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Irrelevant, and not by chance: the failures in Katz's new grant program

The Minister of Finance has formulated an outline for the incentive for about 340,000 chronically unemployed to return to work by February.

But the plan is only relevant for about a third of them, the aid may reach those who have already returned to work anyway - and above all, a question mark hovers over whether it is an election economy.

Spokesman: To ensure that the initiative is accepted while maintaining restraint

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• Israel Katz

• Grants

• unemployment

• Corona virus

• Social Security

Sonia Gorodisky and Daniel Dolev

Wednesday, January 20, 2021, 20:37

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In the video: The Comptroller's report on the treatment of the unemployed and the grants for the self-employed in the Corona crisis (Photo: State Comptroller's Office)

The new grants program concocted during the week Israel Katz, Minister of Finance and National Insurance CEO Meir Spiegler, should motivate the chronically unemployed to return to employment next month, but it ignores the fact that Israel is deep in the third closure could last until an unknown time.

Under the new agreement Obtained this week between Katz and Spiegler, the "veteran" unemployed who during the Corona period accumulated a period of unemployment of three months, and who manage to return to the labor force, will be entitled in addition to wages also full unemployment benefits for two months - in the first month and in the fourth month. beginning of November until the end of February.

the plan will soon be approved by the Knesset labor and Social Affairs Committee in a relatively smooth since it B"sdrog "of the previous program designed to provide incentives for returning to work for low wages - a plan that has been a large response.

meetings took place this week on the details of the plan said The Attorney General of the Ministry of Finance said that there should be a professional justification for the plan, and it is not clear if there is one at the moment.

Another giant designed to incentivize people to return to low-wage work.

Attorney General Avichai Mandelblit sent a letter to the Minister of Finance regarding the promotion of economic plans during the election period.

"As long as it is decided to promote such a plan, it must be ensured that the decisions and initiatives presented by the government under it will be made within the framework of the law and while maintaining the necessary restraint and restraint during the election period and in early coordination with professionals."

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• Return period to work:

  1.11.20- 28.02.21

• Eligibility conditions:

  Anyone who has not worked for 3 months during the corona period

• What are the benefits in addition to wages from work?

  Unemployment benefits in the first and fourth months as a derivative of the new wage

• Are there any additional benefits?

  An unemployed person who returns to work at a lower wage than he earned before the unemployment period will also receive an additional grant in the second and third months.

Election Economy?

Katz (Photo: Reuven Castro)

Israel entered the corona crisis in excellent employment with an unemployment rate of 3.8% - lower than the average of other OECD countries.

Despite this and despite the fact that Israel's product has not been significantly harmed compared to the rest of the world, the future of the employment market in Israel does not look bright.

The Ministry of Finance expects that even after the opening of the economy, the unemployment rate will remain high, and the forecast of the Chief Economist for 2021 stands at 8.6%.

Will this particular plan, which may be costly for the economy, succeed in lowering the employment rate?

Will the plan achieve its goal

The target audience of the program is approximately -339 thousand unemployed people who are more than three months unpaid leave, but about two-thirds of them are in a circle of unemployment that their business is closed, so it is doubtful if they could find another job just to the end of February.

This is the rest of the culture industry, The hotels, restaurants and tourism are all out of employment not because they are comfortable receiving unemployment benefits, but because their business is closed for many months, and in some cases close to a year. Currently, it seems that by the end of February (expiration of the program) the specified areas will not open , So it is highly doubtful whether the plan will be relevant to the people of the closed industries.

Target audience: about 339,000 unemployed.

Queues to the Employment Bureau at the Beginning of the Corona Crisis, March (Photo: Reuven Castro)

Will the plan justify its cost?

The exact cost of the plan is not yet known, as it is not known what the amount of the Social Security grant will be, as it is a derivative of the new salary he will be able to obtain.

It is also not known to how many people the plan will be relevant.

Assuming it is applied to one hundred thousand unemployed, its cost could reach close to a billion shekels.

This cost will be welcome if the program is effective and succeeds in curbing rising unemployment.

However, since it is not clear which industries will open by the end of February, it is possible that most of the amount will be directed to those who have already returned to work since November.

This means that the state will distribute grants back to work to those who have already returned to work anyway.

Why until the end of February?

Social Security explained that the plan has been under discussion for several months, and its initial version intended for low-wage workers was approved in mid-November by the Labor and Welfare Committee.

According to the Social Security concept, the plan approved at the time had to be changed because it would not encourage enough people in long-term unemployment to return to the labor market.

It was also said that agreement with the Treasury on the new plan had just been reached, and that it should spur more workers out of the unemployment cycle, both those who work at lower wages and those who were hired at higher wages than they earned before the Corona.

However, it is difficult to ignore the fact that Israel is in the midst of the election period, also because the number of vacancies in the economy is very low, so it is not clear how effective the plan will be.

It is not clear how effective the plan is.

Director General of the National Insurance Institute, Spiegler (Photo: official website, Photo: Ariel Katan, JNF)

Will unemployment benefits be extended after June?

Despite hints from Finance Minister Israel Katz that unemployment benefits will be extended beyond June if necessary, the decision has not yet been made.

The proposal to extend the unemployment benefit beyond June has received many negative reviews, as it encourages unemployment and does not encourage employment.

How fast can the program be promoted?

Social Security is the executive body of the agreements reached together with the Ministry of Finance, so it can be assumed that the plan will be advanced in the coming days.

The decision will have to pass the approval of the Knesset Labor and Welfare Committee, and at present, there are not likely to be many objections, as the decision will be presented as an upgrade of the previous agreement.

Social Security CEO Meir Spiegler responded that "our motivation is to return as many workers as possible who were in the labor market and left it to the IDF. This is a national and economic interest. People who have been in the IDF for a long time go through all kinds of processes, including personal needs. them.

It's not at the push of a button, because these are not robots, but people and therefore there is a psychological element here and not just an economic one.

We want to encourage people to take advantage of the situation in which they find themselves involuntarily. "

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