from Globes Online
Growth and welfare-to-work can’t by themselves solve the problem.
The 2005 poverty report published yesterday by the National Insurance Institute calls into question some of the basic principles of the economic policy that was introduced after Likud chairman MK Benjamin Netanyahu took over the Ministry of Finance, and which has remained in effect following his departure. First and foremost, the report challenges the concept that instituting cuts in social security benefits and dismantling welfare systems will reduce poverty levels, provided that such moves are accompanied by economic growth, higher employment, and an increase in the number of employed people among the ranks of the poor.
This approach, as embodied by the slogan “from welfare to work,” guided policy makers at the Ministry of Finance, including the professionals, and it was the concept that lay behind the unprecedented cuts in benefits in 2004- 2005, without them being accompanied by the building of alternative welfare systems.
The poverty report reveals that there has indeed been higher employment, economic growth, and a higher rate of employment among the poor. Yet despite this, not only has the number of poor people not fallen, but it has even risen and, with it the incidence of poverty among working families.
In view of these figures, one can do one of two things. One option would be to review the primary assumptions and examine why and how poverty is rising as employment expands. Another option is to assume that whatever has been done up to this point has not been extensive enough and we should all carry on along the same route - until the next poverty report.
For Netanyahu himself the reports serves as a blunt reminder that he should continue to maintain a low profile. He and he alone was responsible for economic policy in 2005, and this report in its entirety is the outcome.
One achievement for which Netanyahu takes less credit is actually the increase in old age pensions. This was forced on him for political reasons and led, fortunately, to a reduction in the incidence of poverty among old people. The problem here is that this is not compatible with the fundamental concept and rationale of right wing research institutes in the US, which in many instances wrote their theses first and only began to examine them in practice afterwards.
So Israeli society remains polarized, with separate tracks in work, in salaries and in education, according to ethnic origin and area of residence. Arab families have no chance of making any tangible progress in Israel, and poverty among them has become acute. Israel still has a poverty rate in excess of 20%, while the much vaunted solution, going out to work, has not delivered results.
It may well that the cause of this lies in the social mechanisms that have evolved in Israel, which predetermine a child’s fate at birth, consigning him or her to a pre-set life story, a given quality of education and social services, and a certain level of income in adult life.
As long as this remains the case, all the talk about getting people off welfare and into work will remain empty slogans.
Published by Globes [online], Israel business news - www.globes.co.il - on August 31, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006
Counting the Cost - Extra - Lego: The epitome of simplicity - Counting the Cost - Extra - Lego: The epitome of simplicity Jorgen Vig Knudstrop, the CEO of the Lego Group, discusses Lego, business, and Denmark's econ...
1 hour ago