"The support targeted to working parents of young children is not able to be utilized by the majority of such families," states the Bank of Israel in an excerpt from the Bank of Israel Annual Report which will be published at the end of the month.
The Bank of Israel adds, "Private expenditure in Israel on childcare for young children is among the highest in OECD countries, against the background of low support levels compared with other countries." The average net payment for children, net of benefits and tax breaks in the OECD in 2004 was 15.3%, compared with 34% in Israel - 120% above the OECD average.
One of the key recommendations of the Trajtenberg Committee for Socioeconomic Change was to institute subsidies for education of children from the age of 3. The Bank of Israel nevertheless criticizes the measure, saying, "This step will reduce the payments burden on parents, but not the private expenditure on care for children up to those ages; most of those children are in private establishments, which are very expensive."
The Bank of Israel estimates the cost of childcare for working mothers at NIS 1,900 per month - a quarter of the average mother's monthly net salary.
"The primary method of such support for these families is the subsidizing of public childcare establishments for young children (daycare and nursery programs). In Israel, the average share of subsidies reaches about 44% of the monthly cost of the establishment - markedly lower than other developed countries which are characterized by high rates of employment of women (subsidies average about 68%). Additionally, many mothers who are eligible for the subsidy do not actually utilize the benefit, primarily due to a shortage in supervised establishments through which the benefit can be utilized. In practice, only about one-fifth of total working mothers with children of the relevant ages benefits from the subsidy."
The Bank of Israel calculates, "Subsidizing half the expense of childcare establishments will increase the employment of mothers with young children from the current 63% to about 67%, at a total cost of NIS 2.9 billion. It follows that about 21,700 women would join the workforce, at an annual budget cost of about NIS 135,000 per "new" employee."
The Bank of Israel concludes that subsidizing childcare will increase the employment rate, increase the number of work hours, improve poverty indices, and reduce social gaps in education. "The high cost of the support is justified in a more long term view as well: employment of women will contribute to developing a behavioral model for their children, and as such will increase the chances of the children integrating into the workforce in the future," it adds.
Published by Globes [online], Israel business news - www.globes-online.com - on March 12, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012