would not cost anything, include setting goals for reducing poverty and reducing foreign workers to 3 percent of the work force. Dahan also calls for raising the tax on the use of foreign workers to 40%. At the press conference where the plans were presented, Dahan said that both the number of poor in Israel and the relative depth of their poverty are growing. Whereas in 1998 the average income among those considered poor was a bit more than 25% below the poverty line, in 2004 it was about 32% below that line. Three factors unique to Israeli poverty are the large Arab-Muslim population (one out of six Israelis), the significant haredi population (about 6-7%) and large waves of immigration in recent generations (92% of elderly Israelis were born in other countries), according to Dahan. While haredim are held back financially because men spend large amounts of time outside of the workforce and school curricula are not oriented towards employment, and by their large families, Arab Israelis are significantly poorer than non-Arabs even when the number of income earners and children per family are taken into account. "The primary reason for this is that their opportunities are blocked. There are obstacles the whole way through, from education to employment," said Dahan. "It is not purely the result of cultural preferences" such as norms keeping women in the home, he said.