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Unemployment falls below 10%, but finance minister opposes planned benefit cut

Israel Katz instructs director-general of National Insurance Institute not to reduce unemployment stipends, despite stipulations of law passed in July 2020

A ruined Likud campaign poster showing Benjamin Netanyahu's face covered by '1,000,000 unemployed' in Tel Aviv on March 21, 2021. (Miriam Alster/FLASH90)
A ruined Likud campaign poster showing Benjamin Netanyahu's face covered by '1,000,000 unemployed' in Tel Aviv on March 21, 2021. (Miriam Alster/FLASH90)

Israel’s unemployment rate fell to 9.5 percent in March from 14% in February, the Central Bureau of Statistics announced Wednesday, as the country continues to emerge from the coronavirus pandemic following widespread vaccination.

Based on the government’s 2020 economic relief package passed last July, once Israel’s unemployment rate falls below 10%, unemployment benefits are to be cut to 90%. The cut should come into effect in a month, on May 21.

However, Finance Minister Israel Katz said on Wednesday he had instructed Meir Spiegler, Director-General of the National Insurance Institute, not to reduce unemployment benefits until June 12.

This request technically asks Spiegler to violate the law. In order to prevent the cut, legislators must amend the primary legislation behind the package.

Finance Minister Israel Katz holds a press conference at the Finance Ministry in Jerusalem on July 1, 2020. (Olivier Fitoussi/ Flash90)

The law stipulates that a small, initial cut will be applied to May’s benefits, which are paid on the first of June. The full 10% cut will apply to benefits for the month of June, paid July 1, when the extension ends, according to Channel 12 News.

Earlier on Wednesday, Katz expressed enthusiasm over the drop in unemployment, and said that the figure was “made possible by vaccines and the extensive economic safety net we produced for the self-employed, business owners and those unemployed because of COVID-19, which gave them the economic infrastructure to get through the crisis and the resources to return to activity when the economy reopens.”

Addressing cuts to benefits, Katz said he was holding discussions with finance officials “to adjust and formulate the employment policy for after June.”

Prime Minister Benjamin Netanyahu attends the Israel Prize ceremony in Jerusalem, prior to Israel’s 73rd Independence Day, on April 11, 2021. (Olivier Fitoussi/Flash90)

Responding to the drop in unemployment, Prime Minister Benjamin Netanyahu said in a statement Wednesday: “From 25% unemployment at the peak of the crisis, we have succeeded in reaching the goal of less than 10%, and it will continue to decline.

“This is happening thanks to the millions of vaccines that we brought to Israel and which have led to the opening of the Israeli economy and its jump forward, and to getting back to life,” the premier finished.

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