The spending cuts planned to fund the recent agreement reached between the government and the social workers’ union has been cancelled. According to a fiscal report released by the Ministry of Finance on Sunday, the government has decided to add the 270 million shekel cost of the agreement to the coronavirus emergency spending plan.

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Following a 16 day strike, the government and the Histadrut, which represents the social workers’ union, had agreed to additional funding that will allow enhanced personal security for social workers. This demand followed growing reports of attacks against social services employees. In addition a pay rise will be activated this coming June, while social workers will receive a bonus for the increase in their work-load due to the pandemic.

Directly after signing the agreement, the Ministry of Finance had proposed to fund the extra spending with a 270 million shekel budget cut, in order to avoid any additional increase in government spending.

Finance Minister, Israel Katz (Photo: Adina Wolman)

 

The decision to cut spending while simultaneously increasing spending by approximately 80 billion shekels to fund emergency coronavirus measures had come under fire for pushing unnecessary cuts in the midst of a deep recession. Yesterday, the MoF agreed to suspend the cuts, funding the deal instead from the additional spending on coronavirus measures.

“We have decided that the pay rise will be funded without the need for any additional cuts," said a spokesperson for the MoF. “However, if no additional budgetary source is found until 2021, any expenses will have to be based on spending reduction.”

Critics have claimed that the decision may signal a paradigm shift in the way the MoF is handling the coronavirus crisis. The MoF has taken great care to separate what they consider government spending on emergency measured due to COVID-19, and spending unrelated to the crisis. The separation has allowed the MoF to approve government spending of emergency measures while restricting increased spending on what they regard as current spending.

According to the criticism directed at this policy, the distinction is not always as clear cut as it seems. Social workers, for example, have had to face increasing workloads during the crisis, and have had to work throughout the crisis, enduring high levels of risk. The deal, however, was not considered by the MoF as part of the coronavirus spending.

Consistent government under- spending (Design: Idea Davar)

Critics have also pointed out that the government has not come close to using the full extent of funds made available to it as part of the emergency fiscal stimulus. As of July, 12.5 billion shekels had yet to be used, a full 35 percent of the funds made available to the government since the package was announced. These funds could be used to fund additional needs which have arisen over the course of the crisis, which the MoF does not consider to be included in the emergency measures.