More Israelis Make Do With Less

Rachel Amshalom was living on the edge even before she lost her job as a teacher’s assistant last summer.

Amshalom, the single mother of an 8-year-old daughter, said her monthly income subsidy from the Israeli government shrank from $300 to $75 in 2003 in the wake of sweeping welfare cutbacks. Amshalom said she also lost a small slice of her already minuscule child allowance, a benefit paid to all Israeli parents that has been scaled back.

When the on-again, off-again classroom job dried up too, she was adrift. Amshalom, 50, borrowed $1,800 to pay her bills and moved with her daughter to a cramped apartment in a public housing project in the working-class Katamon neighborhood. She gets potatoes, sugar, rice and other basics at a food bank and waits for the phone to ring with a job offer.

“I’m going backward, and I hope it stops -- somehow,” Amshalom said.

Amshalom is among tens of thousands of Israelis whose welfare benefits have been cut as part of the conservative government’s effort to save money and reduce dependency by nudging more people into the labor force. The changes are part of a wider economic overhaul under Finance Minister Benjamin Netanyahu to trim government spending and privatize more functions.

Reform advocates say Israel is overdue in restructuring its increasingly expensive welfare system, which has a remarkably broad safety net born of the country’s collectivist past, from health insurance and unemployment protection to paid parental leave. Echoing the U.S. debate over welfare reform, they argue that aid recipients stand a better chance of breaking out of poverty by working and that doing so will strengthen the society.

But critics charge that the cuts have been draconian. With unemployment surpassing 10%, they argue, job openings are too sparse to accommodate a big influx of workers. Many aid recipients have been unable to find jobs that are stable or pay enough to carry them above the poverty threshold of $1,000 a month for a family of four, advocates for the poor say.

“They’re finding work two hours a day, four hours a day. They’re finding themselves working but making less than they were with welfare benefits -- a dead end,” said Barbara Epstein, who runs Community Advocacy, a storefront aid office.

The debate over cutting benefits has sharpened since a government report on poverty was released in November, showing that more than one in five Israelis, or 1.4 million people, were poor in 2003. That rate was 8% higher than a year earlier.

A separate study by the National Council for the Child published last week found that nearly a third of Israeli children live below the poverty line. It also found a drop in the number of youngsters whose families received income assistance.

Experts say the figures point to a worrisome rise in the ranks of the working poor. The November report “proved very clearly that the impact of the economic crisis and cuts in social expenditures and benefits resulted in poverty,” said John Gal, a social-welfare expert at Hebrew University in Jerusalem.

The campaign to reshape the welfare system is the latest sign of the sometimes-painful shift away from the egalitarian ideal prevalent during Israel’s early decades toward a national ethos based on private enterprise and individual initiative.

Officials with Prime Minister Ariel Sharon’s government say that getting people to work will help break a “poverty trap” that has ensnared up to three generations of Israeli families.

“It’s not just essential reductions of public expenses. But it’s a change in behavior we should encourage,” said Iris Ginsburg, director of the employment and welfare division in the Foreign Ministry’s budget office.

Netanyahu, a former prime minister, oversaw the cuts as part of an austerity package after he became finance minister in March 2003. He has called the economic reforms, which include trimming the number of public employees and salaries and privatizing government-owned companies, a “social revolution.”

Since July 2003, income subsidies have stopped for 4,000 families and were reduced by an average of 30% for 95,000 other households, according to the government’s National Insurance Institute.

Netanyahu defends the reductions, noting that 100,000 Israelis have joined the workforce since the reforms began, despite the lingering effects of recession.

“This revolution will continue to increase growth and also to get people out of the poverty cycle,” Netanyahu said in Herzliya. “There’s no other way to do this, only through work.”

In December, the government picked four foreign companies, one of them American, to run regional employment centers in the test phase of a program under which unemployed Israelis will have to receive job training to continue getting income-assurance allowances. The centers will offer vocational training plus guidance in the nuts and bolts of getting a job, including writing resumes and dressing properly. The centers also will provide child care for job-seekers.

The firms will be paid on a performance-based model under which they must cut spending on government-paid allowances by at least 35%. In two years, Israeli officials hope to save $45 million, which they plan to plow back into the program.

But introducing for-profit companies into Israel’s welfare system unsettles advocates for the poor, who fear the privatization of the safety net.

“We worry that money will go not to the poor people, but to American companies,” said Avishai Benish, legal advisor for a Jerusalem-based group called Commitment to Peace and Social Justice. “The main problem is that, like in the United States, the people who get jobs will stay poor.”

One problem, activists say, is that many new jobs are low-paying or temporary positions. The legal minimum wage in Israel is $760 per month, or $4.75 an hour, but the departing leader of the country’s manufacturers association said last month that more than a third of employers flout the wage law.

Those at the bottom of Israel’s economic ladder despair over the cuts.

Rachel Dadon, 37, said her allowance was cut in half last year, leaving her with about $450 a month to live on.

Her apartment in Katamon, shared by her three children and boyfriend, is crowded and dank, with bare bulbs dangling from the ceiling and paint flaking from the walls. The only protection against the winter cold is a portable kerosene heater. It stays off much of the time because fuel costs about $7 a day.

Dadon has an occasional job taking care of an elderly woman, but it’s been more than a month since she last worked. Dadon, a warehouse manager before she hurt her neck in a car crash more than two years ago, said she has signed up at 10 job agencies but still has no offers.

In the meantime, her debts have grown. She owes the local grocer $750 and still frets over unpaid school bills from last year. A computer sits broken because there is no money to get it fixed. Dadon dreams of starting a beauty shop at home but can’t afford the materials.

She is no stranger to poverty. Her parents were poor too, Dadon said. Sitting on her worn couch and looking drawn, she expressed worry that her children -- ages 15, 14 and 5 -- may end up the same way. “This is going to be the third generation of poverty,” she said.

Dadon said she would like to work, as Israeli officials want her to, but the benefit reductions have only worsened her plight.

“The government needs to look at the people who are at the weakest level of society. They need to be more considerate of the single parent,” Dadon said. “They should see us the way we are, and not imagine us in three-piece suits and ties.”