“Weakening the Incentive to Enlist”: Controversial Bill Approved by MKs

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

The bill would allow daycare subsidies to be granted on the basis of the mother’s employment, even when the father has evaded enlistment. The proposal was approved contrary to the professional recommendations of the Finance and Justice ministries. The Budget Division estimates the cost of the legislation at 300 million shekels a year.

This is not a new initiative. The bill has been moving through the system since 2024, and is meant to circumvent the Supreme Court ruling that ordered the state to stop subsidizing daycare centers for ultra-Orthodox yeshiva students who have not regularized their military status, a sanction intended to encourage them to enlist in the IDF. Instead of resolving 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 Budget Division opinion submitted ahead of the committee debates contained harsh criticism of the bill. The proposal “clearly undermines” the economy’s two main challenges, integrating ultra-Orthodox men into the workforce and enlisting them in the IDF. The law not only does not promote employment, it is expected to harm it. When the subsidy is also given when the father stays at home, the basic rationale for the benefit falls away. There is an inherent paradox, the more the father works and earns, the smaller the subsidy he receives. In other words, the law is designed to reward non-employment.

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

The legal officials also did not hold back their criticism. Attorney Naama Roth of the Justice Ministry said the proposal is “lacking 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 the purpose of eligibility for the subsidy, but is counted in the number of household members used to calculate the subsidy amount, 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, anchoring the criteria in primary legislation would mean the law overrides any future regulation or support test, so no labor minister would be able to change the rules later without passing new legislation. Deputy Attorney General Gil Limon warned in the debate that “if the purpose of the bill is to contradict the Supreme Court ruling, we also have statements on the constitutional level.”

According to the Finance Ministry opinion, if approved, the new law is expected to worsen an already difficult economic situation. Today, every ultra-Orthodox household that does not participate in the labor market requires the transfer of more than 10,000 shekels a month from taxpayers’ pockets, a total 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 bottom-line conclusion in the opinion, by 2065 a 16 percent increase in direct taxes on all citizens of the state will be required, just to maintain the level of public services the state provides today.

At Finance Minister Bezalel Smotrich’s request, a clause was added at the last minute giving reserve soldiers preference for admission to daycare centers and in the amount of the subsidy. However, this addition does not address the main problem raised by the proposal, the removal of the economic sanction on ultra-Orthodox men who have not regularized their enlistment. According to the Budget Division, that sanction was one of the main factors behind an increase of more than 100 percent in ultra-Orthodox enlistment rates מאז the restrictions were imposed.