Since August 2005, a Welfare to Work plan (called the Wisconsin Plan) has been operating in Israel, the stated goal of which is to decrease the number of people receiving income guarantees by integrating them into the job market. The plan is implemented by private companies and has functioned, to date, as a “pilot program” in which only a third of those receiving income guarantees participate, with the goal of examining whether the plan can be expanded to cover all those receiving income guarantees.
In the framework of the program, participants must accept every job offered to them, unless they have a medical reason, otherwise their income guarantee payment is denied. A lack of desire to work in a difficult physical job is not considered a legitimate reason to refuse work and leads to a negation of the income guarantee for two months.
Every participant is given an individual program, generally involving 30-40 hours weekly (during the program, cuts in time were done for some participants based on certain criteria), including workshops and searching for employment. Anything less than full participation in the personal plan results in a negation of the income guarantee for one month.
Participants who do not find employment, some of them simply due to a real unsuitability to the labor market, are forced to continue with the program endlessly, otherwise their income guarantee will be ended.
The program functioned as a pilot from August 2005 through June 2007, under the name Mehalev. At the conclusion of the pilot period, the program continued as a pilot program with certain changes (including a transition from compensating the companies on the basis of their revocation of income guarantees to compensation on the basis of work placements and a cut in the extent of the personal program for some of the participants in accordance with certain criteria) for an additional two years, from July 207 to August 2009, under the name Orot Letasuka.
In the framework of the law regarding implementation of the program, it was determined that the Brookdale Institute (an Israeli research institute) would monitor the program and publish its results every several months.
The 2009 Law of Arrangements determines that the Wisconsin Plan must be expanded such that it encompasses all those receiving income guarantees—approximately 150,000 people. In the coming weeks, the law is supposed to pass its second and third readings in the Knesset, although this will be prior to publication of the follow-up report of the Brookdale Institute and without any public discussion of such an important move, with critical implications for the lives of all the program participants.
The proponents of such a move contend that the program succeeds in bringing people out of the cycle of poverty and placing them in the labor market, such that it should be extended to a national level (“expansion of Mehalev will lift approximately 7,000 families out of poverty”).
In light of the intention to expand the program, it is appropriate to present data that does not support these contentions.
Professional Training and “Service in the Community”
The fundamental assumption of the program is that the labor market can absorb those receiving income guarantees, and with a bit of appropriate assistance and incentive (for example, denying income guarantees to those who do not participate), they will find work (“The Mehalev program is a social program, the goal of which is to return those receiving income guarantees […] to the labor market […] at the heart of the program is a type of ‘agreement’ […] in exchange for the welfare payment, they (the participants) will be required to participate in a personal program, the point of which is to promote their chances to gain employment”). The difficulty is that those receiving income guarantees have few chances to gain employment.
According to the Brookdale Institute, 50% of the participants in Mehalev have less than 12 years of education. Forty percent have poor command of the Hebrew language, 77% lack computer skills, 55% have no profession, and 46% have never worked or have not worked in the past five years. 33% are immigrants, 40% Palestinians, 17% single parents (a majority of which are women). Accordingly, it is no wonder that the program is supposed to include professional training for those requiring it. In practice, not all those needing professional training receive it, as companies attempt to place the participants in work places as quickly as possible, as it is precisely for this they are rewarded.
In Mehalev, approximately 46% of the participants received training irrelevant to their professional capacities, but which touched upon “soft abilities”—development of motivation to work, ability to receive instructions and directions and to apply them, meeting deadlines, persistence in work, development of inter-personal communication skills, and teamwork.
Thirty-one percent took part in “practical” courses, primarily Hebrew or Arabic, and only 22% participated in a professional course.
Professional training courses are given to participants who worked more than one year, but they are given at the end of the work day, such that many give up on it due to the inherent difficulty of such an arrangement, and, as we will see below, a majority of the participants are not placed in ongoing work for the entire year. In parallel, budgets for professional training of the Employment Services and the Ministry of Industry, Commerce and Trade were cut, in the framework of overall budgetary cuts.
A particularly difficult problem faces single mothers—who will care for their children when they go to work?
According to the report, 44% of single mothers required assistance from the center in caring for their children, although only 15% received it. This is despite research that demonstrates the great importance of arranging childcare as a condition for integrating people into the labor market.
The private companies implementing the program are rewarded for placing people in employment and thus devote a majority of their efforts to this end, and do not allocate resources for the professional training so needed by the participants.
Participants for whom no work is found must participate in “service to the community,” i.e., to work for free and receive their guaranteed income benefit in order to “provide them with work skills.” It is important to note that many of those directed to “service in the community” possess prior employment experience, such that they already have “work skills.”
In Mehalev, 29% of the participants were sent to “service in the community,” of whom 70% already had previous employment experience.
The directives of Orot Letasuka recommend sending to “service in the community” those with professions such that they will gain employment experience, i.e., to send professionals to work for free. This is despite the prohibition of sending participants for trial periods without payment to employers.
There is still no data for Orot Letasuka, but its participants are still being sent to “service to the community” and working without payment.
A report of the Adva Center points to comprehensive studies conducted in the United States and Sweden which demonstrate that no evidence exists that service in the community helps the participants to find regular employment.
Work Placement Data and Quality of Work Placements
Despite the change in the basis for compensation of the companies, the employment rate is still not high and a majority of the placements are not of good quality. While Mehalev improved the employment situation (entry into employment or improvement in the extent of employment) for 35% of the participants, the Orot Letasuka program placed approximately 30% of the participants in employment. However, of the 11,303 placements, 5,049 were repeat placements—people who were placed in the past but fell out of employment. Accordingly, 44% of the placements were repeat ones, a statistic that demonstrates the low quality of placements. Accordingly, 64.6% of the placements in Orot Letasuka were in part-time employment, a statistic similar to Mehalev. The average salary of program participants placed in employment was NIS 2,754, less than 25% of the minimum wage.
It is important to note that the placement percentages are biased upwards, as even if a participant was sent to a job for one day and it was found to be inappropriate, he is listed as placed.
In Orot Letasuka, an exemption was provided until August 2009 for those 45 and older, the placement of whom is more difficult than for other participants. Accordingly, the monthly reports still do not include those 45 and above, another reason that placement statistics are biased upwards. Those 45 and above were taken out of the program in October 2007. In September 2007, the placement numbers were 3.37% and in October, 10.8%. Although those 45 and older were taken out of Orot Letasuka, the program’s placement percentages were lower than those of Mehalev, and it is reasonable to assume that they will continue to decline with the reentry into the program of participants 45 and above in another two months.
There are still no statistics for Orot Letasuka, but according to the data from Mehalev, a majority of participants placed in employment did not receive social rights and benefits—72% did not receive a pension, 54% did not receive a yearly paid vacation, 45% did not receive payment for sick days. Thirty-five percent of the placements were in unskilled positions. Accordingly, it is no wonder that the plan did not improve the economic situation of its participants—the average income of program participants grew by NIS 61, through an increase in the average income from work by NIS 416 and a decrease in the average income from welfare payments by NIS 370. As the percentage of placements in part-time employment is identical in Orot Letasuka, it is reasonable to assume that the situation today is similar.
While the percentage of placements was 35%, for only 35% of the accumulative number of participants in the program a proper report of the program centers is sent monthly to the National Insurance. Even if we estimate that approximately 15% of the participants are no longer eligible for income guarantee payments or began receiving another welfare payment (Brookdale’s report notes approximately 8% after 15 months of beginning the program), we receive a high percentage of participants, approximately 15%, for whom work was not found and from whom the income guarantee payment was denied and who were left without any source of income (“income guarantee payment” is the last line of defense for one without income, all that remains for him are soup kitchens,” Professor Guy Mundlak).
Summary and Conclusions
To date, the program was implemented, during the majority of its stages, in periods of economic growth, and, despite this, it did not succeed in improving the employment situation of a majority of its participants. Moreover, for those it did succeed in placing, it was primarily in part-time work. While the market has entered a period of recession in recent months, there are no signs that this will result in necessary changes to the program, such as an easing of conditions for participants, given the difficulty in finding work, or taking advantage of the market situation to send more people for professional training. This is expressed in lower placement percentages in Orot Letasuka than in Mehalev (the recession began when the Orot Letasuka program was implemented), even with removal of those 45 and older from the program.
Studies from the United States demonstrate that even the limited success of the program in periods of growth is curtailed in periods of recession and that the biggest success occurs when the welfare budgets are increased in parallel with implementation of the program. Accordingly, the limited success of the program in Israel is not surprising given the fact that program implementation preceded a sharp cut in welfare budgets, and that one of the goals of the program is a cut in the income guarantee payments in light of the increase in welfare recipients since the 1980s.
The program is not beneficial to a majority of the participants and gives the impression that its primary goal is to cut government expenses for welfare payments, in addition to the bonus of weakening the power of workers through “service to the community,” which floods the market with free workers. This fits the Israeli policy over the past decade (“we succeeded in the period of recession in changing the rules of the game and promoting the most dramatic revolution—breaking of organized labor in Israel.” Uir Yogev, former Supervisor of Budgets in the Israeli Ministry of Finance).
The fact that this program is implemented by private, profit-making companies, creates a clear conflict of interest between them and the participants, expressed amongst other ways in the low investment in professional training, lack of a willingness from the companies to invest resources in the participants in their job placements, and the clearest conflict of all—the companies still profit from the negation of welfare benefits and do not, to put it gently, go out of their way to make participants feel comfortable (“they know that if they cut welfare benefits directly, that petitions will be submitted to the High Court, so they do this indirectly through cruelty toward those requiring services of the Employment Services, such that they will despair and give up,” Professor Guy Mundlak).
There exists no reason to assume that an expansion of the program to include all those receiving income guarantee payments will lead to better results. If the partial program did not succeed particularly well in the job placement of 20,000 people, how will it improve the employment situation of 150,000 people, and to do this when the market is in recession and unemployment levels are rising? Where will 130,000 jobs be found?
The problem is not the unwillingness of those receiving income guarantees to work, but that the job market cannot promise employment to everyone, and cannot ensure a life of dignity to many employees.
In order to bring about a real improvement in the situation of those receiving income guarantees, and not only an improvement in the Ministry of Finance’s budget and the profits of the companies, the program must be conducted by the state, include voluntary participation and with no negation of income guarantee payments. It must include a combination of appropriate professional training, and, of course, the initiation of a policy to create jobs which can ensure a life of dignity for the employees.
This article was originally written in Hebrew for the Alternative Information Center (AIC). Translation to English by the AIC.
“The world should be aware of the human implications of Israel’s policy of ‘no development, no prosperity’ in the Gaza Strip,” noted AIC economist Shir Hever, as he testified today (2 July 2009) in Amman before the United Nations Fact Finding Commission on the Gaza Conflict. 
