Welfare in Israel

Israel's welfare system did not emerge from scratch in 1948 but grew out of a dense network of voluntary and semi-official Jewish organizations that had developed during the decades of the Yishuv — the pre-state Jewish community in Mandatory Palestine.[1] These institutions provided much of the community's schooling, health care, child welfare, and social welfare, drawing on Zionist social-security ideals that combined social-justice commitments, late nineteenth-century European socialist thought, and an aspiration to replace charitable donations with durable institutions capable of protecting people against life's hardships.[1]

The Histadrut, founded as the General Federation of Hebrew Workers, was the single most important pre-state welfare institution.[2] Its compulsory sick fund was reorganized in the 1930s and financed mainly by membership fees, with some support from the Jewish Agency but none from the British Mandatory government.[2] The Histadrut also established rudimentary social-security arrangements, particularly unemployment benefits, and by the late 1930s these institutions amounted to what one historical account calls a "virtual welfare state" — though one whose coverage was confined to the Jewish community.[2] The Jewish Agency itself was directly responsible for health, welfare, and educational institutions serving the Yishuv before statehood.[3]

After the State of Israel was established in May 1948, many functions that had been performed by these voluntary and quasi-governmental bodies shifted to central state institutions.[3] Mass immigration more than doubled the population within the first few years, making immigrants' economic, social, and cultural integration a central task for both the government and the broader community, and placing enormous pressure on nascent state structures to absorb and provide for newcomers.[1]

Israel's Ministry of Social Welfare began operating in June 1948, continuing the work of a Social Welfare Department originally established under the British Mandate in 1931.[4] The two pillars of the modern welfare framework were put in place within the state's first decade: the National Insurance Act of 1953 and the Social Welfare Service Law passed by the Knesset in 1958.[4]

The National Insurance Law, passed by the Knesset in November 1953, established compulsory social-insurance programs that covered the population broadly.[5][1] Programs operating from April 1954 included old-age, survivors', maternity, and employment-injury insurance; a family-allowance scheme for families with four or more children was added in September 1959.[1] Contributions came from employers, employees, and the government, and the National Insurance Institute administered the program as an autonomous state agency under the supervision of the Minister of Labor, with a statutory Public Advisory Council representing employers, labor unions, industries, and other interest groups.[1]

During the 1950s, national and local government shared responsibility for education, health, social welfare, public works, employment programs, subsidies, and social insurance. Municipalities and local authorities maintained social services with national-government financial contributions, while the national government also supplied some services directly.[1] Despite this broad reach, basic social-welfare legislation was largely absent in that era and there was no legal basis for a general right to assistance.[1]

The early social-insurance benefits had distinct forms and limits. Old-age pensions began in 1957; by the end of March 1958, 31,500 insured people received benefits, roughly 35 percent of the population aged 65 and over, and the payments were judged inadequate even for minimum necessities.[1] Maternity insurance included hospital childbirth grants covering hospitalization and an infant's first clothing, as well as allowances equal to 75 percent of regular income for twelve weeks for employed and self-employed women.[1] Employment-injury insurance covered workers including self-employed people and provided financial and medical benefits alongside rehabilitation.[1]

Alongside compulsory national insurance, the Histadrut administered semi-voluntary insurance programs for workers in agriculture, construction, and industry, providing benefits for illness, death, and retirement.[1] Health care at the time was substantially socialized: government, municipalities, and the Histadrut's workers' sick fund provided services, while private physicians and hospitals served a relatively small segment; the sick fund covered 60 percent of the population and received extensive government financial support.[1] By 1986, the Histadrut-affiliated Kupat Holim covered about 70 percent of the population, including Arabs, while other organizations' sick funds covered about another 20 percent.[4]

The NII initially served partly as an instrument of immigrant absorption.[2] In its early years, compulsory payroll and self-employment contributions exceeded benefits paid; entitlements amounted to 1.6 percent of GNP in 1957.[2] As programs and benefits expanded, payouts reached 5.2 percent of GNP by 1970 and 8.7 percent by 1974, when social-security benefits exceeded 10 percent of total budget expenditures.[2]

During the first three decades of statehood, Israel developed the basic features of a modern welfare state.[6] Its broad service network encompassed health, education, housing, social security, and personal social care, alongside policies intended to maintain and improve living standards — a far-reaching transformation of Israeli society that the source characterizes as among the most significant of that era.[6]

The early state sought to distribute newly produced wealth equitably through progressive taxation and other measures associated with welfare states.[3] Public housing was broadly allocated: new immigrants of any financial means received some form of public shelter, unlike programs that restricted eligibility to the lowest-income households.[3] Spending on health, education, and welfare services rose from 17 percent of GNP in 1968 to approximately 20 percent in the early 1970s, remaining at around that level through 1986; education and health were the main drivers, while the share of other welfare services, including immigrant-absorption services, stayed roughly constant.[4]

In response to domestic social unrest, the government introduced large-scale programs in the early 1970s aimed at improving education, housing, and welfare assistance for the urban poor — partly intended to address socioeconomic disparities between Ashkenazi and Mizrahi (Oriental) Jews.[4] Programs introduced in that period did not, however, eliminate the gaps: in the late 1980s, the Library of Congress country study reported that Oriental Jews continued to lag behind Ashkenazim in education, occupational status, housing, and income.[4]

After 1967, special programs for new immigrants included low-interest loans, subsidized housing, and rent or mortgage relief, provided through the Ministry of Immigrant Absorption and the World Zionist Organization.[4] These programs drew criticism from some native-born Israelis and long-term residents in lower-income brackets, particularly regarding assistance to relatively well-off immigrants from Western countries.[4]

Before Project Renewal, Israel's approach to urban poverty had relied on slum clearance and densely populated public housing projects, premised on the assumption that relocating people into new housing would address the roots of poverty.[3] That approach proved inadequate as social distress and physical deterioration appeared in areas built in the 1960s and 1970s.[3] Prime Minister Menachem Begin announced Project Renewal in June 1977 as a joint Israeli-diaspora urban revitalization program calling for an intensive effort to provide adequate housing for approximately 45,000 Israeli families. Its approach combined community participation with coordination among public and service-delivery bodies and sought to connect housing renewal with social policy and community rehabilitation.[3]

Unemployment insurance was established in 1973 after prolonged debate, despite opposition that one account notes came, perhaps unexpectedly, from parts of the Israeli labor movement.[6] A national income-support safety net began in 1982, replacing assistance to needy people previously delivered through local-authority social-welfare bureaus and shifting responsibility to the national government; the program was designed to guarantee a legally defined minimum income nationwide to people meeting eligibility criteria.[6]

Welfare in Israel is formally a cooperative state-local service.[7] The Ministry of Welfare funds programs in whole or in part and sets eligibility criteria; local authorities determine eligibility under those criteria, assemble benefit packages based on programs established by law, and provide social services intended to assist families with rehabilitation or adjustment.[7] The central government funds the majority of the welfare budget for income insurance and services to special population groups, while local authorities have taken on increasing responsibility, authority, and activity in welfare services over time; together, education and welfare account for over 40 percent of local council expenditures in the period described by the source.[3]

Under the Social Welfare Law of 1958, municipalities and local authorities are required to maintain social-service departments.[8] The ministry sets policy, initiates legislation, issues operating regulations, and supervises services offered by public and private organizations.[8] Around 75 percent of local social-services departments' budgets comes from the ministry.[8]

The NII administers the core social-security system, which combines national-insurance schemes with non-contributory income-maintenance programs.[6] It describes itself as a public social-security institution operating under the National Insurance Law and paying benefits to protect people and families facing temporary or long-term hardship. Its stated goals include providing subsistence to people unable to support themselves and redistributing income from financially better-off groups toward those that are weak or vulnerable.[9][5] In 2022, the NII served approximately 9 million residents, operated about 30 social programs encompassing nearly 130 types of payments and services, and paid approximately NIS 113 billion in benefits.[10]

National Insurance benefits include long-term benefits — principally old-age, survivors', and general-disability benefits — and income-substituting benefits that temporarily support insured working-age people unable to earn income, including people on maternity leave, those absent from work after work injuries, unemployed people, and those on reserve military service.[11] Supplementary income benefits are also available for residents aged 20 or over who lack employment or whose income is below the legal minimum.[11]

The welfare system covers both cash benefits and services. Cash programs include old-age pensions, disability insurance, child allowances, income maintenance, and long-term care; service programs include social-service bureaus dealing with family, youth, community welfare, and rehabilitation, most of which operate within local or regional government.[6] The legislation-based system also covers national and community services for older people, single parents, children and youth, substance-use prevention and treatment, new immigrants, probation, remedial programs for school dropouts, residential and observational services for youth in distress, sheltered workshops and employment counseling for people with disabilities, and residential and community programs for people with developmental disabilities.[8]

National health insurance has been universal since the National Health Insurance Law was enacted in 1994 and implemented in 1995.[8] Before that law, about six percent of Israelis were uninsured through any of the four existing health funds; the law established a standardized basket of medical services, including hospitalization, for all residents, and the four comprehensive health-insurance schemes must accept applicants regardless of age or health.[8] Funding includes an income-based health-insurance tax collected by the NII and employer participation, with payments to the funds calculated using a weighted count of insured people that accounts for age, distance from health facilities, and other criteria.[8]

Welfare indicators include general-government expenditure on welfare, people registered at Social Service Departments, people with an individually defined need for intervention, and people placed in welfare settings.[12] In 2022, general-government expenditure on welfare reached NIS 188.3 billion, or 28.5 percent of total expenditure, compared with NIS 177.6 billion and 27.6 percent in 2021.[12] In that year, 1.130 million people were registered at Social Service Departments — about 118 per 1,000 people overall, approximately 165 per 1,000 among Arabs, and 104 per 1,000 among Jews and others.[12] Some 613,500 people had an individually defined need for intervention and 292,200 were placed in welfare settings.[12]

Voluntary nonprofit organizations complement public welfare services. National women's umbrella organizations such as WIZO and Na'amat, as well as independent local organizations, provide care for children who are neglected or abused, services for older people, and assistance to new immigrants.[6] Their role becomes more significant when government spending is reduced or public authorities cannot meet demand; locally operated food banks and soup kitchens are among the forms this voluntary provision takes.[6]

Child allowances have been among the most politically debated components of Israel's welfare system. A family-allowance scheme for families with four or more children was first introduced in September 1959.[1] A significant turning point came in 1975, when a tax reform replaced child-related tax credits with direct child benefits and substantially increased those benefits — one account says the reform quadrupled allowances relative to those granted through 1969, with larger sums paid for children from the fourth onward.[13]

Child allowances became fully universal toward the end of the 1990s, covering every child in Israel under 18, and were at that point the second-largest social-security program, accounting for about 20 percent of benefit payments.[6] Since March 1993, allowances have been paid for every child regardless of parental income.[11]

A major reversal came in 2002 and 2003: benefit updates were frozen and payments were then reduced by up to 15 percent as part of the June 2003 economic recovery plan.[13] A 2003 reform also replaced a scale that rose with family size — especially from the third child — with a flat-rate allowance for all children; children born after July 1, 2003, were assigned the new rate, with the transition scheduled for completion in 2009.[6] The child-benefit budget fell from NIS 8.1 billion in 2000 to NIS 5.1 billion in 2008, a 37 percent decrease.[13] The reduction process was halted in 2007, and from 2013 the allowance was equalized for children regardless of birth order.[11] As of December 2023, the aggregate child allowance for the first three children stood at ILS 578.[14]

The debate over child allowances has intersected with demographic and economic concerns. The argument that larger allowances encouraged fertility and reduced labor-force participation, particularly among ultra-Orthodox Jewish and Arab families, was prominent in the reform debate; at the same time, social, cultural, and economic factors are cited alongside benefit-level changes in accounting for observed fertility patterns, and the relationship between benefit levels and fertility remains contested.[6][13] Poverty statistics illustrate the stakes: in 2019, poverty rates were 45.2 percent among households with four or more children and 55.6 percent among families with five or more children, and child poverty reached 28.7 percent in 2020.[14]

Long-term-care insurance began operating in 1988, providing one of the welfare system's most significant expansions in its later decades.[6] The program serves older residents who depend substantially or entirely on others for essential daily activities; eligibility is subject to dependency and income tests.[6] Benefits can include personal care at home or in a day-care center, housekeeping, absorbent materials, laundry, and distress alarms, delivered by licensed nonprofit or commercial service organizations, and the program grew rapidly in both beneficiary numbers and expenditure after it began.[6]

Services for older people involve multiple public and voluntary bodies, including the health and welfare ministries, the NII, health funds, and organizations such as JDC-ESHEL.[15] The NII administers old-age social-security programs, including a basic flat-rate pension and supplementary benefits for people without other sources of income; the national pension system is supplemented by work-related pensions.[15] Women homemakers have been entitled to a basic old-age pension since January 1996.[11] The NII also administers the Community Long-term Care Insurance Law, which finances community services for more severely disabled older people and supports development of institutional and community-care infrastructure.[15]

The costs of long-term care have grown substantially: annual costs rose from NIS 7 billion in 2018 to NIS 21 billion in 2025, and the number of elderly recipients rose from about 180,000 to 392,000 over the same period.[16] About half of the NII's benefit payouts went to old-age and long-term-care allowances, with the remaining half covering disability, work injury, child, and unemployment benefits, according to a 2024 account.[17] The minimum medical-disability entitlement level rose from 40 percent to 60 percent in January 2004.[11]

A work grant introduced in 2007 — a negative income tax — provides payment to employed people with low incomes, especially families, intended to reduce poverty without weakening the incentive to work; 500,275 people were eligible in 2014, with a 70 percent uptake rate, and 2015 spending on the grant was NIS 3.1 billion, 6.1 percent of social-security spending at the time.[18]

Israel's statutory system for child protection rests on the Youth (Care and Supervision) Law of 1960, which provides for social-worker involvement and court orders concerning a minor's care or supervision, including orders related to education and mental rehabilitation and, in certain circumstances, removal from a responsible person's custody.[19] A broader policy framework, the National Program for Children and Youth at Risk, began in 2008 and brings together government ministries and other bodies to identify children at risk and coordinate responses.[19]

Services for people affected by domestic violence include a network of state-operated shelters. In 2023, the Ministry of Welfare and Social Affairs operated 17 shelters for survivors of domestic abuse, including three for the Arab community, two mixed Jewish-Arab shelters, three for the ultra-Orthodox and religious community, and eight for the general population.[20] The ministry also operated a hotline, including a text-message-based option; between January and November 15, 2023, the hotline received 5,877 calls concerning domestic-violence cases.[20]

A significant shift in Israeli social policy began with the 1985 economic stabilization plan, which reduced the size and role of government in the economy.[21] Reference accounts describe the period as the beginning of a transition toward a more market-oriented welfare model, involving changes to child allowances, old-age and disability pensions, unemployment protection, pension provision, and in-kind services.[6]

Israel moved away from a European model emphasizing social solidarity and limiting inequality toward a more limited state role with greater exposure to market forces.[6] Cuts in welfare and social-security spending and changes to benefit programs were central trends from the late 1980s, and especially during the major reform and restructuring program adopted in 2000–2004.[6] During those reforms, income-support benefit levels were reduced; among the changes were tighter eligibility for people under 25, a work-reporting requirement for mothers whose children were aged two and older rather than seven and older, and cancellation of most recipient rebates — affecting about 70 percent of income-support recipients.[6]

At the beginning of the 2000s, policy changes sharply reduced both income-support levels and the number of people eligible, alongside efforts to encourage people in poverty to enter the labor market.[22] As unemployment grew during the 1990s, amendments also made unemployment benefits harder to obtain; the stated aims were to strengthen labor-market discipline and increase flexibility, while the effect was to reduce the scheme's capacity to provide adequate protection for unemployed people.[6]

By 2015, total social spending — including education, health, and welfare — reached NIS 192 billion, then the highest level since 2000; welfare spending was NIS 94 billion, or 21 percent of total government spending, with 90 percent of social-security spending consisting of NII allowances.[18] Nevertheless, after taxes and transfers, Israel's disposable-income poverty position was last among the OECD countries in the comparison, alongside Mexico, reflecting persistent structural challenges.[18]

In 2014, the Committee for the War Against Poverty in Israel (the Elalouf Committee) proposed a plan estimated to cost NIS 7.4 billion annually and intended to bring Israel's poverty rate to the OECD average within a decade.[18] Only NIS 434 million was added to relevant budget items in 2015, and NIS 1.9 billion in 2016 — 26 percent of the committee's recommended annual addition.[18] Some programs were expanded, including income supplements for senior citizens, but major recommendations remained unimplemented, with planned added anti-poverty spending of NIS 4 billion for 2017 directed largely toward child savings, work grants, and senior-citizen income supplements.[18]

Public social expenditure in Israel reached 16.6 percent of GDP in 2023, up from 15.8 percent in 2022, while remaining six percentage points below the OECD average.[23]

Israel measures poverty in relative terms, defining the poverty line as 50 percent of median available income per standardized family member, where available income is economic income plus transfer payments minus direct taxes.[11] These measurements capture the redistributive effect of the welfare system as well as the baseline level of economic hardship.

In 2023, 1,984,211 people lived below the poverty line, including 872,404 children and 158,518 senior citizens.[23] Individual poverty stood at 20.7 percent, child poverty at 27.9 percent, and senior-citizen poverty at 12.8 percent.[23] The NII's 2024 announcement described broadly stable conditions under its revised baseline: individual poverty rose slightly from 20.6 percent to 20.7 percent, while family poverty fell from 20.2 percent to 20.0 percent, with approximately 2 million people and 880,000 children living in poverty.[24] Without state intervention through transfer payments and direct taxes, individual poverty incidence would have reached 31.5 percent and family poverty incidence 34.5 percent.[24]

Transfer payments and direct taxes together reduced individual poverty incidence by 33.5 percent and family poverty incidence by 41.2 percent in 2023; senior-citizen and survivors pensions and disability pensions were the most effective individual benefit categories in reducing poverty.[23] The net-income Gini index fell by 1.5 percent between 2022 and 2023.[23]

Poverty is concentrated in certain population groups. Poverty among Arab and Haredi (ultra-Orthodox) families remained substantially higher than among non-Haredi Jewish families.[23] The share of poor people who were Arab or Haredi rose from 44 percent in 2002 to 57 percent in 2015.[18] In 2021, the share of Jerusalem's Arab Palestinians living in poverty was reported at 60 percent by the Jerusalem Institute for Policy Research.[20] Poverty rates were 45.2 percent among households with four or more children and 55.6 percent among families with five or more children in 2019.[14] The assessment that poverty is strongly associated with household size, and that substantially higher child allowances alone would not necessarily bring Israel's poverty rate below 20 percent if large household sizes remain prevalent, is the analysis of INSS researchers.[14]

Approximately 1.127 million residents were registered with local social-services departments in November 2020, across roughly 452,000 case files; around 369,000 registered family members were classified as having no individual welfare need.[25] Poverty and welfare-service registration are distinct measures, and the size of the service population depends on the definitions and overlaps between different groups.[25]

Questions about the long-term financial sustainability of Israel's social-security system have intensified in recent years. The NII accumulated a fund of NIS 245 billion by 2023, slightly more than two years of welfare payments, after years in which income exceeded outgoings.[17] From 2023, payments began to exceed receipts, reversing the prior pattern.[17] The NII's actuarial report projected that the fund would be empty by 2036, absent further financing or repayment of money transferred to the state treasury — moving the expected date forward from 2044 in the preceding report.[17]

A 2026 State Comptroller report cited by Calcalist gave 2035 as the projected year for exhaustion of NII reserves, attributing particular pressure to the rapid growth of long-term-care benefits: annual costs rose from NIS 7 billion in 2018 to NIS 21 billion in 2025, while the number of elderly recipients grew from about 180,000 to 392,000.[16] The Comptroller found that the 2018 reform expanding long-term care had been implemented without sufficient actuarial analysis.[16] The 2035 and 2036 projections reflect different reports and different underlying assumptions and should not be read as identical estimates.

About half of the institute's benefit payouts went to old-age and long-term-care allowances, with the other half covering disability, work injury, child, and unemployment benefits.[17] The system also has a universal component under which rich and poor receive almost the same old-age allowance.[17]

Significant disparities in the level and quality of welfare services available to residents in different localities and communities have been documented across multiple sources. The 2019 Ministry of Welfare budget reached NIS 10.1 billion initially, including NIS 2.3 billion in local-authority participation, rising to NIS 11.5 billion after in-year additions, of which NIS 8.2 billion went to local social-services departments.[26] The ministry's budget grew about 61 percent from 2012 to 2019, while Israel's population grew 24 percent over the same period.[26]

Despite overall budget growth, per-person spending was markedly unequal: in 2019, average welfare spending per registered service user was NIS 5,110 in local authorities in the highest socioeconomic clusters (7–10) and NIS 3,056 in the lowest clusters (1–4).[26] A key structural reason is a matching requirement: 91 percent of social-worker positions required local authorities to contribute 25 percent of their cost, which poorer authorities could struggle to afford.[26] An average authority in cluster 5 had 2.5 times as many social-worker positions as an authority in cluster 1, and 600 positions were unfilled overall.[26] During the second half of the year, the ministry could reallocate unspent funds from authorities unable to meet matching requirements to those able to do so, and the State Comptroller found that this allocation system could favor stronger authorities and widen disparities.[26]

Domestic-violence service gaps illustrated the same pattern. Of NIS 300 million designated for the national program, NIS 128 million had been allocated, and among 95 of 110 specialized centers reviewed, 38 percent of 2,327 people identified as needing treatment received care at those centers.[27] People from 41 local authorities were not referred to specialized centers in 2019, and waiting times at some centers ran from one to three months.[27] The State Comptroller warned that the funding method could widen disparities between weaker and stronger authorities; the ministry said it accepted the recommendations and that some were being implemented.[27]

Services outsourced to nonprofit organizations through government tenders amounted to approximately NIS 10 billion, or 80 percent of the Ministry of Social Welfare's NIS 12.6 billion budget as of 2019.[28] One account argued that the ministry underfunded providers' operating costs by 30 percent, leaving NGOs and philanthropy to cover an estimated NIS 4.3 billion in costs, and described a reimbursement system in which providers paid expenses before submitting reports and could wait months for reimbursement.[28]

The 2023 U.S. Department of State report documented specific service gaps for particular communities. In Bedouin communities in the Negev, the seven Bedouin townships were reported to have poor infrastructure and inadequate access to services including health care, education, welfare, public transportation, mail, and garbage disposal, particularly compared with Jewish towns and cities in the area; approximately 90,000 Bedouins lived in 35 unrecognized villages without access to government services.[20]

For asylum seekers — a legally distinct population — the 2023 State Department report states that the government generally did not provide public social benefits.[20] Adult asylum seekers could enroll in health insurance only through their employers; without employer-provided insurance they had access only to emergency care, while the Ministry of Health offered insurance for children of asylum seekers for 120 shekels per month.[20] Many asylum seekers who lost jobs after October 7, 2023, were not eligible for unemployment benefits or income-support allowances, and most asylum seekers needing welfare services received them from aid organizations rather than the state.[20]