Big earners won’t get handouts as Netanyahu’s NIS 6b plan tweaked amid criticism

Private citizens making over NIS 640,000 a year and public sector workers making NIS 30,000 a month no longer eligible for stipend

Self-employed Israelis protest at Rabin Square in Tel Aviv, calling for financial support from the Israeli government in the face of the coronavirus pandemic, on July 11, 2020. (Miriam Alster/Flash90)
Self-employed Israelis protest at Rabin Square in Tel Aviv, calling for financial support from the Israeli government in the face of the coronavirus pandemic, on July 11, 2020. (Miriam Alster/Flash90)

The Prime Minister’s Office, facing widespread criticism over its economic response to the COVID-19 pandemic, announced on Monday that it had tweaked the formula by which it will allocate stimulus grants to citizens affected by the ensuing financial crisis.

In a statement, the PMO said that the new model for the allocation of grants was settled after consultations with Defense Minister Benny Gantz, Finance Minister Yisrael Katz, and Economy Minister Amir Peretz.

According to the new plan, NIS 6 billion ($1.75 billion) will be allocated for the grants, which will be given to all citizens with the exception of “those earning over NIS 640,000 (approximately $186,000) per annum and senior civil servants earning over NIS 30,000 (approximately $8,700) per month.”

The PMO also announced that people “receiving support payments for convalescent care, handicapped status, income assurance, needy new immigrants (who have been in the country for at least two years), the unemployed over 67, and the elderly who receive income supplements” will all receive larger (though currently unspecified) grants.

Prime Minister Benjamin Netanyahu at start of the weekly cabinet meeting, July 19, 2020 (GPO)

The original plan, as outlined by Prime Minister Benjamin Netanyahu last week, would have seen all couples with one child receive a one-time payment of NIS 2,000 ($583), rising to NIS 2,500 ($729) for those with two children, and NIS 3,000 ($875) for those with three or more. Single Israelis aged 18 and over would each receive NIS 750 ($218).

The proposal was been roundly criticized by Finance Ministry officials, the premier’s coalition partners and the public, with the criticism mostly centered on the plan’s call to disburse money to all Israelis — regardless of income or whether they were hurt economically by the government-mandated restrictions to contain the virus — and its high cost.

Senior officials in the treasury, including director Keren Terner Eyal, opposed the plan ahead of its unveiling, likening it to “throwing suitcases of money that we don’t have into the sea,” according to Channel 13.

The head of Lahav, Israel’s Chamber of Independent Organizations and Businesses, similarly voiced criticism.

“It is a surreal decision to give money to people who don’t need it, instead of people who are crying out. The self-employed sector is bleeding. Enough with the cheap populism,” Roee Cohen was quoted as saying by Channel 12 last week. “The streets are on fire. We need real solutions.”

Cohen subsequently accused Netanyahu of excluding him from a meeting he held with representatives of the self-employed in retaliation for his outspoken opposition to the stipend plan.

Police use water cannons on demonstrators against Prime Minister Benjamin Netanyahu in Jerusalem on July 18, 2020. (Olivier Fitoussi/Flash90)

According to a Channel 12 news poll published Thursday, 56 percent of Israelis believe Netanyahu’s handouts-for-all package was motivated primarily by political considerations, versus 36% who believe it was conceived out of a desire to juice the economy. Another 8% did not know.

Ministers at Sunday morning’s cabinet meeting clashed over the controversial handouts, with Minister Gila Gamliel proposing that vouchers be given instead of cash transfers, while Higher Education Minister Ze’ev Elkin said that grants should only be given to those who receive income benefits.

Additionally, ministers from the Blue and White party reportedly said that changes should be made so that more money goes only to those who really need it.

Welfare Minister Itzik Shmuli (Labor) said that the money should definitely be distributed, but in a different manner.

“The question is not whether we should give money to the public — we should give even more — but rather to whom it should go,” he said, according to Army Radio. “A distribution mechanism that gives everyone the same gives too little to those who need, while those who don’t need get too much. There are billions here that must be divided differently, in a just and economically sensible way.”

Welfare Minister Itzik Shmuli speaks during a ceremony at the ministry’s headquarters in Jerusalem on May 18 2020. (Shlomi Cohen/ Flash90)

Channel 12 reported that Shmuli was backing a plan to grant the same unemployment benefits enjoyed by salaried workers to the self-employed, who have been hit hard by the economic fallout of the pandemic and subsequent shuttering of the economy, and that he was pushing to have it included in the next budget.

According to the plan, which was formulated by the National Insurance Institute, the institute would redirect 0.25% of self-employed workers’ monthly income, supplemented by funds provided by the government, into a fund that would be used to provide benefits should their businesses close.

Representatives of the Ani Shulman organization, which represents the self-employed, panned the plan, saying that it opposed “any additional payment to Social Security on the part of the self-employed.”

On July 11, thousands of Israelis gathered at Tel Aviv’s Rabin Square for a demonstration against the government’s handling of the economic crisis, and what they said was insufficient aid offered to small business owners and professionals in the hard-hit entertainment and hospitality industries.

The next day, the cabinet approved stipends of up to NIS 7,500 ($2,170) for self-employed Israelis, salaried employees, and business owners who have been hurt economically by the coronavirus and the government’s measures to contain it.

However, many of those eligible for the stipends responded with outrage after discovering that the amount that finally reached them was far less than they had been led to believe, amounting to less than NIS 2,000 ($580).

Unemployment in Israel on Sunday morning stood at 21.1% — or 855,380 people — as restrictions imposed amid record daily coronavirus infections further battered the economy.

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