Center for Social Policy Studies Annual Report Released: Allocation of Resources for the Social Services 2003

On November 27, 2003, the Center for Social Policy Studies (CSPS) in Israel formally presented its annual report on the Allocation of Resources for the Social Services to the President of Israel, Mr. Moshe Katsav. The report finds that government social expenditure stopped growing seven years ago. Approximately 430,000 households in Israel receive services from the Ministry of Social Affairs. The present government’s economic policy is dictated largely by a socioeconomic viewpoint that believes in downscaling the state’s share in the national economy as much as possible. Many economists and social scientists, as well as politicians, consider this policy a danger to the country’s socioeconomic fiber.

The new report, which analyzes socioeconomic developments in Israel in recent years with the focus on the past year, states that the Israeli economy is in a state of deep freeze. Highlights of the report are:

One manifestation of the economic decline is the level of per-capita Gross Domestic Product; although Israel was in a respectable position among the countries of Europe only a few years ago, it no longer is.

National expenditure for social services will be NIS 104 billion in 2003, as against NIS 103 billion in 2002. The share of National Insurance benefits in the total social service expenditure is more than 40 percent this year, as against 30 percent in the early 1990s.

Unemployment and income-maintenance benefits have fallen nearly NIS 2 billion from the 2001 level of NIS 7.7 billion. Most of the cutback, NIS 1.5 billion, was in unemployment compensation—even though unemployment in Israel has worsened in the past two years.

Education accounts for 30 percent of total social expenditure. Between 2001 and 2003, the education development budget -- the budget reserved for buildings and equipment -- was slashed by 34 percent. This means a drastic reduction in the quality of the physical structures.

The average government outlay per capita for health has dropped sharply in recent years, from NIS 2,600 in 1996 to NIS 2,300 in 2003. Some 20 percent of the population has refrained at least once in the past year from using a medical service due to its cost. Households finance one-third of national health expenditure today, as against about one-fourth in the mid-1990s. Only eight of the twenty-seven OECD countries spend less on health, in national per-capita terms, than Israel.

The CSPS report finds that 430,000 households, about one-fifth of all households countrywide, receive services from units of the Ministry of Social Affairs. One-fourth of these households receive services at a high level of intensity. About 16 percent of children countrywide are in situations that harm, or may harm, their ability to enjoy a healthy social, family, and school life. The report states that one-fourth of poor households are composed of elderly persons.

The annual CSPS Public Opinion Survey shows that the public felt the implications of the economic crisis acutely this year. Most respondents believe that the level of social services has declined, socioeconomic gaps have widened, and the standard of living has fallen. About 70 percent of respondents believed that the government’s economic policies are widening social gaps. More than 40 percent of respondents noted that they feel very vulnerable to the possibility that unemployment will affect them directly. The poll showed that the public is opposed to cutbacks in educational spending even during hard times. A rising proportion of Israelis believe that the level of health services is declining.