“It Weakens the Incentive to Enlist”: MKs Approve Controversial Day Care Subsidy Bill

Members of the Knesset Finance Committee approved for first reading the so-called “Day Care Law,” which is intended to require the state to continue subsidizing day care centers for ultra-Orthodox men who do not work, even if they have evaded enlistment in the IDF. The Budget Department at the Finance Ministry strongly opposed the initiative, saying the proposal “clearly undermines” the main challenges of enlistment and encouraging employment among the ultra-Orthodox. Legal officials also protested, citing a lack of professional and factual basis and harm to equality.

According to a summary: the Finance Committee approved the “Day Care Law” for first reading. The law would allow subsidies based on the mother’s employment status, even when the father has evaded enlistment. The proposal was approved against the professional recommendations of the Finance and Justice ministries. The Budget Department estimates the cost of the legislation at 300 million shekels a year.

The law is intended to let lawmakers bypass sanctions against draft evaders. The Knesset Finance Committee approved the bill today, Tuesday, for first reading. The proposal, initiated by MKs from United Torah Judaism, Shas and Otzma Yehudit, would allow the transfer of government subsidies for day care centers to households based solely on the mother’s employment, even though the fathers have not legally resolved their military service status. Committee members approved the initiative in complete contradiction to the recommendations of professional officials in the Finance Ministry and the Justice Ministry, who warned of severe economic damage and constitutional difficulties raised by the proposal.

The opinion submitted by the Budget Department in the Finance Ministry estimates the cost of the legislation at 300 million shekels a year, 200 million shekels for families in which the father is required to enlist, and another 100 million for families in which the father does not work and is not required to enlist. This is not a new initiative. The bill has been moving forward since 2024, and it is intended to circumvent the High Court ruling that ordered the state to stop subsidizing day care centers for ultra-Orthodox yeshiva students who had not resolved their enlistment, a sanction meant to incentivize them to enlist in the IDF. Instead of addressing the enlistment issue itself, the bill seeks to disconnect eligibility for the subsidy from the father’s employment status and base it only on the mother’s employment.

What did the professional officials say? The opinion submitted by the Finance Ministry’s Budget Department ahead of the committee debates included harsh criticism of the legislative initiative. The proposal “clearly undermines” the two main economic challenges facing the economy, integrating ultra-Orthodox men into the labor market and enlisting them in the IDF. The law not only does not promote employment, it is expected to harm it. When the subsidy is granted even when the father stays at home, the basic rationale for the benefit is removed. There is an inherent paradox, the more the father works and earns, the smaller the subsidy he will receive. In other words, the law is designed to reward not working.

The proposal is “expected to significantly weaken the system of financial incentives for service” for ultra-Orthodox draft resisters, who were described by IDF officials as having “a decisive contribution to increasing enlistment rates in the past year.”

Legal officials did not spare their criticism either. Attorney Naama Roth of the Justice Ministry said the proposal “lacks a professional and factual basis,” harms equality, and ignores the father’s employment status, including in cases where he is available to care for the children at home. The deputy legal adviser to the Labor and Welfare Committee, Anat Maimon, pointed out a structural problem in the debate, the father is not examined for eligibility for the subsidy, but is counted in the number of household members for calculating the amount of the subsidy, an artificial separation that shows his employment status cannot be ignored.

The legal background document submitted to the committee pointed to a deeper structural problem, enshrining the criteria in primary legislation would mean the law would override any future procedure or support test, so no labor minister would be able to change the rules in the future without new legislation. Deputy Attorney General Gil Limon warned in the debate that “if the purpose of the bill is to contradict the High Court ruling, we also have statements at the constitutional level.”

What the Day Care Law is expected to worsen

The Finance Ministry’s opinion says that if the new law is approved, it is expected to worsen an already difficult economic situation. Today, every ultra-Orthodox household that does not participate in the labor market requires a transfer of more than 10,000 shekels a month from taxpayers’ pockets, an overall negative balance of about 25 billion shekels a year. The expected demographic growth of the ultra-Orthodox population will increase this budget deficit to about 140 billion shekels a year in the future, almost identical to the cumulative economic cost of reserve duty since October 7, which stands at more than 150 billion shekels.

The final result, according to the opinion, is that by 2065 a direct tax increase of 16 percent on all citizens of the state will be required, just to maintain the level of public services the state provides today.

At the request of Finance Minister Bezalel Smotrich, a clause was added at the last minute giving priority to reserve soldiers in admission to day care centers and in the level of the subsidy. But that addition does not address the core problem raised by the proposal, the removal of the financial sanction on ultra-Orthodox men who have not resolved their enlistment, a sanction that, according to the Budget Department, was one of the main factors behind a more than 100 percent increase in ultra-Orthodox enlistment rates since the restrictions were imposed.