OECD gives low grade to Israel's social policy

The organization finds there is no coherent strategy for dealing with major problems, especially among Arabs and haredim.

The response of the Israeli government to the challenge of poverty has been inadequate in the past two years in relation to the size of the problem, despite important steps taken to improve the positions of poor populations and minorities, an OECD report on the Israeli government's social policy finds.

The recently released report is an update of a more comprehensive report drawn up when Israel joined the organization three years ago. The report covers the government's social and employment policies in the period 2010-2012. It was prepared on the basis of reports by the government to the organization about its past and future policies, but its compilers do not include the decisions made in formulating the 2013-2014 budget.

After surveying its main findings, the report's authors define the conditions for what they call "coherent policy" on social affairs. Such policy, in the OECD's view, should be based on investment in education, vocational training and regional development, encouragement of the employment of minority groups, further improvement in enforcement of labor laws and the minimum wage, a strengthening of the support provided for low-paid workers, a reduction in the quotas for importing foreign workers, and development of a national employment strategy. "Investment in such a comprehensive strategy will require an additional public spending effort but the potential gains in terms of improved growth prospects and social cohesion are large," the report states.

Inequality and flawed enforcement

1. According to the report's findings, despite progress in legislation and enforcement, contract workers are still vulnerable, because of the failure to implement agreements on improving their lot. It will be recalled that, about two weeks ago, Minister of Finance Yair Lapid and Histadrut (General Federation of Labor in Israel) chairman Ofer Eini announced the signing of a new agreement for implementation of the previous agreement which had not been kept. The authors of the OECD report point out that there is insufficient enforcement to ensure that the rights of workers from minority groups, Palestinians, and asylum seekers are respected. The report says that the government should seek the aid of non-government organizations to make enforcement of labor laws more efficient, and that these organizations could advise the Ministry of the Economy on matters to do with foreign workers.

2. According to the report, the incidence of sub-standard employment conditions is very high in Israel, especially in industries like security guards, cleaning, teaching, and nursing care. The report finds a connection between this incidence of sub-standard employment and the fact that Israel has very large gaps between poor workers and the high-paid. This stems from, among other things, inadequate enforcement of labor laws, particularly the minimum wage. The report states explicitly that the roots of inequality in Israel lie both in the fact that large portions of the population are not employed, and also in the fact that there are people who are in employment but who are nevertheless poor.

3. Until 2012, the ratio between the number of people employed in the Israeli economy and the number of labor law inspectors was much higher than the standard set by the International Labor Organization for industrialized countries. The report says that, on the basis of information received from the previous government, this ratio should fall below the standard this year, that is to say, the number of inspectors is meant to rise substantially. It should be pointed out that this information was provided before the decisions were made about the state budget for the next eighteen months.

Words are cheap

1. The report finds that, although encouragement of employment is one of the government's declared goals, the resources actually devoted to this matter are meager. According to the data presented in the report, public spending on the policy of encouraging employment is 0.9% of GDP, compared with an OECD average of 1.7%. Moreover, expenditure on vocational training of the unemployed was just 0.8% of GDP, only one in a hundred unemployed workers received special counseling, and only 2 in a hundred were referred to vocational training. Total spending on active job seeking was 0.15% of GDP, almost unchanged since 2008. This compares with an OECD average of 0.66%.

2. Caseloads-to-staff ratios in the public employment service remain among the highest in the OECD. According to the figures supplied to the OECD, in 2011, a caseworker in an employment bureau in Israel dealt with 456 cases on average, compared with 50 cases in countries like Australia, Finland, and Germany. The report also points out that after the abolition of the Wisconsin program, the government did not attend to formulating a different national strategy for tackling employment.

Best to be rich and healthy

The report finds that earned income tax credit (EITC) has been extended across the country, as recommended by the OECD in 2010, but that payments are still too low, and recommends that they should be increased to encourage higher take-up rates and reduce in-work poverty. Israel spent not more than 0.2% of its GDP on this program in 2011, compared with 0.4% in the US and 0.5% in Britain. According to the report, the support given to workers is not effective in encouraging employment, because of the small amounts involved. In this context, it should be pointed out that the rate of uptake of the program in Israel remains low, at just over half of the workers who could benefit from it. The report remarks that this might be connected to the fact that the authorities in Israel distributed information to workers in Hebrew with summaries in several additional languages, but that Arabic was not among these.

2. The report finds that the reform meant to encourage employment among the disabled has not succeeded, and that the system of services for the disabled is difficult to understand and does not inspire trust. The report recommends involving employers in the programs for employment of the disabled, and a focus on new claimants.

3. The report states that the government should implemement a more transparent affordable housing program for people on low-incomes, apply more egalitarian criteria for obtaining affordable housing and public housing, and in particular end the discrimination in favor of large families.

Opportunities for minorities

According to the report, the government has not met the goals it itself set for employment of Arabs. According to information provided to the OECD when Israel joined the organization, the government set a target of of 10% of employment and 30% of new hires in the public sector, but in 2012, 7.8% of public employees were Arab, and only 12.8% of new hires. The report says that state-owned companies and other government bodies should report on progress in employing Arab citizens to the Employment and Equal Opportunities Commission.

2. The report notes that the government of Israel informed the OECD of efforts to settle the land claims of Bedouin citizens, and to introduce a program of economic development for them. Despite this, the report sees fit to remind the government of its humanitarian obligation to connect Bedouin settlements to water, sewage, electricity, and transport services.

3. The report stresses the need for the study of English and mathematics in all schools, including haredi schools, and criticizes the government for lack of implementation in recent years. It also recommends ending finance from the public purse for schools that do not teach these subjects.

The revolving door is still revolving

In 2010, the OECD recommended that the Israeli government should reduce the "revolving door" in relation to foreign workers. This was meant to have been achieved by reducing the quotas for the importing of foreign workers by manpower contractors, awarding permanent residence to existing workers in accordance with the state of the economy, and encouraging the employment of minorities and Palestinian workers instead of workers brought in under quotas. The 2013 report finds that almost nothing has been done in this area, there is no mechanism for determining entitlement to permanent residence, and in practice there has been no reduction in the quotas for importing foreign workers.

Published by Globes [online], Israel business news - www.globes-online.com - on May 28, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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