Along with the prices that the epidemic is demanding, it also provides an opportunity to correct injustices in the National Insurance Institute and in the structure of wages and the economy: for example - a personal unemployment fund •

Typically, more than 70,000 people receive unemployment benefits each year. This is an expenditure of more than NIS 320 million a year, not this year of course. Like other benefits distributed through the National Insurance Institute, this is an anachronistic benefit that is not suitable for this period - worse than old-age benefits and child benefits, as can be learned these days.

In some ways, it is galloping into the abyss. The National Insurance Institute // Photo: Yossi Zeliger

While we wonder what the actual unemployment rate is, between the cautious estimates aimed at 16% and those approaching 25%, many employers in the market are complaining that they are having difficulty finding workers. Unemployment benefits in 2021-2020 will exceed NIS 1 billion a year, and the National Insurance deficit this year will end at at least NIS 50 billion.

Thus, the early estimate that by 2035 the National Insurance Institute will no longer be able to pay its benefits will be even earlier than expected. In this sense Social Security, like the state’s pension obligations, is galloping at full speed down the abyss. 

And meanwhile we continue to distribute unemployment benefits as employers lament the shortage of workers. These are mainly workers at the level of the minimum wage up to the average wage in the economy - NIS 5,300-11,000. At this wage level, all those unemployed and workers in the IDF receive a guaranteed income by June 2021, which reaches 70% of their wages. At the higher wage levels, a 30% decrease in wages is significantly more than at these wage levels.

Unemployed people who now receive NIS 7,000 can fill the gap by reducing work-related expenses, such as the need for clothing, outdoor meals and car maintenance. Many of them can even supplement income with casual and informal jobs, such as replacing the gardener in the building, washing stairs and assisting in the business of acquaintances. This is the explanation for the perplexity of many employers as to why their offers are not being responded to during a period of severe unemployment. 

Property tax in the days of Corona

Unemployment benefits are built unfairly, distorting the structure of the employment market. In many professions it has been customary in recent decades to change jobs every few years. In other words, apart from public employees, in the private sector mobility between jobs is high.

In many cases, employees who leave a job after working two or three years or more, look for a job only after 6-3 months. Why? Because you can get unemployment benefits and relax a bit before you storm the next job. And so there are many who tend to take full advantage of unemployment benefits, and enjoy in their careers years of cumulative unemployment benefits.

Of course, this device is not intended for them at all, and they enjoy the no-man's land of the public coffers. Of course, they do not break the law and do not hide from their friends and employers their "legitimate" plan to use the lost method to gain power. This is at a time when their colleagues, who tend to skip jobs less, or do not skip at all, never enjoy the same third of a billion shekels that Social Security collects and distributes to everyone. Of course, the self-employed do not enjoy this benefit either, even if they are really unemployed for a long time after their business has failed, or the customers have abandoned them for a few months. 

This distortion is not difficult to correct. Unemployment insurance in a modern market should be like any other - sustainable insurance. Imagine a fund, like the study fund, that will be a personal fund for unemployment. Suppose that one-third of a billion shekels is set aside from Social Security in favor of the same fund, which will distribute the money equally among all employees - self-employed and employees alike.

Employees will have the right to set aside up to a certain ceiling for that fund their money, with a partial or full tax exemption. In this situation everyone has personal unemployment insurance that has accumulated money and during periods of unemployment he can decide whether to use it and how much, say up to a ceiling of 70% of his average wage.

Such a fund should allow employees to attract overdrafts at certain periods, assuming a person enters an unemployment period early in his or her career, but that ceiling will also be limited, of course. At retirement age, every employee will be able to enjoy the balance of funds in his fund. This will prevent this fiasco, which means that there is a shortage of workers in a period of double-digit unemployment, which we have not known for years.

A number of MKs have already expressed interest in this proposal, which may be the beginning of a smart solution to the inevitable crash of Social Security, which we continue to ignore. 

Budget in uncertainty

No fewer than 49 local authorities have asked the Ministry of the Interior to approve an exceptional property tax increase for 2021 - beyond the automatic rate of increase, which has already been made by law at a rate of 1.1%.

The annual rate of update of the property tax for 2021, which consists of two indices, has risen mainly as a result of the increase in public sector wages, which rose by 1.4%; The consumer price index decreased by 0.3%.

If there is a good reason for the protest, it is the method of linking wages in the public sector, and increasing the workforce. The public apparatus has grown in the last decade far beyond the rate of population growth, and wages in the public sector have grown much more than the average wage in the economy, opening a gap of tens of percent in favor of public workers.

The method of linking wages in the public sector is completely circular - some high-wage earners in the economy are linked to changes in the minimum wage, and the increase in everyone's wages leads to an increase in the services they provide, such as property taxes - because someone has to finance it. It is interesting that the consumer price index does not rise at all.

In other words, the situation in the economy does not allow the free market to raise prices, and the only ones who can do so are those whose prices are imposed on captive consumers. No one enjoys this defective situation. Excellent people work in the civil service and in the public sector. They did not recruit themselves for work and did not set themselves the salary. This is a structural problem - a market built on power, regardless of output. 

The state budget is built on the assumptions of growth, GDP, inflation, employment, wages, tax collection and other income. If we look at the forecasts against performance in recent years, it seems that apart from the inflation in which the Treasury and the Bank of Israel insist on setting unrealistic targets, overall growth forecasts were only slightly lower than actual growth; And in the other components the forecasts were entirely reasonable, even in forecasts which led to the important forecast of the projected scope of taxes.

According to the Budget Law, an annual budget can be transferred until the third month of the beginning of the year. This time it seems that it is essential to add to the budget forecasts for 2021 the forecasts of the infected, the sick and the measures that will be derived from it in the winter months. The insistence on forcing finance experts to make these predictions now - should go hand in hand with support for their replacement in the fortune - telling team. Forecasts under conditions of uncertainty must be more extreme, so such a budget will be difficult to digest. If it is held now for next year - it will have to include harsh decrees.