Haredi Poverty

The previous Israeli government, elected in 2013, was characterized by the absence of the traditional religious parties from the coalition. For the first time in many election cycles, these parties found themselves outside the government and in the opposition instead. Right-wing Habayit Hayehudi was provided with ministerial portfolios but its economic platform is markedly different from that of the parties representing the ultra-religious (Haredi) electorate – United Torah Judaism and Shas. This made it possible for the government and the 19th Knesset to pass legislation the ultra-religious had long viewed as inimical to their interests, including the curtailment of exemptions from IDF conscription and reductions in child support subsidies to large families.

Actual changes made by the government elected in 2013 regarding programs of exception (conscription) or subvention (child allowances) were both less than their advocates hoped but more than the Haredi parties could stomach. The 2015 election was characterized by extreme statements made by Haredi leaders against the most recent minister of finance, Yair Lapid. Their two main goals in the 2015 election were to reverse both their political exile and the harsh treatment they view as having been decreed against them by the state. Curiously, the issue of burden sharing which played such a significant part in the rise of Yesh Atid and in the tenure of its chairman, Yair Lapid, as minister of finance was not as prominent in 2015 as before in the rhetoric of his party.

The debate will continue into the coming years. The composition of the ruling coalition may determine whether policy continues to follow its recent course at a greater or lesser pace, or is rolled back significantly. The coalition agreement Netanyahu signed with United Torah Judaism in early May 2015 bespeaks a complete rollback of the provisions intended to enhance economic integration of the Haredi community. Reports of the agreement include, most prominently, reinstatement of prior levels and conditions for child allowances, which affect all disadvantaged Israelis, and elimination of pressures to serve in the IDF, which targets the Haredi community directly.

In direct terms, reinstatement of child allowances to prior levels could cost the treasury ₪2.6-3.0 billion per year. Of greater concern might be the indirect effects of these two measures, particularly with respect to employment and poverty. Israel’s National Insurance Institute (NII) reports that in large part as a consequence of rollbacks to child allowances in 2002-2003 there was a measurable increase in employment and a decrease in poverty among those families headed by adults capable of work over the ensuing decade.16 In a similar spirit, the government, in a special session, has just rolled back the requirement that daycare subsidies be given to families in which both parents are employed. This requirement has resulted in a 70 percent increase in Haredi men’s employment over the last two years.17

This does not mean that reducing child allowances is a panacea for poverty. The same NII report also makes clear that households headed by adults incapable of work have seen a worsening of conditions. And rates of poverty among families with two wage earners have actually deteriorated as well. This second trend brings skills into the equation. Typically, such impoverished households are largely in the Haredi and Arab sectors. Often these second earners are entering the labor market for the first time with minimal marketable skills. A reduction of the requirement for Haredi youth to serve in IDF eliminates what has been seen as one of the best transition paths from unskilled labor or unemployment to more individually fruitful participation in the economy. In addition, the coalition agreement promises to promote legislation to circumvent the Supreme Court ruling barring full-time yeshiva students (who are not working) from receiving welfare payments, thus keeping them further away from the labor market.

This also introduces a recursive problem. The combination of higher benefits with reduced labor participation will also increase budgetary outlays while reducing tax revenues, thus putting those very benefits once more at risk.
There are figures to support the hypothesis of change in educational integration, even in the short term. Comparing the 2012-2013 academic year, during which the last government increased the pressure on the Haredim to engage with the general society, to the estimated figures for the most recent year, the number of students in Haredi academic programs increased markedly. Most striking was the increase in male attendees, up by more than 80 percent in two years.

Attendance in Haredi academic programs of higher education, by gender and year: