Serious Blow to the Economy: How Much Will the Daycare Subsidy Law Cost Us?

The daycare subsidy law, which has been promoted in recent days as part of the coalition’s effort to prevent an early collapse, is expected to increase the burden on the reserve forces and damage the economy, as we reported tonight (Tuesday) on Kan News. It is a law that creates an unsustainable reality, both security-wise and economically, and in practice serves political interests. If and when the law takes effect, it will restore daycare subsidies for yeshiva students who have been ruled to be evading military service, subsidies that can reach about 2,000 shekels per month per child.

In addition, once this benefit is restored to draft evaders, their incentive to enlist or enter the labor market drops sharply. For the economy, the implication is twofold, with the economy expected to absorb damage of tens of billions of shekels a year because reserve soldiers are absent from the labor market for hundreds of days each year due to the shortage of troops. This is without mentioning the heavy personal price they are paying in any case. As noted, Haredi yeshiva students who receive the subsidy, even if they do not work or study a profession, are effectively also being encouraged not to go to work. The low employment rate and a series of personal benefits mean that a subsidized Haredi family is already receiving 10,000 shekels a month from the taxpayer.

This amounts to an annual deficit of 25 billion shekels a year, which could continue to swell to 140 billion as the share of the Haredi public in our society grows. Under pressure from the Haredi parties, representatives of the Haredi factions are working to pressure the government to advance legislation that will benefit their public, amid the danger of dissolving the Knesset. Earlier this week, Shas chairman Aryeh Deri demanded that the Basic Law granting Torah students the same rights as soldiers be brought to a Knesset vote כבר בשבוע הקרוב, already next week. Deri conditioned his faction’s support for advancing other bills on this. "This will be a historic declaration of the supreme value of Torah and of the contribution of Torah students to the people of Israel and to its security," he said at the start of his faction meeting. The bill in question, the Basic Law: Torah Study, is intended to replace the enlistment law. Last week, Attorney General Gali Baharav Miara spoke out against initiatives promoted by the government in a speech at the Israel Bar Association conference, and one of the issues she raised was efforts to exempt the Haredi public from military service.

More on this topic: Haredi protesters tried to break into the police station in Jerusalem. "This is an exemption from enlistment law in disguise," the Haredi ultimatum and the uproar over the daycare subsidy law