Treasury Opposes Day Care Bill, Says a Haredi Household Creates a Monthly State Deficit of NIS 10,000

The Knesset Finance Committee is expected to vote tomorrow, Tuesday, on approving the “day care bill” promoted by the Haredi parties ahead of its first reading in the plenum, despite fierce opposition from the Budget Department at the Finance Ministry and a series of reservations from the legal advisory department. Two opinions from those offices were submitted to the committee this week.

The proposal, officially titled “Admission of a Child to a Day Care Center and State Participation in the Cost of Tuition,” seeks to base eligibility for the subsidy on the mother’s employment alone, and is intended to bypass the High Court ruling that revoked the benefit, worth up to about NIS 2,200 a month, from families of draft evaders who do not report for service. The private bill was submitted by lawmakers from United Torah Judaism, together with MKs from all coalition factions. Today, subsidy eligibility depends on both spouses working or studying. Under the proposal, only the mother’s status would be examined, so families in which the father does not work or study could again receive the discount.

In the Budget Department opinion, signed by the department’s employment coordinator, Neta Bar-Ziv, it was written that the proposal “clearly undermines two of the Israeli economy’s central challenges”, integrating Haredi men into the labor market and into service in the IDF, and that it “contradicts the basic economic rationale” of the subsidy as a whole, whose purpose is to encourage both parents to work.

The department says that “when the father does not work, there is no barrier to the mother’s integration into the labor market,” and therefore disregarding his status “is not consistent with the basic rationale of the benefit’s purpose.” They also warn that the proposal will harm enlistment efforts. According to them, “the immediate and certain effect expected from the passage of the law is an increase in income of tens of thousands of shekels per year for the households of draft evaders,” in a way that “explicitly contradicts the principle of economic incentives.” The budgetary cost of the benefit is estimated by the Treasury at about NIS 300 million.

According to the document, the employment rate among Haredi men stands at only about 53 percent and has not improved significantly in the past decade, creating a growing fiscal burden. An appendix to the opinion states that on average, “a Haredi household creates a deficit effect in the state budget of about NIS 10.5 thousand per month, financed by a surplus originating from non-Haredi Jewish households.” At the economy-wide level, the Treasury estimates the negative balance stemming from populations with low labor force participation at about NIS 25 billion a year, a sum expected to grow, given demographic trends, to about NIS 140 billion a year in the future.

The legal advisory opinion, drafted as a series of questions for discussion, focuses mainly on concern over harm to equality. Today, a family in which both parents work receives priority for admission to day care, a limited resource with demand exceeding supply, over a family in which only the mother works. If the law is approved, the legal advisers note, the working family would lose this priority. In addition, they point to a distortion in the wording: since the father’s income would still be counted in the per capita income calculation, a family in which the father works could actually receive a lower subsidy tier than a similar family in which the father does not work at all.