Activation Policies and Social Experiments: the Israeli Case Study Orit Fisher

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2013 Activation Policies and Social Experiments: The Israeli Case Study Orit Fisher

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COLLEGE OF SOCIAL SCIENCE AND PUBLIC POLICY

ACTIVATION POLICIES AND SOCIAL EXPERIMENTS: THE ISRAELI CASE STUDY

ORIT FISHER

A Dissertation submitted to the Department of Sociology in partial fulfillment of the requirements for the degree of Doctor of Philosophy

Degree Awarded: Summer Semester, 2013 Orit Fisher defended this dissertation on March 28 2013. The members of the supervisory committee were:

Jill S. Quadagno Professor Directing Dissertation

Iatarola, Patrice University Representative

Isaac W. Eberstein Committee Member

Daniel Tope Committee Member

The Graduate School has verified and approved the above-named committee members, and certifies that the dissertation has been approved in accordance with university requirements.

To those who I cannot do without

For the memory of my dad who always inspired me

iii

ACKNOWLEDGEMENTS

In my path at the Sociology Department at Florida State University, I was lucky to have had people who greatly inspired and influenced me both as a scholar and as a person. I would like to thank Dr. Jill Quadagno, for her endless support and encouragement. I felt lucky when she first agreed to mentor me in the first place. I am glad to have this space to thank her and express my sincere gratitude. I would like to thank Dr. Ike Eberstein, without whom I would, literally, not be here. At difficult moments, he was an island of sanity for me and his open door and infinite patience was a great help. Dr. Eberstein and Nancy always provided me good and honest advice, a secure ground and a feeling of belonging. Believers say that when one becomes a guardian of a newborn, the newborn takes something from the personality of the guardian, so I feel even blessed for his part in my son’s life. I would like to thank my committee members- Dr. Daniel Tope, for his wonderful advice and support throughout this process. I would like to thank Dr. Patrice Iatarola for all of her support which went above and beyond what one could ask for. On a personal level, Dr. Iatarola and Magi allowed me to dedicate myself to my study, as I know that my loved ones were taken care. I would also like to thank Dr. Gloria Lassen and Juan for their continuous smile and good word. Thank you Dr. Gershon Tennenbaum, head of the Israeli community in Tallahassee, who believed in me from the first time we met, and did everything in his ability to make this happen for me. Thank you to Mona and Dave Markel the head of the Jewish Federation in town that provided me with the opportunity to become part of a wonderful community. A special thanks to the Florida Israel Institute for supporting my education and for providing me with this wonderful opportunity to study aboard and become a better scholar. Many thanks for Jamie Yeargan, without whom our department would have fallen apart and to Kim and Lettie who make our work so much easier, joyful, and possible to manage (mainly with kids -thank you for that Kim). From the bottom of my heart, I would like to thank my dear colleagues and friends at FSU. I truly value Carmen von Rhor for her friendship and I am thankful for all of her help and advices along the way - I am not sure what I would have done without her, and she definitely made my journey much more fun. I would also like to thank Brandon McKelve for supporting and encouraging me and for being a friend during difficult and happy times. I would like to thank Rusty Shekha, Ben Kail, and JoEllen Paterson. I do not feel that I am leaving Tallahassee with

iv many friends but I feel that I am leaving with friends for life. Thank you to all my other fellow sociologists who provided good memories for me over the years. Thank you to my mother and father, Hana and Carol Fisher, to my sister, Anat, and her family. I know it was not the easiest years for you all but your love and support helped me, and shaped me as a better person. I would like to thank you for being that one constant factor in my life who I can always count on. I love you more than words can express. Thank you to Dvora Shalem, Professor Elieser Kaplinsky, Hayuni’s, Carmel’s, and Rotenberg Families. Almost a final thank you to my grandparents Menahem, Daphna, Yadviga and Rita, that always made me feel special, supported, guided and guarded me. I miss you and thinking of you all every day. Finally, thank you to my wonderful family. My loving partner Khen, you started this wonderful adventure for me and made this journey possible. You encouraged me and supported me in everything I did. Thank you for days, weeks and months where you allowed me to focus on my work without any distraction or guilt. You are an inspiration. I feel lucky to have you in my life. Itai and (A)idan, my two wonderful boys, your unconditional love makes me a better, a happier, and a more complete person.

TABLE OF CONTENTS

List of Tables ...... viii List of Figures ...... ix Abstract ...... x 1. INTRODUCTION ...... 1 1.1 Introduction ...... 1 1.2 The History of Activation policy ...... 3 1.3 Privatization Theory: Merging a Public Problem with Private Profit ...... 8

2. WELFARE TO WORK (UNITED STATES, GREAT BRITAIN, THE NETHERLANDS) ...... 12 2.1 United States Welfare Reforms and the Beginning of Activation Policies ...... 12 2.2 Wisconsin Works Welfare Reform ...... 15 2.3 Research and Evaluation ...... 18 2.4 European Labor Market Developments ...... 23 2.5 Following the American Model...... 26

3. WORLDVIEW ATTITUDES ...... 28

3.1 Welfare Regime Theory ...... 28 3.2 The Relationships between Welfare Policy and Public Perceptions ...... 30 3.3 Data ...... 33 3.4 Statistical Model ...... 38 3.5 Analysis and Findings ...... 40 3.6 Limitations ...... 54 3.7 Conclusions and Discussion ...... 56 4. THE ISRAELI CASE STUDY ...... 62

4.1 The Establishment of the Israeli Welfare State ...... 62 4.2 The Link between the Local and the Global – Globalization and Localization ...... 69

5. THE ISRAELI WISCONSIN WELFARE TO WORK PROGRAM--THE BIRTH AND DEATH OF A PROGRAM ...... 72

5.1 Introduction ...... 72 5.2 Methods ...... 74 5.3 The Birth of a Program ...... 78 5.4 August 1st 2005-The Israeli Welfare to Work Program is Launched ...... 100 5.5 The Israeli WTW Program's Results over the Trial Period - The First Year ...... 111 5.6 The End of the First Year- the Second Tamir Committee ...... 116 5.7 A Third Year to the Trial Period ...... 118 5.8 Lights for Employments...... 125 5.9 The End of the Program ...... 137

5.10 After the Storm ...... 138 5.11 Conclusions and Discussion ...... 140

6. CONCLUSIONS ...... 143

APPENDICES ...... 150

A. INTERVIEWS ...... 150

B. PROGRAM TIMELINE ...... 151

C. QUESTIONNAIRE GUIDE FOR FORMAL INTERVIEWS ...... 153

D. HUMAN SUBJECTS APPROVAL ...... 155

REFERENCES ...... 157

BIOGRAPHICAL SKETCH ...... 174

vii

LIST OF TABLES

2.1 Summary of the Five Stages of the Wisconsin Works ...... 18

3.1 Descriptive Statistics – European Value Survey and World Value Survey ...... 35

3.2 Descriptive Statistics –2006 International Social Survey Programme ...... 38

3.3 Cross-Tabulation of Attitudes: People Should Not Have to Work if They Do Not Want To.40 xx

3.4 Cross-Tabulation of Attitudes: People Should Take More Responsibility vs. the State Should Take More Responsibility...... 41

3.5 Cross-Tabulation of Attitudes: Work is a Duty towards Society ...... 42

3.6 Cross-Tabulation of Attitudes: Government Responsibility to Provide Jobs for Everyone. ... 43

3.7 Cross-Tabulation of Attitudes: Governmental Success in Fighting Unemployment...... 45

3.8 Cross-Tabulation of Attitudes: Governmental Spending on Unemployment Benefits ...... 45

3.9 Multiple Linear Regression: Government Should Spend Money on Unemployment Benefits ...... 48

3.10 Multiple Linear Regression: Government Successful in Fighting Unemployment ...... 50

3.11 Logistic Regression Goodness of Fit for Government Responsibility to Provide Jobs for Everyone ...... 55

3.12 Logistic Regression: Government’s Responsibility to Provide Jobs for Everyone ...... 55

5.1 Newspaper Archival Analysis ...... 75

5.2 Profile of Welfare to Work Participants- Wisconsin vs. Israel ...... 94

5.3 Percentage of Former W-2 Participants above the Poverty Level in 2003, by Agency (1) Individuals who left from October through December 2002 ...... 99

5.4 The Social Nonprofit Organizations by Area ...... 108

5.5 July 2005-Number of Available Jobs in the Market by Areas ...... 109

5.6 Dinnur Committee, June 2007 ...... 123

5.7 Yaari Committee, January 2006-December 2007 ...... 124

5.8 Number of Participants that Found Jobs using “Lights for Employments” ...... 132 viii

LIST OF FIGURES

4.1 Working-Age+ Recipients of Income Support and the Rate of Increase 1990-2004 ...... 68

5.1 OECD Worldwide Unemployment Rate Percent of Labor Force 2003 ...... 85

5.2 The Mehalev (the Israeli Welfare to Work Program) Trial Areas ...... 87

5.3 Percentage of Welfare Recipients Returned to the Labor Force at the Beginning of the Program and in February 2006, by Family Type ...... 115

5.4 The Extension of the Israeli Welfare to Work Plan by Area ...... 121

5.5 The Impact of the Program on Work After Fifteen Months by Age Group ...... 122

ABSTRACT

In a global interacting world, there is a natural tendency to look abroad, to see how other countries have responded to similar problems, and to share ideas and experience. This dissertation examines policy diffusion using a case study of a Welfare-to-Work reform from the

United States adopted by Israel. Using a mixed-method approach involving interviews, content analysis of media coverage, and data analysis from the World and European Value Survey and the International Social Survey Programme, this dissertation analyzes the importance of understanding the local culture and customs in the process of policy diffusion.

The research questions are policies can successfully be transferred from one country to another and how attitudes toward welfare state issues and government responsibility influence welfare reform outcomes. Key findings suggest that public attitudes can influence the outcome of efforts to adopt policies designed in other nations to serve different population groups. This dissertation stresses the importance of anticipating problems that might arise when policies developed in one country are adopted by another because of different cultures, population, and ideology.

CHAPTER ONE

INTRODUCTION

An attitude transformation toward the perception of “Work for those who can, security for those who cannot” (Evan, 2001:4 )

1. 1 Introduction The common definition of the welfare state derives from the widespread perception that the state has some degree of responsibility in ensuring a basic level of welfare for its citizens (Esping-

Anderson, 1990). Yet the welfare state is often criticized for supporting extravagant and costly programs that are spiraling out of control and are responsible for a sizable component of federal spending (Seccombe, 2011). Despite these criticisms, there is a general agreement that the state has some responsibility for education, health, maintaining a basic standard of living and providing access to employment for all citizens. Social welfare thus alternates between the notion of social justice and economy efficiency.

This dissertation examines policy diffusion in the context of the globalization process.

Globalization and socioeconomic forces have changed the way policymakers perceive the welfare state. Ferrea and colleagues (2001) claim that inequality is a result of globalization that led to neoliberalization trends across the world (Ferrera, Hemerijck and Rhodes, 2001). Initially, disappearance of low and medium skilled jobs become a real concern, as international competition, technological changes, and demand created a new area. Although the ability to infuse ideas across borders has existed for a long time, progress in technology made this process much easier. Currently, there is an intersection of the international and the domestic. While many problems appear to be local in origin, the way to handle them is borrowed from the international sphere as nations explore and copy what has been done elsewhere (Bennett, 1991; Drezner,

2001). Nowadays even more than in the past, in a global world, there is a natural tendency to look abroad, to see how other countries have responded to similar problems, to share ideas and experience, to draw lessons, and to bring evidence to bear within the domestic policymaking process (Bennett, 1991).

This dissertation examines how attitudes influence success or failure of policy diffusion, for many studies have shown that public opinion toward welfare is a significant factor in policy outcomes. These effects of public attitudes toward welfare on policy diffusion are demonstrated using the Israeli Welfare to Work program, The program was initially a policy established in

Wisconsin in the late 1990s, due to a robust growth in the welfare caseload. The program was later adopted by other states in the United States and further diffused to countries such as the

United Kingdom, the Netherlands, Germany, and others. In 2004, the program, using the same principles of Wisconsin, began to operate in Israel. It quickly become clear that the program in its initial form could not survive under the different Israeli culture and social perceptions, so numerous changes were adopted. Despite the efforts, in April 2010, the Wisconsin Plan was suspended. However, an analysis of the process remains relevant because of its uniqueness and because similar proposals are still are on the agenda, both in Israel and across the globe. This dissertation helps us to understand privatization processes and policy diffusion, within a world course of action.

The research questions examined are, first, using Israel as a case study, can we successfully transfer policies from one country to another? Second, how do nations’ perceptions of the welfare state issues influence the outcome of welfare reform? Third, how did the Israeli public’s perceptions of the program influence the outcome of welfare reform? Finally, to what

2 extend did cultural differences affect the program, its performance and public receptivity of the

Wisconsin model? This dissertation examines the role of cultural attitudes and social agents' representation in policy transfer actions.

The following chapter will present the history of welfare with a focus on the historical move from income support toward activation policies. This chapter will again present the research questions in more detail and briefly review the other chapters presented in this dissertation.

1.2 The History of Activation Policy

1.2.1 The 14th century to the 19th century: The law of the poor.

In 14th century England, laws were passed providing assistance to those considered unable to work. In 1601, Queen Elizabeth I adopted what can be considered the first state-administered activation policy in the world. Those regulations, entitled the “Poor Laws”, remained in place for over 350 years and expanded across the British Empire. According to the English Poor Law, the community had to pay taxes, which were distributed to the needy. In exchange, recipients’ were obligated to work. Parents could be taken to workhouses or to labor yards while children were forced to work as chimney sweepers or in coal mines. At this time, however, most jobs were not of significant economic benefit and were mandated to prevent idleness (Paz-Fox, 2007; Trattner,

1979).

During this era, much effort was put into separating the “deserving poor” from the

“undeserving poor”. Katz (1989) in his book “The Undeserving Poor” posits that terms such as

‘undeserving poor’, ‘the culture of poverty’, and the ‘underclass’ represent moral status distinguished by the source of dependence, the behavior with which it is associated, its transmission across generations, and its formation into cultural patterns. The deserving poor

3 received welfare without having to meet strict conditions while aid for the undeserving poor was provided under restricted conditions and involved numerous regulations (Trattner, 1979). For instance, in 1696 poor people were required to wear the letter ‘P’ on their clothes with the name of their community in order to prevent them from collecting benefits from more than one community (Paz-Fox, 2007). This regulation exemplifies how the poor were seen by the state and the community.

Nevertheless, even in a system that provided few benefits and expected great responsibility, welfare recipients were seen as trying to ‘game’ the system. Welfare benefits were low and set according to the principle of “less-eligibility”. This means that the welfare recipient wage had to be lower than the lowest paid average worker, so as not to provide a disincentive to work. Despite all of these restrictions, the Poor Law represented the first time that a country rather than churches and local communities provided help to the needy and created an official and legalized tax system for that purpose. Even if a person lived in a community or congregation that did not want to provide support, the person was still eligible to receive some support (Paz-

Fox, 2007).

1.2.2 The 19th century to the 20th century: The Modern Welfare State

Multiple dates have been used to mark the beginning of the modern welfare state. Some claim that the modern welfare state originated at the end of the 19th century in Germany after the

Industrial Revolution under the regime of the German Counselor Otto Eduard Leopold von

Bismarck (Myles and Quadagno, 2002; Trofing, 1998). Bismarck granted to give benefits to the working class, including pensions and unemployment protection, in large part to prevent the growth of Socialist political parties. The most important growth of social welfare programs,

4 however, came from Western Europe in the beginning of the 20th century with the rise of the

Social-Democratic parties. The democratic transition in Europe created political demands that states protect their citizens “from cradle to grave”. William Beveridge was one of the most influential people in creating the welfare state in Great Britain. After the Second World War, the government issued a report on how to rebuild Britain’s social structure. Beveridge produced

“The Report on Social Insurance” (Beveridge, 1945), proposing that all working age people should pay a weekly national insurance contribution. This contribution would be used to provide benefits to these who were sick, unemployed, retired or widowed, thereby providing a minimum standard of living for all citizens. Beveridge spoke of the ‘Five Great Evils’ in society: want, disease, ignorance, squalor and idleness, all of which could be eliminated under his policy

(Beveridge, 1945; Harris, 1997).

In less than three years, Britain reorganized legislation and society. Laws for social security, workplace protections, education benefits, and national health insurance were enacted.

Additionally, activation policy was officially recognized and the government was now expected to encourage and create employment for those unable to find work. Under this system, Beveridge

(1945) posited that the way to deal with societal turmoil and dislocation was with a general and equal commitment from all layers of society to all layers of society. However, for those who did not work, Beveridge still gave some help, based on the principle of “less eligibility” from the

“Poor Laws” of 1601 (Harris, 1997).

The Beveridge approach, which acknowledged unemployment problems and welfare rights, was broadened after the Second World War and also became embedded in the United

Nations 1948 Declaration of Human Rights.

“(2) In the exercise of his rights and freedoms, everyone shall be subject only to such limitations as are determined by law solely for the purpose of securing due recognition and respect for the rights and freedoms of others and of meeting the just requirements of morality, public order and

the general welfare in a democratic society.” (Article 29, The Universal Declaration of Human Rights, 1948)

These principles softened the Protestant Ethic that claimed work is an individual virtue and unemployment an individual sin (Weber, 1930). Despite these changes, the debate on the welfare state continued, and the “moral” issue of welfare policy was far from resolved (Gilbert, 2002).

In the 1960s and 1970s, the discourse that surrounded income maintenance programs focused on the problem of poverty and the need for levels of support that afforded a decent standard of living. The objective was to provide basic financial support at a level that kept people above the poverty line (an objective rarely met in some countries) and to allow the unemployed to survive without being forced to take the first job offered (Gilbert, 2002).

In 1961, the Organization for Economic Cooperation and Development (OECD) was established. The Organization provides:

“A setting where governments compare policy experiences, seek answers to common problems, identify good practice and coordinate domestic and international policies” (OECD official web-site http://www.oecd.org/pages/0,3417,en_36734052_36734103_1_1_1_1_1,00.html)

At that point, it was almost universally accepted that social policies should provide

“passive” income supports. Referring particularly to unconditional, exclusively cash benefits to the unemployed. High unemployment in the 1980s saw a shift toward measures designed to stimulate employment and other responsible behaviors- promoting what the OECD terms an

“active society” (Gilbert, 2002). By 1990, many of the OECD countries had made significant progress in reducing structural unemployment (OECD, 2001). Stretching across the political spectrum from Sweden to the United States, policies to activate the unemployed created new incentives and strong pressures for welfare beneficiaries to find work (Gilbert, 2002). Activation strategies were targeted to ensure that job seekers would have greater chances of finding employment. People seeking benefits were required to participate in interviews, training

6 programs, and other job searching activities. Some of the OECD countries even privatized their public employment services (OECD, 2001).

1.2.3 The 21st Century: the Conditioning Principle

Reviewing 400 years of welfare and activation policies, it is apparent that many of these principles that were developed hundreds of years ago still apply today. Most people are encouraged to work rather than to depend on welfare. Additionally, the attempt to distinguish between the deserving and undeserving is still an important part of political debates concerning welfare assistance. In order to apply these principles to the 21st century, it is important to understand the political and social changes that have taken place in Western democracies in the late 20th century. Many political movements altered the emerging consensus on welfare policies.

Some of these critiques were so foundational that many came to question the prior period of consensus as an historical anomaly.

Trofing (1998) drew a distinction between neo-statist and neoliberal strategies. The neo- statist approach emphasizes positive incentives to seek employment rather than the reduction of benefits for those who do not comply with work requirements. It also aims to empower rather than prevent and control beneficiaries, and favors training over “forced labor”. Examples of the neo-statist approach, according to Trofing, can be found in the Scandinavian countries. In contrast, the neoliberal approach relies more on economic sanctions, offers limited training, and applies compulsion measures narrowly targeted on the unemployed. This approach is associated with the Anglo-American nations such as the United States and the United Kingdom (Gilbert,

2002; Trofing, 1998). This distinction, however, draws too sharp a line among the mix of carrots and sticks administered (Gilbert, 2002) through work-oriented policies in different countries. In

7 many cases distinctions between neo-statist and neoliberal approaches tend to blur, which emphasizes the need to combine economic with social considerations when using activation policy programs. This view of mixed strategies provides an exemplar for a global policy that has influenced many local markets (Gal, 2007) around the world.

1.3 Privatization Theory: Merging a Public Problem with Private Profit

Since the 1980s, the move toward “buying private services” in order to provide public services by governments has been a growing trend around the world (Mandelkeren and Sherman, 2011).

The question is whether the private sector can provide services more effectively than the government (Levin and Tadelis, 2010). This debate has affected a variety of services from education, healthcare and transportation to trash collection and street repairs (Levin and Tadelis,

2010).

According to several studies (Mandelkeren and Sherman, 2011; Levin and Tadelis,

2010), privatization allows governments more flexibility to make significant changes without the need to constantly go through the bidding process and to follow long complicated protocols. The aim of privatization is also to achieve higher microeconomic efficiency (Sheshinski and López-

Calva, 2003). Other claims, that the lack of government control is a problem and more important than the question of ownership, profit or shareholder-wealth maximization (Megginson and

Netter, 2001). Nevertheless, privatization is one of the most influential economic and social processes that happened in recent decades.

One example of the privatization process can be found in the field of social welfare policy. The welfare state is synonymous with the notions of governmental care. For example,

Esping-Anderson’s definition of the welfare state is that it is involves “state responsibility for

8 securing some basic modicum of welfare to its citizens” (Esping-Anderson, 1991: 18-19). While the welfare state includes a varity of components such as education, health care, and pensions, people emphasize most its traditional role and dominant activity, which is income maintenance

(Esping-Anderson, 1991).

In recent years the welfare state has become a key player in the field of privatization.

This debate over the privatization model became a key feature in the Israeli Welfare to Work program when for-profit organizations were solicited to participate in the competitive bidding process for administrating the program. The idea of merging private interests with a public purpose is still regarded as controversial in Israel. Privatization has been considered for many different services in Israel such as jails and transportation systems and has led to strikes by unions against the government's attempts to privatize public sector services.

The Welfare-to-Work program initiative was meant to increase employment and decrease welfare dependency. Welfare-to-Work programs based welfare assistance on the philosophy that unemployment and dependency are destructive to the recipient and the recipient's family.

Therefore, the recipients of welfare must perform useful labor in exchange for the benefits they receive. In order to implement these objectives, private companies were hired to operate centers for the government (“one-stop-shop”) and to create active welfare recipients who would provide labor work in return for welfare benefits.

In many aspects, the privatization process of the Welfare to Work program in Israel is not considered ”full privatization", because some aspects of government administration such as monitoring services, setting goals, funding and selecting participants have been left in place. This model is referred to as "partial privatization", out-sourcing, or constructing-out (Mandelkeren and Sherman, 2011). As Benish (2007) explains, many do not perceive this move toward out-

9 sourcing as the end of the social services system or a retreat from the principles of the welfare state. But in practice, as will be shown later, the media does perceive this process as a breach of trust and as a collapse of the Israeli socialist welfare state. No wonder then, that when it comes to welfare funds, the debates from the public and non-profit organizations are highly contentious.

Some argue that privatization drains knowledge and expertise from government, compromising the state’s ability to monitor and evaluate private companies' effectiveness. On the other hand, it can be argued that since the state was not very effective from the beginning, there was a need for privatization. Further, advocates claim that when private entities handle management, more government resources can go to planning, adjusting and inspecting the contractors (Mandelkeren and Sherman, 2011).

This paper focuses on the Ministry of Labor, Trade and Employment, especially in those services designed to help the unemployed to return to the labor force between 2005 and 2010 when the "Wisconsin Plan" was implemented. In the areas where the program was adopted, responsibility for the unemployed was transferred from the Government Employment Service to private companies. The Israeli Government followed the OECD’s encouragement to move towards an activation policy. As a result, Israel decided to adopt the American “Wisconsin

Works” (W-2) plan, which created a one-stop-shop that welfare recipients are required to participate in. Participants receive special guidance, which in turn is meant to show that they are making a genuine effort to return to the labor market. In return for their participation, enrollees continue to receive their welfare allowances. This dissertation examines several research questions that address gaps in our understating of policy diffusion across different nations. First, using Israel as a case study, can we successfully transfer policies from one country to another?

Second, how do public perceptions of welfare state issues influence the outcome of welfare

10 reform? Specifically, how did the Israeli public’s perceptions of the program influence the outcome of welfare reform? Finally, could the problems with the Israeli Welfare to Work program have been prevented? This dissertation examines the role of cultural attitudes and social agents' representation in policy transfer actions.

The dissertation contains two empirical chapters that explore questions regarding policy transfer and welfare to work programs. Using data from the World Values Survey (WVS), the European

Values Survey (EVS) and the International Social Survey Programme (ISSP), the third chapter examines public perceptions of the three foreign operators of the program in Israel, in terms of government roles, the welfare state, work requirements and other topics related to welfare to work programs. These perceptions are then compared to Israeli’s views toward welfare and the government responsibility for welfare policy.

The fifth chapter, a qualitative chapter, uses newspaper archives, interviews, and governmental reports to document the "birth" of the Welfare to Work program in Israel and to reveal the problems and resistance that the program faced. Specifically, it examines the different issues raised by transferring a policy from one culture to another and the difficulties inherent in this situation. Finally, it tests the conditions under which a policy transfer can occur and successfully accomplish its goals. These chapters contribute to the literature on social welfare, activation policies and policy diffusion. Chapters 2 and 4 outline and lay out the background for activation policy welfare reform in the United States and Europe (Chapter 2) and in Israel

(Chapter 4).

CHAPTER TWO

WELFARE TO WORK AND ACTIVATION POLICES

(UNITED STATES, GREAT BRITAIN, THE NETHERLANDS)

2.1 United State Welfare Reform and the Beginning of Activation Policies

According to Myles and Quadagno (2000), it was never a question of whether the United States would have a welfare state but rather what form it would take and what principle(s) would guide it in terms of family support, health care, elderly care and other issues. In the following chapter, I will review activation policy history in the United States, Great Britain and the Netherlands. All three countries were involved in the administration of Welfare-to-Work reform in Israel.

Public welfare for families with dependent children was initially created by the Social

Security Act of 1935 as an income maintenance program to assist needy deserving widows and their children. The Aid to Dependent Children (ADC) poverty program also referred to as

Mothers’ Pensions was a leading social reform for children. In contrast to the prior perception that poor children should be separated from their parents, mother’s pensions declared that “home life is the highest and finest product of civilization….Except in unusual circumstances, this home should not be broken up for reasons of poverty (Proceeding, 1909, p.9-10).” ADC, provided financial support for women who were single parents so they could stay home and care for their children without regard for work-oriented sanctions and inducements (Gilbert, 2002; Rogers-

Dillon, 2004; Quadagno, 1994). As the name changed to Aid to Families with Dependent

Children (AFDC) in 1961, so did the program and its orientation toward work.

As the AFDC rolls increases in the 1960s, in 1967 the Work Incentive (WIN) program was enacted providing employment training, daycare, and financial incentives for welfare recipients to seek work. Although WIN did not require mothers to engage in work training or 12 take jobs, it marked the first significant shift in emphasis from welfare services to workfare

(Gilbert, 2002). This reform was referred to as the Third Way (Myles and Quadagno, 2000), because it reflected strategies to encourage and maintain labor force participation. However, the results of the experimental program were not encouraging. By 1970 more than one-third of

AFDC recipients had dropped out of the program and those who found jobs were considered the

“cream” of the pool and most likely to find a employment, regardless of the program (Gilbert,

2002).

In 1988, WIN was replaced by the workfare provision of the Family Support Act of 1988

(FSA), which made the labor force participation of welfare mothers mandatory. Under the

Family Support Act, federal regulations required AFDC recipients with children older than three to participate in the Job Opportunities and Basic Skills (JOBS) programs operated by each state and then to search for employment. There was no time limit for this act or any provision regarding how long one could receive welfare, but those who refused to participate in the training process or did not show an effort to look for jobs, grants could either have their benefits reduced or eliminated (Gilbert, 2002; Haveman, 1996; Rogers-Dillon, 2004). Additionally, the

Family Support Act offered recipients inducements to take paid employment by providing childcare services and Medicaid health coverage for 12 months after the family was no longer eligible for AFDC due to income increases from employment. The initial results of the JOBS program were generally positive but not compelling (Rogers-Dillon, 2004). Thus, despite the fact that federal welfare reforms in 1967 and 1988 sought to increase work among welfare recipients, those reforms had little effect on most recipients. At this point the public perception of assistance programs had become unpopular. By 1994 seventy-nine percent of Americans believed that the

13 welfare system was not working where as fewer than twenty percent of Americans believed that most welfare recipients were “truly deserving” (Rogers-Dillon, 2004).

In 1996 JOBS was replaced by the Personal Responsibility and Work Opportunity

Reconciliation Act (PRWORA), which shifted the emphasis from job training to job placement.

PRWORA abolished the AFDC program, creating in its place the 1997 Temporary Assistance for Needy Families (TANF) program (Rogers-Dillon, 2004). The Act provides temporary financial assistance while aiming to get people off assistance, primarily through employment

(Myles and Quadagnon, 2000). TANF gave significant authority to the states while remaining firmly framed by a number of federal rules. Some potential welfare recipients were barred from participation in the program (teenage mothers who live with their parents, mothers who are uncooperative in establishing paternity, and those convicted of drug crimes). States required recipients to meet a strict timetable for employment and had a 60 month (equal to 5 years) lifetime limitation for welfare recipients, regardless of their employment status (Gilbert, 2002;

Myles and Quadagno, 2000).

States had wide autonomy in designing sanctions and incentives to motivate welfare recipients. For instance, California linked benefits to school attendance, while Michigan required that absent fathers who did not make required child-support payments lose their driver’s license and other professional licenses (Gilbert, 2002). One of the most innovative states was Wisconsin, which had initiated the Wisconsin Works (W2) program that served as the model for national welfare reform. W2 was based on the premise of helping people find jobs by providing training, public assistance and supporting services. Wisconsin has often been labeled as a laboratory of welfare reform (Corbett, 1995).

Because Wisconsin was one of the more ambitious states in experimenting with welfare reforms

(Barnow, Kaplan and Moffitt, 2000), many of the welfare to work programs around the globe were influenced by that program. Wisconsin-Works provides a useful example of an early case in which a state played a key role in enforcing work requirements for program participants. The following section will provide a closer overview of the Wisconsin Works welfare reform, which has been considered a breakthrough in activation policies.

2.2 Wisconsin Works Welfare Reform

During the welfare boom from 1989 to 1994, the average state reported a 34% increase in enrollment in AFDC. Wisconsin was one of four states to record a decline in enrollment, despite paying among the highest benefits in the nation (Mead, 1999). The other three decliners-

Arkansas, Louisiana, and Mississippi-were all southern states with low benefits. After 1994, many states saw large case-load declines. But between January 1993 and September 1998,

Wisconsin's decline of 87% was still the largest in the country, 25% higher than that of the next highest state, Florida (Mead, 1999).

Beginning in 1995, Wisconsin became a leader in restructuring the approach to service delivery and in linking employment and training policy with certain aspects of social policy

(OECD, 1999). In 1995 under Governor Tommy Thompson, Wisconsin became the first state to institute work requirements for welfare recipients. The Wisconsin Works (W-2) program was created under Act 289 in order to achieve self-sufficiency through employment. The program replaced monetary entitlement through Aid to Families with Dependent Children (AFDC 1935) with what became Temporary Assistance for Needy Families (TANF 1996). It based welfare assistance on the assumption that unemployment and dependency are destructive to the recipient

15 and to the recipient's family. Therefore, Wisconsin announced that welfare recipients had to perform useful labor in exchange for the benefits they received. It required AFDC recipients with no children under the age of three to participate in job placement, training, education or employment programs unless exempt due to inability, full time schooling or certain other reasons

(Barnow, Kaplan and Moffitt, 2000; OECD, 1999).

In April 1996 the program was piloted in two counties and by September 1997 it was operating statewide (OECD, 1999). All participants in the program, except mothers of infants less than four months old, were expected to engage in assigned activities. Wisconsin’s work program changed the state welfare system and placed specific work responsibilities on welfare recipients (Ehrle, Seefeldt, Snyder and McMahon, 2001). This policy elevated Wisconsin to one of the leaders in state-level welfare reform efforts. The goal of W2 was not only to reform welfare for Wisconsin recipients but also was part of a larger political debate about the decentralization of policymaking and states’ rights (Rogers-Dillon, 2004). Wisconsin’s welfare reform was widely viewed as successful, and as a result other states adopted the program.

“…I am very pleased to sign the country’s most significant piece of welfare reform legislation. Through a series of waivers and pilots programs, beginning with learnfare in 1978 we have established the basic premise that for those who can work, only work should pay, and that everybody should work to the extent of their ability. Welfare should be used as a temporary last resort, and should provide incentives to promote individuals’ efforts to attain self sufficiency…” (Tommy G. Thompson letter to the members of the legislative body. April 26, 1996, http://www.povertylaw.org/poverty-law-library/case/56100/56124/56124B.pdf )

In Wisconsin, 96.5% of the participants in the program were unemployed women and 97.8% were single-parent families. Over half of the participants (56.7%) were African-American and

Hispanic mothers. The average age of the program participants was 18 to 29, and most participants had limited education and on average, two children (Wisconsin Department of

Workforce Development, 2001:18).

The Wisconsin Works Welfare Reform created centers where recipients could receive occupational training and search for job opportunities. The reform provided a “one-stop-shop” in centers that gave access to various services such as a database of jobs, resume databases, and other activities that kept job seekers searching for employment (OECD, 2001). The one-stop centers aimed to make the system and the process of searching for jobs more transparent, thus providing an integrated interface for a broad range of services (OECD, 1999). Thus, the United

States, Wisconsin was a pioneer in the shift to a Public Employment Service (PES) based on the one-stop centers approach (OECD, 1999).

The reform provided income support, employment and training, childcare, and other social services in order to promote independence and self-sufficiency. Wisconsin employed private agencies to distribute these services based on the belief that these organizations were better placed to help program participants achieve skills needed to succeed in the labor market.

The program required recipients to engage immediately in a job search, work activity, or other program approved by the Wisconsin Works program in order to keep their welfare entitlements.

Work readiness was one of the main goals of this program. W-2 participants were expected to work outside the home in one of four types of jobs based on their level of readiness. Participants could work at transitional jobs, which mainly provided training and gave the worker a monthly benefit of $628. Participants could also work at community service jobs, which would provide experience and training. The monthly benefit for this work was $673. Others worked at trial jobs that provided training experience and could lead to permanent employment. These positions were unsubsidized if recipients were involved in part-time work, but the participant could not earn less than the state or federal minimum wage. For full-time employment employers would receive a subsidy of no more than $300 per month. Finally, unsubsidized employment through

17 the Wisconsin Works agency would be available and participants in this type of employment would receive their salary (Wisconsin Department of Workforce Development, 1999:9).

Table 2.1 Summary of the Five Stages of Wisconsin Works

STAGE Income/Payments Time Requirement Program Time Limit

Unsubsidized Job Employment wage None None Testing Job At least minimum wage 40 hours a week 3 months per placement (the program pays up with a onetime 3- to $300 per employer) months extension; total of 24 months over all Testing job placements Community Service $673 per month 30 hours a week, and 6 months per placement Job up to 10 hours a week with an option for one 3 in education and month over all training Community service job placement; extensions permitted on case-by- case basis Wisconsin-Works $628 per month 28 hours a week of 24 months; extensions Transition work activates, plus up was on case-by-case to 12 hours a week in basis only education and training Parents with a child Newborn Caretaker $673 per month None younger than 13 weeks. Source: Meyer and Cancian, 2001. W-2 Child Support Demonstration Evaluation. Phase 1: Final Report.

2.3 Research and Evaluation

There has been great interest in Wisconsin and in understanding the characteristics of those individuals and families who remained on welfare and what happened to them once they left welfare. Studies vary in their research designs, analytic methods, sample sizes, target population, geographical range, time period and analytic complexity.

Research that examined public attitudes toward the program as an indication of the policy’s success showed through nationwide polls that people wanted a welfare system that both aids the needy and expects adults to work (Farkas, Johnson, Friedman, and Bers 1996). In 1998 the Annual Wisconsin Citizen Survey showed that 87% of citizens supported the state's welfare

18 reform requiring recipients to hold a public or private sector job in order to receive benefits

(Black, 1998:11).

Generally, Wisconsin enjoyed robust job growth and unemployment rates below the national norm. For instance, when Tommy Thompson became governor in 1987, he cut

Wisconsin's maximum AFDC payment by 6%, and by 1996 it had dropped from the fifth to the twelfth most generous states in the nation (Mead, 1999). Between 1986 and 1995 there was a decline of 31% in the AFDC basic benefits. Part of the decline in AFDC benefits was equalized by an increase in food stamps so that, overall, the welfare cash and food stamp benefit declined by approximately 14% (Wiseman, 1996).

Mead (1999) created a time series analysis of the state caseload trend from 1986 to 1994 and found that good economic conditions and benefit cuts helped to drive the caseload down. In his discussion of the political environment, Mead (2004) argued that the government in

Wisconsin is more capable than that of most states in administering welfare benefits. In regard to the caseload decline, other researchers agree with Mead that the decline in welfare in

Wisconsin, as in the nation, was due to a favorable economy and to cuts in welfare benefits, not to policy changes (Corbett 1995; Wiseman 1996). There was never a clear agreement among research whether the decline in caseload was due to policy change or due to the economic situation.

While Wisconsin welfare recipients were a relatively homogenous group, there was still some variation in culture, race and ethnicity. Moore and Selkowe (1999) examined approximately 1,200 Hmong (South East Asia refugees) residents who participated in the

Wisconsin Works program. They found that given the major cultural differences, language barriers and skill gaps, the majority of Hmong respondents experienced serious difficulty

19 communicating with their W-2 caseworkers. Moreover, the reduction in cash benefits brought about by W-2’s flat grant structure (without consideration of family size) added to the financial strain for these Hmong families, a substantial number of whom were unable to meet their basic food and clothing needs. Similarly, the Institute for Wisconsin’s Future (1998a) conducted a convenience sample of 670 interviews about training and work placements. The results showed that many workers were not placed in jobs that could lead toward self-sufficiency. Additionally, they found more need for skills development in order to be able to help recipients achieve better paid jobs.

In another study, the Institute for Wisconsin’s Future (1998b) found that statewide, there were not a sufficient number of jobs to employ the total number of current AFDC recipients and unemployed persons. The study also found that there was a need to increase extensive training, which would increase the number of occupations that participants could apply for as well as increase salaries. This would result in a better future for the recipients and their families (The

Institute for Wisconsin’s Future, 1998b).

Meyer and Cancian (2001) sampled mothers who participated in Wisconsin Works, the fathers of their children, and the children themselves. They collected data in two waves; the first period of data collection measured families’ experiences in 1998 (the first year of the Wisconsin

Works program), and the second period focused on 1999. While there were only small significant differences between the control group and the experimental group, the findings showed some increase in child support amounts received among an economically vulnerable population, which had a variety of other positive effects. These benefits came at little additional cost to government.

Mead (2004) examined how caseloads for Food Stamps and Medicaid changed alongside

AFDC/W-2 between1985 and 2001. He argues that Wisconsin Works aimed to move recipients and their families closer to the mainstream through a change in lifestyle and work. Although the amount of state funds spent rose significantly, more money was devoted to supporting working families than was spent on the nonworking poor. According to Mead, the Wisconsin reform was not mainly about money and, in fact, the state spent more money to achieve its goals. Driving families off the welfare rolls allowed Wisconsin to be more generous to those remaining.

The Survey of Those Leaving AFDC or W-2 (1999), conducted by the Department of

Workforce Development (DWD) in 1998 on a random sample of 375 telephone and in-person interviews, showed that 48% said that they had more money than when they were on aid, but

50% disagreed, and 68% said that there were “just barely making it from day to day”. At the same time, 68% disagreed that life had been better on welfare, and 59% thought that they would not have to go on welfare again.

The evaluation report of the Wisconsin Works program by the Department of Workforce

Development (2005) shows that approximately 20% of people who left the American W-2 plan earned more than the poverty level only a year after they left the program. However, the data indicates that few welfare recipients were able to improve their situation and rise above the poverty level. To understand the significance of the American Wisconsin plan for participating families, it is important to recognize that the state welfare benefit per family, regardless of family size, is $8,076 per year, whereas the average poverty line in the United States for a family of three persons is $16,090 per year. This means that those who were able to rise above poverty doubled their income as a result of their integration into work; to live on welfare benefits in the

US is to subsist on income at 50% of the poverty level. (Novak, 2005).

In contrast to these positive assessments, Maariv newspaper (David, 2006a) published a report citing a study conducted by Hezenfled (2006), indicating that the Wisconsin program did not improve the conditions of unemployed participants in the United States. His research examined

Wisconsin Welfare to Work participants from 1996 to 2001 and found that although the caseload decreased by 50% and the unemployment rate declined from 5.4% to 4.2%, the poverty rate among these families remained high (50%). Hezenfled posits that once you give for-profit companies responsibility for taking people off of welfare, these businesses have no motivation to improve welfare recipients’ quality of life (Hezenfled, 2006).

Another issue is that studies often disagree as to what is considered ‘success’. Was the goal the ability to provide precipitants the ability to enter “mainstream” society (Mead, 2004), or was it to lower caseloads (Mead, 1999)? Is finding a job at all costs considered ‘success’ even if the salary is lower than welfare benefits? Research comparing several representative states such as California, Georgia and Missouri showed that the Wisconsin shift was extreme. Wisconsin cut overall social service spending by 8% and spending on cash assistance by 77%. At the same time, Wisconsin increased spending on childcare and child development by 168% (Elwood and

Boyd, 2000). While studies have varied in their conclusions, overall there has been a relatively positive reaction toward activation reforms. The Wisconsin reform has been considered a milestone in a new way of thinking about welfare reform, including the way that welfare programs should be designed and the way that welfare recipients should be addressed.

2.4 European Labor Market Developments

Unlike the American program, in Europe activation policies developed somewhat differently.

The leading model in Europe is the British “New Deal”, but similar programs were developed as well in Denmark, The Netherlands, Sweden, France, Norway, Germany (Ochel, 2005) and

Ireland (SSA, 2003). Many programs already were active prior to the Wisconsin model’s inception in the United States. These were referred to as ALMP- Active Labor Market Programs.

The first such program was adopted in Sweden after World War I (Barbier, 2001). Subsequently referred to as “Activation Polices”, this has become the leading approach in the OECD (OECD,

2001).

Over the years different models were developed with the primary goal being to make work desirable for welfare participants. In order to do that, financial benefits and subsidies both for the employee and for the employer were added (OECD, 2001). While the European

Programs vary somewhat, they share the desire to reduce welfare spending and return “chronic” welfare recipients to the job market.

For the purposes of this research, I will describe the activation policies of the Netherlands and the United Kingdom, since they were the supplementary foreign operators that were chosen by the Israeli government to implement the Israeli Wisconsin program. However, it is important to recognize that other similar programs were operating in Sweden, Denmark (the “Rights &

Duties” approach) (Kildal, 2001; Ochel, 2005), Norway (“the working approach”) (Arbeidslinjen translated into -The working line) and in France (Evan, 2001).

In the Netherlands between the 1970s and the 1980s, there were substantial problems in the labor market, including high unemployment, negative job growth, high job substitution and a high proportion of the working age population claiming disability benefits in lieu of early

23 retirement or long-term unemployment (Evans, 2001). In the 1990s, the Dutch became influenced by the Clinton administration’s ideas1. Beginning in 1992 the Netherlands offered different plans for subsidized jobs, mainly in the community service area in order to incorporate people back into the job market (Ochel, 2001). Despite political conflicts in the election of 1994 with the labor movement, the policy of economic liberalization and social services continued.

This policy included the privatization of employment services and other changes in taxes and welfare stipends (Babier, 2001; Evans, 2001). At the same time programs for the chronically unemployed were expanded. Toward the end of the 1990s, they included young welfare recipients as well as long-term welfare recipients. These programs also encouraged employers to hire the long-term unemployed by subsidizing salaries, lowering taxes and offering assistance from the National Insurance (Evans, 2001; Ochel, 2001). Additionally welfare recipients were obligated to do what they were assigned in order to avoid sanctions such as a temporary or partial stop of their welfare stipends (Ochel, 2001).

The British program entitled the “New Deal”, which was initiated to return welfare recipients to work, is another program that stands out, besides the American Welfare to Work program. The British Social Welfare System includes a universal health system component and income support. In the last few years it has incorporated an activation component as well.

Starting in 1971 the British programs for family welfare support included a payment system that required work. This system was changed in 1988 with the “Family Credit Act” and later with the

“Working Families Tax Credit” emphasizing that a family deserves to get a tax credit for remaining in the labor force (Ochel, 2001).

1 This may explain also the Israeli decision process in choosing companies from the Netherlands to operate the Israeli program. 24

For a long time Britain objected to the ideas underlying the welfare system in the U.S.

However this changed when the Labour Party came into power and prioritized returning the unemployed to the labor force. This was done using “Project Work”, which was an experiment to put the chronically unemployed into the job market. The main objection rested on the fear that the government would provide poor quality jobs for the weaker layers of society (Barbier, 2001).

In 1997, influenced by the Clinton administration’s social reforms (Walker, 1999),

British Prime Minister Tony Blair claimed that the welfare state was “encouraging dependency, lowering self-esteem and denying opportunity and responsibility in almost equal measure. . . .

The more demands that are put upon it, the essentially passive nature of too much provision— especially benefits—is revealed” (Blair, 1997 in Walker, 1999:683).

In 1997, the Labour Party initiated the “New Deal” program, which was intended to roll back unemployment. The British “New Deal” was inspired by President Franklin Roosevelt’s

“New Deal” of the 1930s, which was a response to the Great Depression in the United States.

The new program was intended to increase the employability of welfare recipients and to help them find jobs (Evans, 2001). Four different plans were established with different goals, demands and parameters for support. The first program targeted young working-age adults – the

New Deal for Young People (NDYP), and the chronically unemployed over 25 (ND+25). There was also a plan for single parents – the New Deal for Lone Parents (NDLP), and a plan for disabled people. The main differences between the programs were that the young and the chronically unemployed were obligated to attend the program, while single parents and the disabled did not have to do so (Evans, 2001).

Mandatory work-first programs were initiated in the United States and in countries such as the United Kingdom, Denmark and the Netherlands in the 1990s, and in a later stage in

Germany as well (Ochel, 2005). The United States was considered a leader in establishing welfare-to-work programs. The United Kingdom’s activation policy is considered to be one of the strictest toward welfare recipients in Europe. The Netherlands activation policy is more limited than the two others (Ochel, 2005).

2.5 Following the American Model

It has long been agreed that government is important in developing and administering welfare reform (Mead, 2004). Mead (2004) contends that government had a key role in managing successful welfare reform efforts: “What makes government ‘good’ is not that it does new things but that it governs well. This means two things- to make effective policy and to implement it”

(Mead, 2004: 215). Mead’s analysis of the Wisconsin Works reform also emphasizes the importance of a strong government in creating a relatively successful program- not because of its results but rather because it shows how an effective state-level welfare policy experiment led to welfare reform.

Economic globalization has often been invoked as a cause of changing welfare state policies since the 1970s (Myles and Quadagno, 2002). Meseguer (2005) argues that nations adopt other countries’ policies simply because they perceive them as high-status “know best” countries. The United States is often perceived as hegemonic because the ‘American model’ has been perceived as successful (Myles and Quadagno, 2000). As a result, many countries have adopted various American programs, as welfare-to-work programs gained popularity.

Wisconsin’s deconstruction of welfare was one of the most dramatic attempts a state had made to reform welfare (Scanlan, 1998). Therefore, the Wisconsin model was considered a ‘winning’ model, which was not only adopted in the United States but also beyond continental borders. For

26 these reasons, Israel decided to adopt the welfare-to-work reform as well. Although the program was not fully consistent with the Wisconsin welfare reform, it incorporated the core ideas of activation policies, one-stop-shops, and private agencies. While other programs were examined as well, Wisconsin was chosen because it was the best-known program and the first to implement a work requirement. Considering the merits of the Welfare-to-Work program, Israel chose to implement this model over other competing models.

This chapter has reviewed the programs that were operating in the countries that were later chosen to run the Israeli Welfare to Work (WTW) trial program. However, it is important to mention again that other countries such as Australia, New Zealand, Germany, Hungary and others had used and are still using activation policies. Despite the global tendency toward activation policies, there are differences between the various programs.

Israel adopted the WTW program mainly following the American model. However, from the beginning it seemed that the Israeli program faced many problems that were not taken under consideration. The different culture, belief system, and ideology became an element that could not be disregarded for long. This raised the question of whether Israel adopted the right model and whether other programs were considered. What in the Israeli environment made the implementation of a program adopted from the United States so problematic and difficult? The cultural differences among the Israeli society and the operators will be further explored in the following chapter.

CHAPTER THREE

WORLDVIEW ATTITUDES

In 2005 Israel decided to contract its Welfare to Work (WTW) services to foreign companies.

Through a bidding process four foreign companies were chosen from three different countries: the United States, the United Kingdom, and two companies from the Netherlands. According to

Esping-Andersen (1990) in The Three Worlds of Welfare Capitalism, countries can be divided into three ideal types of welfare regimes: Social Democratic, Conservative and Liberal. The operators chosen by the Israeli government to run the experiment all belonged to the same regime type, which is the liberal regime. Israel, on the other hand, is considered a Social-

Democratic regime. The research question analyzed in this chapter is whether citizens in countries in different regimes hold cultural beliefs and perceptions toward welfare issues that are consistent with their regime type. In other words, is Esping-Anderson’s theory valid in this case?

If so, how do these cultural perceptions affect welfare reform results, a topic that will be further discussed in Chapter 5. In order to examine this question this chapter uses three cross-cultural surveys. The rationale of this analysis is to explore cultural differences between the three countries employed by the Israeli WTW program and the Israeli perceptions toward welfare.

Later I will show how these attitudinal characteristics affected the Israeli program.

3.1 Welfare Regime Theory

Esping-Andersen (1990) originally developed a theory of welfare regimes, which suggests that welfare state polices in Western industrialized societies are influenced by politics, family and market changes as well as the degree of collectivization and institutionalization. These diverse historical pathways created three regime types: Social Democratic, Conservative and Liberal.

Esping-Andersen’s ideal types takes a holistic approach which emphasizes the general characteristics of each regime rather than the specific and individualistic characteristics (Weber,

1949; Art and Gelissen, 2002). This makes it possible to use these ideal types as a conceptual tool to compare different societies. Nevertheless, it is important to acknowledge that each welfare state is unique and often some ambiguity can be found using the classification system.

Regime theory is based on two important concepts: decommodification and stratification.

Decommodification refers to the degree that a person can maintain a socially conventional standard of living without relying on market participation (Esping-Andersen, 1990).

Stratification refers to the distribution of resources and class composition that is being promoted by policy makers. The welfare state is not only a system that possibly corrects inequality but also organizes social relations. Looking at these two dimensions helps us to cluster different welfare state types into one of the three typologies.

One variation is the Social Democratic typology, which is characterized by broad social services that cover most social risks, a high degree of entitlement, and generous benefits. A social democratic regime is also characterized by a high degree of decommodification, meaning the odds are high for maintaining a socially conventional standard of living independent of market participation (Esping-Andersen, 1990). The Social Democratic model is considered the least common. Sweden is a customary example of this regime type. The characteristics of the

Social Democratic regime match, to some extent the Israeli welfare state. However, it is also important to note that Israel has a unique structuring of the welfare state system described as categorical universalism in which eligibility is not always equally spread among all groups (Gal,

2008).

The second regime type, the Conservative welfare regime, limits some of the ideas of decommodification and social security, and is mainly directed toward the preservation of social position and class differentials. For instance, by not providing public services such as daycare, conservative regimes perpetuate women’s traditional family role, making it harder for women to participate in the labor market (Esping-Andersen, 1990). Germany, Austria, Italy and France are customary examples of this regime type.

Finally, the Liberal welfare regime draws mainly from the market sphere, where citizens are individual players in the market, the public social security system is marginal and means- tested benefits are common (Myles and Quadagno, 2002). In this model, assistance is often associated with stigma (Esping-Andersen, 1990). The United States, Great Britain, Canada, and

Australia are customary examples of this regime type.

Recent research has suggested new additions to these three welfare regime types (see:

Arts and Gelissen, 2002 for an overview). For instance, Spain, Greece, and Italy epitomize the

Mediterranean regime type. The Mediterranean model has some resemblance to the

Conservative model but with a stronger emphasis on family networks and aid (Arts and Gelissen,

2002 , Brooks and Manza, 2006). However, Esping- Andersen disagrees with the supplemental types, viewing them rather as sub-clusters that do not form distinct groups and that reduce the ability to conduct comparative analyses (Arts and Gelissen, 2002).

3.2 The Relationships between Welfare Policy and Public Perceptions

Regime theory claims that welfare regimes include not only formalized social policy arrangements but also collective patterns of institutionalized social justice beliefs. These solidarity and social justice principles are seen as historically and culturally embedded in welfare state institutions, which continuously shape public discourse and values (Jaeger, 2006). Values

30 are frequently viewed as influenced by historical revolutions (Brooks and Manza, 2006). The question is whether public opinion influences welfare reforms, which subsequently leads to changes in public policy. Further, how strong is the relationship between mass opinion and social policymaking? If the relationships are real, then mass opinion becomes a significant factor influencing social policymaking.

Recent research (e.g. Myles, 2006; Brooks and Manza, 2006) focused on the relationship between public policy and public opinion suggests that policy preferences do influence welfare state policy. For instance, Brooks and Manza (2006) examined welfare state expenditures and social policy responsiveness and established a linkage between mass opinion and social policymaking. Using the International Social Survey Programme (ISSP), they found a coherent relationship between Esping-Anderson’s regime types and level of welfare preference. The

United States (representing the liberal regime) showed the lowest level of support for welfare spending in comparison to conservative and social democratic nations. Brooks and Manza (2006) thus revealed large effects of public opinion on cross-national differences in welfare.

Other studies also support the link between public opinion and policy (e.g. Burstein 1998;

Manza and Cook, 2002). The idea that public opinion influences policymaking is consistent with power –resource theory (Brooks and Manza, 2006). Power resource theory stresses that the distribution of power and wealth in society is unequal and mainly dominated by interest groups

(Korpi, 1989). The power resource approach expects class to be an significant component in conflicts between interests groups in Western societies. The degree of inequality may vary over time and among groups according to different variables such as the past or present political and economic situation. These variables will play an important role, having an important effect on the different interests (Myles and Qadagno, 2002; Korpi, 1989). Korpi (1989) posits that the

31 power-resource approach plays a key component in creating social policy and in the development of welfare states. The mobilization of resources and distribution of ‘rewards’ is used in politics in class-related ways (Korpi, 1985; 1989). Korpi (1985) suggests that the application of this theory becomes significant when the attitudes held by those in power affect the actor using the resource, as will be shown in this chapter.

In this chapter, I assess the impact of public opinion about social policy on overall perceptions toward welfare. My approach combines welfare state regime theory with the literature regarding opinion/policy linkages. I seek to determine whether public opinion reflects policymaking. The analysis examines attitudes toward topics that relate to welfare. The analysis is then connected to Esping-Andersen’s regime theory and provides additional support for the connection between public attitudes and state policy (e.g. Jaeger, 2006).

The unique contribution of this analysis is that the countries analyzed are related to each other by the Welfare to Work experiment in Israel. This makes the analysis not just a theoretical experiment but also a practical application to what occurred in reality. What I will demonstrate is that each country’s perception of welfare is consistent with its regime type. These attitudes, therefore, help explain the policy atmosphere of each country’s operation center in the Israeli

WTW trial program, which were consistent with their own policy beliefs.

Another contribution is the use of three data sources: the WVS, the EVS, and the ISSP.

The analysis of data from all three sources is designed to strengthen my findings and hypothesis regarding the relationship between public policy and mass opinion.

3.3 Data

World Value Survey (WVS)- is a worldwide comparative survey that measures changing values and their impact on social and political life (World Value Survey website, 2012). The WVS conducted representative national surveys examining changes in people's beliefs in 97 countries.

WVS executed five waves of the survey, from 1981 to 2007, selecting respondents through random probability sampling. Participants were interviewed face to face using a standardized questionnaire translated into the local language. The WVS measures values and beliefs on different issues such as religion, gender, work, government, political participation, and other subjects concerning well being. These surveys often play a key role in countries' development

(World Value Survey, 2012) and understanding countries development and changes.

The European Value Survey (EVS), like the WVS, is a cross-national survey measuring basic human values that provides insights into attitudes, values and beliefs of citizens across

Europe (European Value Survey Website, 2012). The survey covers different topics such as family, work, politics, society, religion and quality of life. The EVS began in 1981 and is conducted every nine years. The survey questionnaire is matched with the World Value Survey and therefore expands our ability to make wider cross-cultural comparisons.

This dissertation uses the fourth wave of the World Values Survey, which includes data from 1999 to 2004. The reason for choosing this period is that it matches the time period prior to the official launch of the Israeli WTW program. Ideally, this period reflects the state of mind of the citizens of the countries chosen to operate the program. The United Kingdom and the

Netherlands were sampled in 1999 in the EVS survey. The United States and Israel were sampled in 1999 and 2001, respectively, in the WVS. Both the EVS and the WVS used the same

33 questions, which make it possible to integrate both data sets into one file that combines all four countries. Descriptive statistics for the EVS and the WVS are presented in table 3.1.

Dependent Variables. The dependent variables used in this study are relevant questions asked in both EVS and WVS concerning the respondent’s attitudes and beliefs on issues such as the welfare state and government roles in decision-making. The following topics and questions were analyzed: WORK-Attitudes towards work "Work is a duty towards society (c039) "; "People should not have to work if they do not want to (c040)"; POLITICS AND SOCIETY- Attitudes concerning society "Government Responsibility. People should take more responsibility vs. the government should take more responsibly (e037)".

EVS and WVS Coding. The first two questions- "Work is a duty towards society" and

"People should not have to work if they do not want to"- contained the following categories:

"totally agree, agree, neither agree nor disagree, disagree, totally disagree, do not know." The last category "do not know" was treated as missing data. The other five categories were collapsed into the following: "totally agree" and "agree" were coded as "1=agree," "neither agree nor disagree" was coded as 2= “neutral” and "disagree" and "totally disagree" was coded as

3="disagree". The third question concerned "Government Responsibility. People should take more responsibility vs. the government should take more responsibly.” It used a scale of 1 to 10 where low values (1) signified people should take more responsibility and high values (10) signified the government should take more responsibility. For the purposes of this paper the 10 scale was modified to a 5-level scale where 1-2=1 (people take more responsibility); 3-4=2; 5-

6=3; 7-8=4; 9-10=5 (government takes more responsibility).

Independent Variables. The independent variables are the four countries chosen: the United

States, the Netherlands, Great Britain and Israel, which represent the following regime types: the

United States, the Netherlands and Great Britain belong to the liberal regime type, while Israel belong to a social democratic regime type.

Table 3.1 Descriptive Statistics – European Value Survey and World Value Survey

Country ISRAEL NETHERLANDS Great Britain US Regime Social Democratic Liberal Liberal Liberal GENDER Male 45% 49% 44% 42% AGE 18-88 (M = 39) 18-93 (M = 43) 17-92 (M = 41) 18-86 (M = 40.5) CURRENT LEGAL Married/Cohabiting 60.9% 54.9% 50.6% 55.5% MARITAL Divorced/ Separated/ 10.9 17.5 19.4 17.4 STATUS Widowed Single/Never married 28.7 27.0 26.5 27.2 HIGHEST Inadequate education 9.0% 1.0% 0.0% 2.2% EDUCATIONAL Compl compulsory edu 5.3 5.3 39.7 12.3 LEVEL (Compl) elementary ATTAINED edu+basic voc 6.9 24.4 0.0 5.2 qualification 2nd, interm vocational 5.7 23.2 7.8 13.8 qualification 2nd, interm general 4.5 6.6 19.8 9.6 qualification Full 2nd maturity level 36.4 5.2 12.3 6.3 certificate Higher edu- lower-level 8.0 22.3 10.1 20.1 3d certificate Higher edu- upper-level 23.5 12.0 3.4 30.3 3d certificate EMPLOYMENT 30h a week or more 39.4% 39.5% 32.6% 50.8% STATUS Less than 30h a week 16.8 16.3 17.1 13.1 Self employed 0.2 7.7 2.8 5.1 Retired/pensioned 1.3 15.2 20.4 12.7 Housewife 8.9 14.0 12.7 6.6 Student 6.6 2.3 5.4 3.3 Unemployed 10.7 1.5 6.5 6.5 Other 0.8 3.3 1.7 1.8 N 1199 1003 1000 1200 M = Median Selected countries/samples: Great Britain [1999], Israel [2001], Netherlands [1999], United States [1999] Source: European World Values and World Values Survey

An additional data source used is the International Social Survey Programme.

International Social Survey Programme (ISSP) is a cross-national collaboration. The

ISSP was founded in 1983 by national research institutes and currently includes 48 countries

(International Social Survey Programme, 2012). The ISSP combines longitudinal and cross- national data. ISSP compares people’s values, attitudes and behaviors in different aspects of social life and on world issues. The questions are designed to be relevant in all countries and are expressed in an equivalent manner in all languages (International Social Survey Programme,

2012). The sample is a nationally representative random sample of the adult population, designed

35 to achieve a norm of 1,400 cases (with a minimum of 1,000 cases). Descriptive statistics for the

ISSP are presented in table 3.2.

Similar to the WVS, the ISSP uses different modules each year to focus on various topics such as inequality, family and changing gender roles, the environment, work orientation, religion, citizenship, national identity, the role of government and more. For this chapter, I identified questions relevant to welfare and work issues, drawn from the "2006 Role of

Government IV" module, which is designed to reveal attitudes toward government responsibility to provide jobs and to take care of the individual. Attitudes are examined for the four different countries: The Netherlands, Great Britain, the United States and Israel. The Israeli population is divided into Arab and Jewish and for the purposes of this analysis, I kept this distinction. The ability to examine these different populations will add another dimension to our understanding of attitudes toward welfare and state policy.

Dependent Variables. The dependent variables used in this study are similar to the dependent variables used in the EVS and WVS. Relevant questions were asked concerning respondents’ attitudes and beliefs on issues such as unemployment and government roles. For the purposes of this analysis, the following questions were used: "Government Responsibility to

Provide Jobs for Everyone" (V25), "Government Successful: Fighting Unemployment" (V39), and “Government Should Spend Money on Unemployment Benefits” (V23).

Independent Variables. The independent variables are the four countries- the United

States, the Netherlands, Great Britain and Israel- which represent the different regime types.

ISSP Coding. The first question "Government Responsibility to Provide Jobs for

Everyone" contained the following categories: "definitely should," "probably should," "probably should not," "definitely should not". For the characteristic level analysis (the regressions models)

36 this question was coded as dummy variable where the supportive categories ("definitely should,"

"probably should,") were coded as “Should” = 1 and the unsupportive categories ("probably should not," "definitely should not") were coded as “Should not” = 0. The second question

"Government Successful: Fighting Unemployment" contained six categories: "very successful",

"successful", "neither successful nor unsuccessful", "unsuccessful", "very unsuccessful" and

"cannot choose". The latter was treated as missing data. The other categories were collapsed as follows: "very successful" and " successful" were coded as 1= “successful", "neither successful nor unsuccessful" was coded as 2= “neutral” and "unsuccessful" and "very unsuccessful" was coded as 3="unsuccessful". For the multiple regression analysis the answers coding were reversed where 1 ="unsuccessful" and 3 = “successful". The third question “Government Should

Spend Money on Unemployment Benefits” contained six categories: “spend much more”, “spend more”, “spend the same as now”, “spend less”, “spend much less”, and “cannot choose”, which was coded as missing data. The other categories were collapsed as follows: “spend much more” and “spend more” as 1= “spend more”, “spend the same as now” was coded as 2= “spend the same” and “spend less” and “spend much less” as 3= “spend less”. For the multiple regression analysis the answers coding were reversed where 1 =" spend less " and 3 = “spend more".

Sociodemographic Characteristics. The sociodemografic characteristics used were gender, age, education, class, and employment status. Gender is a dummy variable (0=male,

1=female) (SEX); age is a continuous variable (AGE); level of education measured by the highest degree earned (6 categories) which was later coded as dummy variable (0=college or higher, 1=High School or lower) (DEGREE); class is a continuous variable, it is top-bottom self- placement on a scale of 1 as the lowest and 10 as the highest (TOPBOT); employment status

(EMPLOYST) is measured by 10 categories and coded as whether a person is in the labor force

37 and employed from “less than a part time” to “full time” (employed=0 ,unemployed =1, retired

=2 or if they identified themselves as not in the labor force =3 which included those who help with family members, students, vocational training, housewife-man, permanently disabled, not in the labor force and others).

Table 3.2 Descriptive Statistics –2006 International Social Survey Programme

County ISRAEL- ISRAEL- NETHERLANDS GREAT BRITAIN US Jewish Arab Social Democratic Liberal Liberal Liberal GENDER Male 47% 68% 54% 42% 47% AGE 18-92 (M = 46) 18-81(M = 32) 18-92 (M = 49) 18-91 (M = 48) 18-89 (M = 46) CLASS Mean 5.95 7.48 6.24 a 6.50 YEARS OF No formal EDUCATION qualification, 2.5% 2.6% 4.5% 23.5% 2.3% incomplete primary Lowest formal 8.4 8.8 18.5 10.1 4.4 qualification Above lowest 27.9 25.4 18.9 19.9 9.6 qualification Higher secondary 20.5 21.5 3.9 15.2 32.3 completed Above higher secondary level 17.0 18.9 41.8 14 26.5 ,other qualification Univ. degree completed 22.2 21.5 10.7 17.2 24.4 /graduate studies EMPLOYMENT Employed, Full- STATUS 37.2% 45.9% 37.8% 41.4% 55.7% Time Employed, Part- 12.3 14.0 20.0 13.9 9.7 Time Less Than Part- 3.3 0.7 1.9 1.2 0.0 Time Helping Family 0.0 0.0 0.4 0.0 0.0 Member Unemployed 4.1 11.1 2.2 3.1 3.1 Student/School/V 6.7 3.3 2.8 2.5 2.6 ocational Training Retired 20.4 3.6 18.8 23.3 13.3 Housewife-Man 8.2 11.4 5.7 8.9 10.9 Permanently 2.5 2.3 3.0 4.6 0.0 Disabled Other/Not In 3.4 2.6 1.2 1.1 4.5 Labor Force N 1038 307 993 930 1518 M = Median a. Great Britain does not contain class variable Source: International Social Survey Programme 2006 (Role of Government IV)

3.4 Statistical Model

Cross tabulation tests were conducted followed by Pearson Chi-Square tests to examine significance. Cross tabulation tests help explain the interrelationship between the variables.

Additionally, column proportion tests were used to determine if proportions were differentiated in each country at the .05 level. Following this, a one-way analysis of variance (ANOVA) test was conducted in order to assess differences between groups. Finally, assuming that we do not have equal variance among the sample, the Dunnett T3 post-hoc test was conducted to indicate which group means differ from one another. This is an important enhancement to the analysis, as it goes beyond the basic conclusion that differences exist somewhere among all of the groups. In order not to violate the ANOVA normality assumption, the questions were analyzed in their original multiple categories prior to the coding process. Other violations of assumptions will be discussed further in the Limitations section of this chapter.

In a second stage, in order to examine personal characteristics influence on welfare and governmental perception, multiple regression and logistic regression tests were conducted on the

ISSP data set questions. The reason for choosing ISSP over the WVS and EVS to examine the influence of sociodemographic characteristics was the fact the Israeli population was divided into two groups: the Israeli-Jewish and the Israeli-Arab, which allows us to further enrich our understanding of the Israeli society and the intergroup relationships, which seem to be influential from the other tests conducted at the country level. For the questions regarding governmental spending on unemployment and government success in fighting unemployment, a multiple linear regression was used. Ideally, three ordered logistic regression analysis would be preferred.

However, since some cells had only few to zero frequencies, I choose to run multiple linear regression. For the question regarding the governments’ responsibility to provide jobs for everyone, I conducted logistic regression since the answers were coded into dichotomous categorical variables. The goodness of fit test for each model will be reported prior to each test.

The analysis was conducted using IBM SPSS 20 statistical software. The following section presents the results of the empirical analysis using both EVS-WVS as a combined data set and ISSP.

3.5 Analysis and Findings 3.5.1 Country-Level Determinants of Attitudes Table 3.3 Cross-Tabulation of attitudes: People Should Not Have to Work if They Do Not Want To COUNTRY Israel Netherlands Great Britain United States Agree 41.9%a 20.5% b 18.7% b 21.6% b Neither agree nor disagree 15.4% a 14.7% a 20.7% b 17.1% a,b Disagree 42.7% a 64.8% b 60.6% b 61.3% b Total N 1183 (100%) 1001 (100%) 985 (100%) 1196 (100%) X² = 227.421 df=6, p<0.001** a,b,c- Each subscript letter denotes a subset of country code categories whose column proportions do not differ significantly from each other at the .05 level. Source: European and World Values Survey. Selected countries/samples: Great Britain [1999] EVS, Israel [2001] WVS, Netherlands [1999] EVS, United States [1999] VWS.

Table 3.3 highlights the cultural differences in beliefs about labor market participation. While respondents in all four countries believed that it is a duty toward society to work, Israelis were divided over whether people should or should not be required to work. In the Netherlands (65.4 percent), Great Britain (59.3 percent), and the United States (61.3 percent), most respondents believe that people should work, regardless of their personal wishes.

A one-way ANOVA (F=69.54; df= 3,4364, p<0.05) tested for differences among the beliefs of the citizens in the four countries in order to determines which countries differ from each other. A Dunnett T3 post-hoc test of the four groups indicated that Israelis (M = 2.00, 95%

CI [1.95, 2.06]) gave significantly lower preference ratings than people in the Netherlands (M =

2.44, 95% CI [2.40, 2.50]), p = .000, Great Britain (M = 2.41, 95% CI [2.37, 2.47]) , p = .000, and the United States (M = 2.40, 95% CI [2.35, 2.44]) , p = .000. Comparisons between the other

40 three groups were not statistically significant at p < .05, which indicates that they are similar to each other in their perceptions regarding people’s obligation to work regardless of their desire to do so.

Table 3.4 Cross-Tabulation of Attitudes: People Should Take More Responsibility vs. the State Should Take More Responsibility COUNTRY Israel Netherlands Great Britain United States People should take more responsibility 1 1.6% a 15.0% b 24.6% c 28.2% c 2 5.7% a 33.8% b 27.4% c 30.9% c 3 13.9% a 28.4% b 28.0% d 20.9% c 4 25.5% a 20.6% b 13.3% c 9.9% d The government 5 53.4% a 2.4% b 6.7% c 10.4% d should take more responsibility Total N 1190 (100%) 1000 (100%) 981 (100%) 1199 (100%) Mean 4.2 2.6 2.5 2.4 Median 5 3 2 2 Standard Deviation .99 1.04 1.18 1.27 X² = 1681.778 df=12, p<0.001** a,b,c,d- Each subscript letter denotes a subset of country code categories whose column proportions do not differ significantly from each other at the .05 level. Source: European and World Values Survey. Selected countries/samples: Great Britain [1999] EVS, Israel [2001] WVS, Netherlands [1999] EVS, United States [1999] VWS.

Table 3.4 also shows that Israel is an exceptional case compared to the other three countries.

53.4% of Israeli respondents took the institutional approach, claiming that the government should take more responsibility. This approach is contrasted with the Netherlands, Great Britain, and the United States, where around 60% reported that they believe the individual should take more responsibility.

A one-way ANOVA tested for attitudes toward responsibility of the government for its citizens vs. the individualistic approach among the four countries. Preferences differ significantly among the four countries ( F= 485.875, df= 3,4366 p<0.05). A Dunnett T3 post-hoc comparison of the four countries indicates that Israelis (M=7.47 95% CI [7.35,7.58]) are different from the

41 categories in the other countries. Israel scored significantly higher than the Netherlands (M=4.68

95% CI[4.54, 4.81]) , p=0.00, Great Britain (M=4.45 95% CI [4.30,4.60]) , p=0.00, and the

United States (M=4.31 95% CI [4.16,4.46]), p=0.00, all of whom scored around 4 on the scale compared to the Israeli score of 7 (the original scale in this ANOVA test varied from 1 to 10).

Comparisons between the other three nations were not statistically significant at p<0.05.

Table 3.5 Cross-Tabulation of Attitudes: Work is a Duty towards Society COUNTRY Israel Netherlands Great Britain United States Agree 69.8% a 56.8% b 49.3% c 57.6% b Neither agree or disagree 13.6% a 18.3% b 27.1% c 19.8% b Disagree 16.5% a 25.0% b 23.7% b 22.5% b Total N 1181 (100%) 1002 (100%) 975 (100%) 1194 (100%) X² = 113.430 df=6, p<0.001** a,b,c- Each subscript letter denotes a subset of country code categories whose column proportions do not differ significantly from each other at the .05 level. Source: European and World Values Survey. Selected countries/samples: Great Britain [1999] EVS, Israel [2001] WVS, Netherlands [1999] EVS, United States [1999] VWS.

Looking at Table 3.5, all four countries show at least 50% support for the belief that work is a duty toward society. However, building on our prior findings, it seems that Israel takes a more institutional approach, with 69.8% of the population claiming that it is the duty of society and its institutions to provide individuals with support and to provide them with the tools necessary to become active members of the labor market. Examining column proportions, we can see that the Netherlands, Great Britain and the United States differ from Israel despite their similarities.

A one-way ANOVA tested attitudes toward work among the four countries. Preferences differ significantly among the four countries ( F= 72.489, df= 3,4351 p<0.05). A Dunnett T3 post-hoc comparison of the four countries indicates that the Israelis (M=2.09 95% CI

[2.02,2.15]) differed from the other three nations. Israel scored significantly lower than the

Netherlands (M=2.61 95% CI[2.55, 2.68]) , p=0.00, Great Britain (M=2.71 95% CI [2.65,2.77]) , p=0.00, and the United States (M=2.53 95% CI [2.46,2.59]), p=0.00. Comparisons between the other three groups were not statistically significant at p<0.05.

Table. 3.6 Cross-Tabulation of Attitudes: Government Responsibility to Provide Jobs for Everyone COUNTRY Israel Israel Netherlands Great Britain United States Jews Arabs Definitely should be 39.4% a 62.4% b 19.5% c 17.5% c 15.9% c Probably should be 36.6% a 31.4% a 36.8% a 38.6% a 23.7% b Probably should not be 17.8% a 2.9% b 26.6% c 29.2% c,d 34.6% d Definitely should not be 6.2% a 3.3% a 17.1% b 14.8% b 25.8% c Total N 1012 306 922 861 1504 (100%) (100%) (100%) (100%) (100%) X² = 704.827, df= 12, p<0.001*** a,b,c,d- Each subscript letter denotes a subset of country code categories whose column proportions do not differ significantly from each other at the .05 level. Source: International Social Survey Programme 2006 (Role of Government IV)

Similar to our previous tables, Table 3.6 shows that Israelis, particularly the Arab population

(62.4%), believe that the government needs to provide jobs for everyone. The large difference between the Arab population and the rest of the Israeli population can be attributed to both historical and current security issues. Specifically, the Israeli-Arab conflict restricts some freedom of movement and access to Israel and to the Israeli labor market (Gal, 2008).

Restrictions on the Arab population create a situation in which the Arab population has a higher unemployment rate than the Jewish population. Gal (2008), in his analysis on immigration and welfare in Israel, found a high poverty rate among the Arab population due to a low employment participation rate among Arab women that is a result of traditional attitudes toward women, as well as participation in lower status and lower-paying jobs. Lewin and Stier (2002) attribute the differential in Israeli welfare state benefits between the Jewish majority and the Arab minority to limited economic opportunities. Gal (2008) uses the term categorical universalism to describe

Israeli social welfare policy, a system that rewards the Jewish population and neglects other

43 minority groups. According to Gal, access to welfare benefits is not dependent upon earnings but upon membership in a social category that is considered deserving. This can explain the large difference between the beliefs of Jews and of Arabs. Still, both Jews and Arabs in Israel differ from the Netherlands and Great Britain in believing that the government should probably help to provide jobs to its citizens. Attitudes in the United States are consistent with the liberal regime type (Esping-Andersen, 1990), with more than 60% of respondents disagreeing that it is the government’s responsibility to provide jobs for those in need.

A one-way ANOVA tested for differences among the beliefs of citizens of the four countries in order to indicate which countries are different from each other. Attitudes toward government responsibility differed significantly across the four countries (F=141.577; df=

4,4600, p<0.05). A Dunnett T3 post-hoc test of the four groups indicted that the Israeli Jewish group (M = 1.91, 95% CI [1.85, 1.96]), p=.000, had significantly higher belief ratings than the

Israeli Arab group (M = 1.47, 95% CI [1.39, 1.55]), p = .000. It also showed that both groups had significantly higher ratings than the Netherlands (M = 2.41, 95% CI [2.35, 2.47]), p = .000, Great

Britain (M = 2.41, 95% CI [2.35, 2.47]) , p = .000, and the United States (M = 2.70, 95% CI

[2.65, 2.76]) , p = .000. Comparisons between the Netherlands and Great Britain were not statistically significant at p < .05, which indicates that they are similar to each other in their perceptions regarding government responsibility to provide jobs for everyone.

Furthermore, more than 50% (table 3.7) of both the Jewish and the Arab populations in

Israel feel that the government has been ineffective in fighting unemployment. Respondents in the Netherlands, Great Britain, and the United States are more conflicted in their attitudes.

Nevertheless, 20-30% of these countries’ respondents think that their government has succeeded somewhat in fighting unemployment.

Table. 3.7 Cross-Tabulation of Attitudes: Governmental Success in Fighting Unemployment COUNTRY Israel Israel Netherlands Great United Jews Arabs Britain States Successful 12.3% a 14.2% a,b 20.8% b 29.5% c 29.6% c Neither successful nor unsuccessful 35.5% a,b 33.1% a,b 52.7% c 39.0% b 33.2% a Unsuccessful 52.1% a 52.6% a 26.5% b 31.5% b,c 37.2% c Total 1013 302 938 874 1477 (100%) (100%) (100%) (100%) (100%) X² = 281.747, df= 8, p<0.001*** a,b,c- Each subscript letter denotes a subset of country code categories whose column proportions do not differ significantly from each other at the .05 level. Source: International Social Survey Programme 2006 (Role of Government IV)

A one-way ANOVA (F=53.299; df= 4,4599, p<0.05) tested for differences among the beliefs of the citizens of the four countries. A Dunnett T3 post-hoc test indicated that the Israeli Jewish and the Israeli Arab populations are similar to each other. The test was not statistically significant at p < .05. Both Israeli groups are different from the Netherlands (M = 3.10, 95% CI [3.04, 3.15]), p = .000, Great Britain (M = 3.06, 95% CI [3.00, 3.12]) , p = .000, and the United States (M =

3.12, 95% CI [3.20, 3.25]) , p = .000, scoring significantly higher than these three countries. This indicates a difference in the beliefs of both Israeli groups as opposed to the beliefs of those in the other countries regarding their perception of their government’s success in fighting unemployment. The three countries (the Netherlands, Great Britain and the United States) are similar to each other in their perception of government success in fighting unemployment.

Table. 3.8 Cross-Tabulation of attitudes: Governmental Spending on Unemployment Benefits COUNTRY Israel Israel Netherlands Great United Jews Arabs Britain States Spend More 38.9% a 49.7% b 11.8% c 15.7% c 36.9% a Spend Some 33.0% a 22.7% b 53.5% c 45.8% d 49.1% c,d Spend Less 28.1% a 27.6% a,b 34.7% b,c 38.6% c 14.0% d Total 1007 304 933 861 1489 (100%) (100%) (100%) (100%) (100%) X² = 504.205, df= 8, p<0.001*** a,b,c,d- Each subscript letter denotes a subset of country code categories whose column proportions do not differ significantly from each other at the .05 level. Source: International Social Survey Programme 2006 (Role of Government IV)

Table 3.8 examines attitudes toward governments’ expenditure on unemployment benefits. It shows that while the Netherlands, Great Britain and the United States concur with current governmental spending on unemployment (at 53.5%, 45.8% and 49.1% respectively), the Israeli population (22-33%) is less satisfied and believes that the government should spend more on unemployment benefits. Similar to previous findings, there are differences in beliefs among the

Jewish (38.9%) and the Arab (49.7%) populations in Israel regarding government spending. Fifty percent of the Arab population believes the government should spend more money; this notion is consistent with the idea that welfare allocation is not equal among Israeli citizens (Gal, 2008;

Lewin and Stier, 2002, Rosenhek, 1999).

A one-way ANOVA (F=98.690; df= 4,4589, p<0.05) tested for differences among the four countries and the five groups’ beliefs. A Dunnett T3 post-hoc comparison of the five groups indicates that the Israeli Jewish population (M=2.79, 95% CI[2.72, 2.89]), Israeli Arabs

(M=2.56, 95% CI [2.41, 2.70]), p=0.037, citizens of the Netherlands (M=3.28, 95% CI[3.23,

3.33]), p=0.00, and citizens of Great Britain (M=3.28, 95% CI[3.22, 3.35]), p=0.00, are all significantly different from one another. Israel scores significantly lower than the European countries. The United States (M=2.67, 95% CI [2.63, 2.72]), however, is similar to the Israeli groups, but different from the Netherlands and Great Britain, which were not statistically significant at p < .05. Great Britain and the Netherlands are similar to each other. The differences between the United States and the European countries also appear on the cross tabulation test where citizens of the United States believe that the government should spend more money on unemployment benefits. It is possible that this notion led the United States to introduce activation policy reforms and to support welfare to work policies. This needs to be further investigated in future research.

To summarize this part, the analysis often indicated some similarity between European countries and some differences from Americans in perceptions. Alesina and Glaeser (2004) have argued that Americans and Europeans have different beliefs regarding the poor. While many

Americans think that the poor are lazy, many Europeans think that the poor are unfortunate.

Oorschot (2006)’s analysis also supports the idea that Europeans commonly share a

“deservingness culture”.

3.5.2 Individual-Level Determinants of Attitudes Prior analyses examined country level perceptions. However, in order to indicate whether social characteristics affect perceptions, sociodemographic variables were also examined. Different regression tests were conducted in order to examine the influence of gender, age, social class, education level, and employment status on attitudes toward welfare and the role of government.

The first test conducted is a multiple regression test for the question regarding governmental spending on unemployment benefits. It is important to note that in this regression model the maximum score on the dependent variable is three and the minimum is one. The closer the mean score is to three, the stronger respondents feel that the government should spend money on unemployment benefits.

Table 3.9 shows that for the Israeli Jewish group for every one-unit increase in social class, the score on “Government Should Spend Money on Unemployment Benefits” decreased by .067 points, controlling for gender, age, education, and employment status. This may be because personal identification with lower class often goes with lower status jobs, education and income and receiving support from the government. In Israel, the government is obligated to supplement money to any individual that earns less than minimum wage. This may explain the support for governmental spend among those who identify as lower class. The employment

47 status variable was also significant for Israeli-Jewish respondents where the mean score on government spending on unemployment was .394 points higher for the unemployed group compared to the employed group, controlling for gender, age, social class, and education. For the

Israel-Arab group none of the variables came out as significant for this question. This may be due to the fact that this is a relatively small sample (n=276).

Table 3.9 Multiple Linear Regression: Government Should Spend Money on Unemployment Benefits Country ISRAEL- ISRAEL- NETHERLANDS GREAT BRITAIN US Jewish Arab GENDER .011 .100 .131** -.008 -.004 Ref Female (.055) (.126) (0.44) (.047) (.037) AGE .001 .000057 .009*** .006** .003* (.002) (.005) (.002) (.002) (.001) CLASS -.067*** -.013 -.024 -.029** (.013) (.037) (.014) (.010) Education .043 -.194 .026 .037 .158** Ref College > (.058) (.125) (.048) (.048) (.051) EMPLOYMENT STATUS Ref Employed Unemployed .394** .261 .469** .840*** .278** (.135) (.170) (.134) (.130) (.105) Retired .067 -.005 -.139 .090 -.054 (.092) (.309) (.078) (.077) (.069) Not in the Labor Force .087 .021 .242** .434*** .146** (.077) (.159) (.071) (.066) (0.55) Intercept 2.357 2.322 1.372 1.356 2.219 R² (%) 4.1 2.0 8.1 10.6 2.5 Ref the reference category for each dummy variable. Great Brittan does not contain the variable social class *p .05. **p .01. ***p .001. Source: International Social Survey Programme 2006 (Role of Government IV)

The Netherlands was the only country where gender was significant for this question. For the

Netherlands, the mean score on “Government Should Spend Money on Unemployment Benefits” was .131 points higher for males compared to females, controlling for age, social class, education, and employment status. In terms of age for the Netherlands, with every one-year increase in age, the score on government spending on unemployment increased by .009 points, controlling for gender, social class, education, and employment status. For the Netherlands, the mean score on government spending on unemployment benefits was .469 points higher for the unemployed group compared to the employed group, controlling for gender, age, social class, and education. Likewise for Netherlands, the mean score for the not in labor force group was 48

.242 points higher compared to the employed group, controlling for gender, age, social class, and education.

For Great Britain, for every one-year increase in age, the score on government spending on unemployment benefits increased by .006 points, controlling for gender, social class, education, and employment status. The mean score for the unemployed group compared to the employed group was .840 points higher, controlling for gender, age, and education. Likewise the mean score for the not in labor force group was .434 points higher compared to the employed group, controlling for gender, age, and education. Great Britain does not contain the class variable.

For United States, for every one-year increase in age, the score on “Government Should

Spend Money on Unemployment Benefits” increased by .003 points, controlling for gender, social class, education, and employment status. For every one-unit increase in social class the score on government spending for unemployment benefits” decreased by .029 points, controlling for gender, gender, education, and employment status. The education variable was significant for

United States only indicating that the mean score for governmental spending for unemployment benefits was .158 points higher for those with a high school education or below compared to those with a college degree and above, controlling for age, social class, gender, and employment status. There were also differences comparing employment status to unemployment and to not being in the labor force. For unemployment, the mean score on governmental spending for unemployment benefits was .278 points higher for the unemployed group compared to the employed group, controlling for gender, age, social class, and education. Likewise, the mean score .146 points higher for the not in labor force group compared to the employed group, controlling for gender, age, social class, and education.

Table 3.10 Multiple Linear Regression: Government Successful in Fighting Unemployment Country ISRAEL- ISRAEL- NETHERLANDS GREAT BRITAIN US Jewish Arab GENDER -.066 -.013 -.139** -.205*** -.059 Ref Female (.047) (.105) (0.48) (.055) (.046) AGE .001 -.003 -.001 .001 .001 (.002) (.004) (.002) (.002) (.002) CLASS .006 .078* -.024 0.25* (.014) (.031) (.014) (.012) Education -.092 .179 -.067 -.153** -.073 Ref College > (.050) (.105) (.052) (.056) (.062) EMPLOYMENT STATUS Ref Employed Unemployed .026* -.254 -.498** .185 -.257* (.117) (.142) (.146) (.158) (.128) Retired -.095 -.066 .075 .086 -.104 (.079) (.258) (084) (.090) (.085) Not in the Labor Force .025 -.112 -.010 .090 -.095 (.067) (.134) (.076) (.077) (0.67) Intercept 1.596 1.123 1.828 2.116 1.801 R² (%) 0.9 4.4 4.5 2.6 1.2 Ref the reference category for each dummy variable. Great Brittan does not contain the variable social class *p .05. **p .01. ***p .001. Source: International Social Survey Programme 2006 (Role of Government IV)

Table 3.10 presents multiple linear regression models for the question regarding

“Government Successful in Fighting Unemployment.” It is important to remember that the closer the score is to three, the more the person agrees that the government is successful in fighting unemployment. Likewise, the closer the score is to one, the less the person agrees that the government is successful in fighting unemployment. Table 3.10 indicates that for the Israel-

Jewish group, the mean score on “Government is successful in fighting unemployment” was .026 points higher for the unemployed group compared to the employed group, controlling for gender, age, social class, and education. For the Israel-Arab group, social class was the only significant variable indicating that higher people identified themselves in the social class ladder, their score on governmental success in fighting unemployment increased by .078 points, controlling for gender, age, education, and employment status.

In the Netherlands, the mean score on “Government is successful in fighting unemployment” was .139 points lower for males compared to females, controlling for age, social class, education, and employment status. The mean score on government success in fighting

50 unemployment was .498 points lower for the unemployed group compared to the employed group, controlling for gender, age, social class, and education.

Great Britain showed significance differences in the gender variable where males scored lower than women in .205, controlling for age, social class, education, and employment status.

The education variable was significant for Great Britain only, where the mean score on

“Government is successful in fighting unemployment” was .153 points lower for those with high school education or below compared to those with college degree and above, controlling for age, social class, gender, and employment status.

For United States, for every one-unit increase in social class, the score on “Government is successful in fighting unemployment” increased by .25 points, controlling for gender, gender, education, and employment status. Comparing the unemployed group to the employed group the mean score on “Government is successful in fighting unemployment” was .257 points lower for the unemployed group compared to the employed group, controlling for gender, age, and education.

Table 3.12 examines whether attitudes toward government responsibility for providing jobs were influenced by personal characteristic such as gender, age, social class, education and employment status. Since the answer was coded as two categories of “spend more” and “spend less”, a logistic regression was used. Omnibus test for the goodness of fit (table 3.11) showed significance for all countries. This indicates that at least one of the predictors used on the dependent variable is important. An additional test that used to examine goodness of fit was the

Cox and Snell R Square test and the Nagelkerke R Square that are closely related tests, and show how much of the variability is explained by the model. These tests range from 0 to 1. While we capture some portion of the variability in our model, the tests indicate that there are more

51 predictors that need to be taken under consideration and that our model does not capture everything. Finally, the Hosmer and Lemeshow test is another measure of goodness of fit and we wish not to reject it. Therefore, indicating on-significance in our model suggests that the model fits the data. In here we wish to have our p-value > 0.05, which supports the adequacy of the model's fit for our data. The Hosmer Lemeshow test is not significant for all the countries studied, indicating that the models fit the data.

Table 3.12 shows that for the Israeli-Jewish group, females were 1.46 times more likely than males to say that it is the government’s responsibility to provide jobs for everyone, controlling for age, social class, education, and employment status. Also for each one-unit increase in social class there is a 14.4% decrease in the odds of saying that it is the government responsibility to provide jobs for everyone, controlling for gender, age, education, and employment status. Finally, those that are retired were 2.51 more likely than those who are employed to say that it is the government’s responsibility to provide jobs for everyone, controlling for age, gender, and education.

For the Israeli Arabs group, age was significant indicating that for every one-year increase in age, there is a 6.7% increase in the odds of saying that it is the government’s responsibility to provide jobs for everyone, controlling for gender, social class, and education.

Additionally, those who are employed are 4.53 times more likely than those not in the labor force to say that it is the government’s responsibility to provide jobs for everyone.

For the Netherlands, for every one-unit increase in social class, there is a 14.8% decrease in the odds of saying that it is the government’s responsibility to provide jobs for everyone, controlling for gender, age, education, and employment status. Also, those with a high school education and below were 1.63 times more likely than those with a college education and above

52 to say that it is the government’s responsibility to provide jobs for everyone, controlling for age, social class, gender, and employment status. For the Netherlands, those that are unemployed were 3.17 times more likely than those who are employed to say that it is the government’s responsibility to provide jobs for everyone, controlling for age, social class, gender, and education.

Great Britain showed a significant differences by gender where females were 1.70 times more likely than males to say that it is the government’s responsibility to provide jobs for everyone, controlling for age, social class, education, and employment status. For Great Britain, those with a high school education and below were 1.69 times more likely than those with a college education and above to say that it’s the government’s responsibility to provide jobs for everyone, controlling for age, gender, and employment status. For Great Britain, those that are unemployed were 3.84 times more likely than those who are employed to say that it is the government’s responsibility to provide jobs for everyone, controlling for age, gender, and education. Also for Great Britain, those not in labor force were 1.70 times more likely than those who are employed to say that it’s the government’s responsibility to provide jobs for everyone, controlling for age, gender, and education.

For the United States, females were 1.50 times more likely than males to say that it is the government’s responsibility to provide jobs for everyone, controlling for age, social class, education, and employment status. Age was also significant. For every one-year increase in age, there was a 2.5% decrease in the odds of saying that it is the government’s responsibility to provide jobs for everyone, controlling for gender, social class, education, and employment status.

Those with a high school education and below were 2.85 times more likely than those with a

53 college education and above to say that it is the government’s responsibility to provide jobs for everyone, controlling for age, gender, and employment status.

3.6 Limitations

Several limitations to this study need to be noted. First, the questions are drawn from large data sets, which were not explicitly about the welfare state but rather about the agencies that make welfare policies and about other social issues related to welfare (such as unemployment and the obligation to work). Therefore, the questions do not cover all possible aspects of welfare policy but rather provide a general sense of the state of mind in the country sampled. Second, there is also a need to emphasize the survey’s limitations. For example, because the questionnaire was translated into different languages, meanings may differ from country to country. However, all three international surveys standardized the test in a way that allowed them to create as much validity as possible.

Additionally, the low percentage presented by the goodness of fit test (indicated by R squared) in the two multiple regressions, indicate that some variables are still missing from our model. In order to be able to better explain the influence of social demographic characteristics on perception’s towards governmental spending on unemployment benefits, and perceptions towards governmental success in fighting unemployment more variables needs to be taken into consideration.

Table 3.11 Logistic Regression Goodness of Fit tests for Government’s Responsibility to Provide Jobs for Everyone

Omnibus Tests of Model Coefficients Model Summary Hosmer and Lemeshow Test Cox & Snell Nagelkerke Chi-square df Sig. Chi-square df Sig. R Square R Square Israel-Jews 45.517 7 p<.001 .049 .073 10.795 8 .214 Israel-Arabs 19.636 7 .006 .070 .187 11.841 8 .158 Netherlands 39.142 7 p<.001 .047 .062 4.652 8 .794 Great Britain 50.020 a 6 p<.001 .057 .077 5.340 8 .721 United States 95.807 7 p<.001 .067 .091 9.810 8 .279 a. Great Brittan does not contain the variable social class Source: International Social Survey Programme 2006 (Role of Government IV)

Table 3.12 Logistic Regression: Government’s Responsibility to Provide Jobs for Everyone Country ISRAEL- Jewish ISRAEL- Arab NETHERLANDS GREAT BRITAIN US stimated E Exponentiated Estimated Exponentiated Estimated Exponentiated Estimated Exponentiated Estimated Exponentiated Independent Beta Odds Beta Odds Beta Odds Beta Odds Beta Odds variable Coefficent ª Coefficent Coefficent Coefficent Coefficent Ratio Ratio Ratio Ratio Ratio GENDER .378* .686 1.190 .304 .188 .829 .529*** .589 .403*** .668 (b) Ref Male (.162) (.712) (.150) (.146) (.119) AGE -.009 .991 .065* 1.067 -.010 .990 -.008 .992 -.025*** .975 (.006) (.031) (.007) (.006) (.005) CLASS -.155** .856 -.244 .783 -.160** .852 -.045 .956 d (.048) (.189) (.047) (.032) Education .270 .763 .108 .897 .486** .615 .524*** .592 1.046*** .351 Ref HS =< (.176) (.644) (.164) (.150) (.159) EMPLOYMENT STATUS Ref Employed Unemployed .841 2.320 .664 1.942 1.155* 3.174 1.345*** 3.837 .495 1.641 (.498) (1.104) (.576) (.513) (.322)

Retired .921** 2.512 .206 1.229 .360 1.433 .340 1.405 c (.281) (.261) (.240) (.226) .431 1.538 -1.511* .221 .055 1.057 .529* 1.697 .073 1.075 Not in the Labor (.243) (.670) (.245) (.212) (.171) Force Constant 1.956 2.497 1.353 .886 .525 a. Unstandardized coefficients with standard errors in parentheses. b. Ref the reference category for each dummy variable. c. Israel-Arab- Unemployment status only one case of retired. d. Great Brittan does not contain the variable social class *p .05. **p .01. ***p .001. Source: International Social Survey Programme 2006 (Role of Government IV)

3.7 Conclusions and Discussion

Utilizing cross-national survey data, this chapter examined public attitudes toward welfare at the national level. The main findings suggest that public attitudes toward welfare policies vary between nations. The results of the empirical analysis provide some support for the regime hypothesis and for the relevance of cultural differences among different countries. Esping-

Andersen’s theory, which classifies nations into regime types, suggests that both the United

Kingdom and the United States share characteristics of the liberal regime type. The Netherlands is a borderline case which is classified as social democratic (Art and Gellisen, 2007; Esping-

Andersen, 1990) due to its universal insurance and social security system but also as liberal, due to its shift towards individualistic responsibility and recent significant decreases in social spending (Art and Gellisen, 2007; Oorschot, 2006).

In recent years, the United States has been classified as a neoliberal country (Esping-

Anderson, 1990, Myles and Quadagno, 2002). Neoliberals support privatization of the economy under the belief that privatization is more efficient and will improve economic prosperity (Myles and Quadagno, 2002). Neoliberalism is often associated with the governments of Margaret

Thatcher (Great Britain), Ronald Reagan (the United States), but also Benjamin Netanyahu

(Israel), the finance minister in the second Sharon government (2003-2005) and Prime Minister part of the time when the WTW program period was active (2009-1/2013).

The similarity in economic approaches (i.e. neoliberalism) of the United States, Great

Britain and the Netherlands is reflected in the analysis of their views regarding the government and welfare issues. These three countries were chosen to operate unemployment centers by the

Israeli government in 2004 (Shviv, 1999). The Israeli-Wisconsin WTW program was influenced by the neoliberalist ideal, which assumed that the state should promote self-responsibility and

56 individualism (Esping-Andersen, 1990, Myles and Quadagno, 2002). Thus, it was theoretically consistent with the perceptions of the operators from the three different countries. Each of these countries successfully adopted the WTW plan shaped by the American Wisconsin model. The analysis suggests they did so because all three shared the same regime type as reflected in common values. This means that their similar welfare ideals may have affected their ability to productively adopt the WTW program in their home countries.

However, the analysis presents a different view when it comes to Israel. According to

Esping-Andersen’s typology, Israel is a social democratic country. This is derived from the

Israeli ideology that was founded on the socialist ideal that promotes access and equality of basic needs (Esping-Andersen, 1990). The neoliberal market ideology, which focuses on privatizing the welfare state, led Israeli citizens to feel that the government was abdicating its responsibility to individuals. The program undercut common ideals about shared responsibility and created a program viewed by the public as overly strict. The fact that all four operators of the program came from neoliberal countries strengthened these notions among the Israeli public.

When examining the differences between Israel and the other countries, it is important to acknowledge situational factors as well. Descriptive statistics (tables 3.1 and 3.2) demonstrate a high level of unemployment in Israel in comparison to the other three countries. In the WVS,

10.7% of Israeli respondents were unemployed in comparison to citizens of the Netherlands,

Great Britain and the United States (1.5%, 6.5% and 6.5% respectively). The ISSP presents an even more extreme situation, where 11.1% of the Arab Israeli respondents reported being unemployed compared to 4.1% of the Jewish population. These numbers are still considerably higher than the unemployment rate in the Netherlands, Great Britain, and the United States

(2.2%, 3.1% and 3.1% respectively) during the survey period. Considering these numbers may

57 also help to explain differences in welfare state beliefs. Being directly affected by the government’s welfare state policy and its changes makes the individual more aware and concerned about the direction of reforms (Blekesaune and Quadagno, 2003).

It is also important to note the differences between the two Israeli populations – the

Arabs, and the Jews. A social democratic welfare state should provide an equal and unbiased redistribution of resources and opportunities (Esping-Andersen, 1990). In practice, the definition of what is fair is much disputed, and a wide range of strategies to redistribute resources has been developed (Lewin and Stier, 2002). Gal (2008) describes this as a “categorical universalism” in

Israeli welfare policy, a system that is less efficient in dealing with the needs of the Arabic citizens due to unequal membership (Rosenhek, 1999). According to Gal, the Arabic minority cannot take part in activities (e.g. participating in the defense of the state) that provide benefits for members who do take part. The dominant group is the one that is in charge of the reward system and therefore sets policies that exclude Arabs and other minority groups (Gal, 2008).

Universalism becomes a relative concept once services and benefits are provided in different ways to different groups.

In order to analyze the differences between the different Israeli groups and the different countries, I conducted an analysis of social characteristics such as gender, age, class, education level and employment status. The results were generally consistent with the notion that those who are more socioeconomically vulnerable (older, unemployed, female, lower education or lower class) and thus more likely to need welfare support and benefit from it are more likely to support governmental expenditure and welfare (Hasenfeld and Rafferty, 1989). The main findings suggested that in the Netherlands, Great Britain, and the United States, those who were unemployed or identified themselves as not in the labor force believe that government should

58 spend more money on unemployment benefits compared to those who were employed. A possible explanation is that these two groups are more likely to need and receive funding from the government due to their current employment status. Another common variable among respondents in the Netherlands, Great Britain, and the United States in beliefs regarding governmental spending on unemployment is age. The analysis indicates that with every additional year of age, people were more likely to support government spending on unemployment benefits. Possibly one’s position in the life cycle influences a person’s perception of governmental programs and benefits (Busemeyer, Goerres and Weschle, 2009; Quadagno and

Pederson, 2012) because of current use and needs or a feeling of solidarity in the use of governmental allowances. This may affect perception towards policy, as this analysis indicates that older people are more prone to support government expenses on unemployment.

In terms of support for the government’s role in providing employment placement for everyone, in the Netherlands, Great Britain and the United States, education level is significant.

In all three countries, those with high school degree and lower were more supportive of governmental responsibility to provide jobs for everyone compared to those with a college education or higher. Education attainment and labor market outcomes are strongly connected

(Allmendinger and Leibfried, 2003). Often low skills and lack of ability leads to unstable and low status positions in the labor force. This also is consistent with the findings for Great Britain regarding the government’s success in fighting unemployment where people with a college degree or higher believed that the government is more successful in fighting unemployment than those with a high school degree or lower. Exploring further internal relationships within universal welfare states provides a challenge for future research.

These findings suggest more support for the national identity level in determining perceptions toward governmental policy and welfare. While we find some significance and general trends among the three liberal countries’ social demographics, results are generally consistent with the notions that the socioeconomic groups that at risk of being vulnerable (older, unemployed, female, lower education, and/or lower class) are more likely support welfare

(Hasenfeld and Rafferty, 1989). Our national data analysis such as the ANOVA test found significant differences between nations, indicating support for the Esping-Anderson thesis.

According to this analysis, perceptions towards welfare support are not just indicators of personal characteristics but of a national atmosphere and environment.

The evidence regarding country level differences suggests, first, that Israeli public opinion was inconsistent with the government or the operational centers’ ideologies. Second, the foreign operators' cultural system might have affected the trial and therefore the perceptions of results. This issue will be presented in the next chapters of this analysis. Brooks and Manza

(2006) suggest that mass beliefs exert a significant effect over welfare state expenditure, particularly within social democratic countries (Brooks and Manza, 2006). Therefore, it is possible that the mix of liberal and social democratic mass perceptions led to public rejection of the government initiative on how the country should fight unemployment and decrease welfare expenditure. Given the approach taken in this dissertation, one should pay particular attention to the empirical specification of the relationship between the regime type indicators and support for wealth redistribution.

Attitudes also need to be examined from the perspective of the policy itself. When adopting policy, one should also consider the social perceptions and beliefs that accompanied the policy. There is a process of social learning, which is often ignored in the case of policy

60 diffusion (Meseguer, 2005). This overlooked process and its implications will be examined in the next chapters.

CHAPTER FOUR

THE ISRAELI CASE STUDY

4.1 The Establishment of the Israeli Welfare State

In order to better understand the policy transformation processes in Israel from social welfare to activation, one must understand the welfare regime, conditions and atmosphere under which the

Israeli welfare state was constructed as well as the changes happening to the countries surrounding it. The welfare state in Israel can be divided into six different time periods, five of which follow Doron and Kramer’s (1991) analysis plus the most recent time period.

4.1.1 Pre-State (1920-1948)

The first stage is the Pre-State (1920-1948) where social and religious traditions were central.

The Zionist (i.e. nationalist) movement, which is a movement that advocated the establishment of the new Jewish state, was on the rise. Pioneers started settlements in Palestine first under the

Ottoman Empire and continued after World War I under the British Mandate. The majority of the

Jewish settlers came from Eastern Europe and were influenced by values of pioneering and productivity, egalitarianism, mutual aid and collective responsibility. Doron and Kramer (1991) claim that these ideals were highly suited to the tasks of nation-building and paralleled the development of other countries such as the United States, Canada, and New Zealand. Each of these “new societies” was founded by pioneers who migrated to new countries and attempted to create a new and modern social order unfettered by the class system and culture of their old societies. The Zionist movement was also strongly affected by the socialist ideas established in

Europe in the last quarter of the nineteenth century. This collection of values influenced the characteristics of the fledgling nation (Doron and Kramer, 1991).

During this time, there was little interest in state intervention in economic, political or social life. The only social legislation came from Britain, which offered limited coverage and protection for specific types of industrial injuries and the Employment of Women Ordinance, which provided women with a modest maternity allowance for eight weeks provided by the employer (Doron and Kramer, 1991). In Israel an important reason for the lack of protective legislation in the developing country was the existence of two populations, Arab and Jewish, who lived side by side. Each group had a different culture, religion and social life, making large scale policies politically difficult (Horowitz and Lissak, 1978; Rosnhenk, 2002).

The Jewish settlements had two competing social service systems, which became two major social welfare structures. The Va’ad Leumi, which was also known as the Jewish National

Council of Palestine (JNC) or Jewish People's Council, was the main national institution of the

Jewish community within the British Mandate of Palestine. The other was the Histadrut, which was the General Federation of Labor or Israeli workers' union (Doron and Kramer, 1991;

Rosenhek, 2002). These organizations were originally open only to Orthodox members and relied completely on donations from abroad (Doron and Kramer, 1991).

The Jewish National Council of Palestine was an elected body that represented the Jewish community. It operated on voluntary taxation and controlled internal disputes, labor problems, and a range of social services. The most important service in the field of social security was the social assistance program which began in 1932 when the Social Welfare Department was established. By 1947 the office provided financial aid for families and childcare for the entire

Jewish population, though the aid provided was often minimal (Doron and Kramer, 1991,

Rosenhek, 2002).

The Histadrut was more similar to a union or trade organization and mainly focused on agriculture, industry and construction. As a union body, the Histadrut provided social services such as mutual aid assistance, death benefits for widows and orphans, health care, old-age security, unemployment assistance, discounts for daycare, and other educational and vocational training services. Membership was based on fees (Doron and Kramer, 1991). The social insurance and mutual aid institutions were not regarded as “welfare”, which would contradict the

Labor Zionist ideology. At that time, the Zionists believed that welfare was an unacceptable way to deal with social problems and assumed that the future socialist society would not contain any social problems that would require the intervention of welfare institutions (Shalev, 1992).

After World War II and while still under the British mandate, the Jewish settlements were influenced by Beveridge’s Report and its guiding principle of social insurance as part of a broad social policy. In 1945, the Histadrut pointed to the need for social insurance, which was accepted by the Mandatory government but left to the Jewish leadership to execute. The British

Mandatory government encouraged the development of autonomous welfare institutions

(Rosenhek, 2002).

4.1.2 1948-1957, Nation Building

In 1948 when the state of Israel was officially recognized, a large migration to Israel began.

More than one million Jews, including many elderly and disabled, moved to Israel, mainly from

Arab countries. With the establishment of the new state, the few social welfare services of the

Mandate government and those of the Va’ad Leumi were merged into a newly created Ministry of Social Welfare (Doron and Kramer, 1991, Rosenhek, 2002). The Histadrut (the union

64 organization) continued to exist, however, as a private and independent body based on working status and fees.

In 1949 a committee was appointed to prepare plans for social insurance programs. This was the joint work of both the new state welfare office and the Histadrut. The committee recommended a version of Beveridge’s report. In 1953, the first National Insurance Act was passed, and the basic foundation for the welfare state in Israel was laid. This legislation established the National Insurance Institute (NII) as a semiautonomous state agency and laid the basics for the social security system (Rosenhek, 2002). At that time thousands of immigrants from Arab countries and European Holocaust survivors came to Israel. There was chaos in this transition and the need for a social welfare system was great (Doron and Kramer, 1991).

4.1.3 1958-1967, Institutionalization and Formalization

During these years Israel experienced some reduction in tension on the borders and improved its political and economic situation. The welfare state in Israel became institutionalized and expanded its activities. When living conditions improved, it was easier to service recognized social needs. Levels of assistance increased and residual social assistance provided by local organizations were merged into national insurance coverage plans. All insurance schemes were updated. For instance, pension allowances were given to partially retired people rather than only to those who retired due to old age. Another example was the children’s allowance program where child allowances were provided after the fourth child. By 1965, the employed persons’ children insurance scheme was added, covering the first three children of employed families

(Doron and Kramer, 1991; Rosenhek, 1999). By the end of this period, with the exception of the first three children of nonemployees, all children in Israel were covered by this program.

Interestingly, at that time there was no program for the unemployed. The Labor Party in power and the Histadruth both opposed the implementation of an unemployment insurance program. One of the reasons for their objection was the belief that providers of unemployment benefits to Jewish immigrants would encourage the development of a “dependency culture” and not inspire a “work ethic” among people who lacked one (Rosenhek, 2002).

In practice the Social Welfare Service Act of 1958 did not bridge social gaps between settled and new immigrants with large families, since it continued to be based on the principles of local responsibility, means testing, and familial responsibility (Doron and Kramer, 1991).

4.1.4 1968-1977, Shift in the Distribution of Power

After the Six Day War in 1967 and until 1977 when a conservative coalition took over, there were dramatic social policy changes. Israel became more similar to other industrialized nations. During this era, there was a continuous fight between social classes and ethnic groups.

The conflicts between populations from Europe and from Arab countries increased and threatened social stability. Doron and Kramer (1991) posit that these events were a delayed reaction to the widely publicized War on Poverty in the United States during the 1960s. As a result of these problems, two major committees were established in the early 1970s: the committee on Income Distribution and Social Inequality and the Prime Minister’s Commission for Children and Youth in Distress. A prominent official at that time was Mr. Shlomo Kramer who was a clerk in the Government Budget Office and Taxes and later was in charge of the welfare budgets and Social Security. Mr. Kramer was also involved in the Income Support Law

Act (N.F.S, 2001). Twenty years later Mr. Kramer became a key player in importing the

Wisconsin Welfare to Work American program to Israel.

In October 1973 Israel faced a surprise attack, known as the Yom Kippur War, by Egypt,

Syria and Iraq. During the holy day of Fast, on Yom Kippur (Day of Atonement), Israel was caught unprepared. Although Israel won the three week war, thousands of Israeli soldiers were killed and wounded. Following the war, a massive protest against the Israeli political leadership lead to the resignation of the government. Three years later there was a political changeover where for the first time the right-wing opposition came to power.

After the Yom Kippur War, Israel faced many difficulties that limited the welfare state.

Spending priorities changed as monies were directed to defense needs. At that time few welfare programs were changed, though many welfare issues became political topics including minimum income, laws on school integration, support for higher education and other programs in housing, health, and personal social care services (Doron and Kramer, 1991).

4.1.5 1978-1990 Uncertainty and Government Changes

In 1977 due to the results of the Yom Kippur War and to cultural and ethnic conflicts, the right wing coalition (Likud) took over leadership of the country. The shift from a strong socialist-

Zionist ideology to free enterprise and individualism affected perceptions of the welfare state which the right wing parties strongly opposed. The Lebanon War in 1983 affected the spread of the state, and military expenditures again rose (Doron and Kramer, 1991).

The social security system in Israel covered the entire population and assured a minimum level of income in times of need. However, in the 1980s a new law was passed requiring a person who claims benefits to do all that is possible to earn a living from work. The unemployed had to register in the local office of the state employment service and had to prove their efforts to find a job. Only a person for whom no suitable job was found was eligible for the income support

67 benefits (Doron and Kramer, 1991). Although activation policies became more central after

1980, they still were not widely enforced.

4.1.6 1990- Activation Policy- from Welfare to Work

In 1992 the State Comptroller authored a report examining the Government Employment

Service. The State Comptroller indicated that compared to the large pool of possible vacant jobs only 34% were filled. The State Comptroller's office also stated that the Unemployment

Insurance stipend, as currently regulated, did not encourage job seekers to reintegrate into the market, especially as long as they were entitled to unemployment benefits (State Comptroller

Report, 1992).

+ Working-age 15-64 years old. Source: National Insurance Institute, 2009. Chapter 4: Activities and Trends in Benefits - Income Support, table 1. 2009 Report. Jerusalem: National Insurance Institute.

Figure 4.1 Working-Age+ Recipients of Income Support and the Rate of Increase 1990-2004

Some research also implied that not all welfare recipients were fully entitled to their welfare stipends (Gal, 2007; Yaniv, 1995). This was only part of the general atmosphere at that time. As a result the Israeli government followed the Organization for Economic Cooperation and

Development’s (OECD) proposal to transform welfare programs around the world and decided to move toward activation policies.

Like many other Western countries during the last two decades, the welfare state in Israel experienced changes. As in other countries, there have been strong pressures on the welfare state.

Most political groups in Israel have accepted neoliberal ideas of free markets, minimal state intervention and deregulated labor markets (Rosenhek, 2002).

4.2 The Link between the Local and the Global – Globalization and Localization

Globalization allowed countries to examine what others have done (Meseguer, 2005), decide which policy to borrow and how to integrate the policy. Supposedly, this decision is left the each nation, but in fact, a country that chooses to belong to the growing modern world and to the western society must be integrated into the global economy to some extent. How does this need for integration into the global economy affect the welfare state? Opinion is divided on this question: Some believe that integration into the global economy requires the state to reduce its expenditure on social welfare. Therefore, a country that seeks to integrate into the global economy cannot interfere too much in the labor market. It must reduce the taxes it imposes to attract foreign investors, and it must reduce its spending on social services. Furtehr, such organizations as the World Bank, the International Monetary Fund, and the OECD may also impose liberal policy measures to reduce the deficit, reduce spending, and move toward privatization. These arrangements may lead to the reduction of welfare state spending (Goodman and Barak, 2011).

Others believe that integration into the global economy may not require reducing state spending on welfare. According to these theorists, globalization challenges the welfare state and

69 does require policy makers to pay attention to measures and to respond and adapt to new welfare arrangements. However, integration into the global economy does not necessarily require a reduction of taxes and in welfare spending. High taxes are not the only consideration of foreign investors consider they choose which country to invest in. Equally important considerations of foreign investors are the quality of human capital in the country, which is acquired by investing in education, health and welfare. Therefore, according to this approach, in order to integrate into the global economy, the state needs to invest in education, health and welfare (Goodman and

Barak, 2011).

The mid-1980s were characterized by a shift toward globalization process and toward similar economic policies between Israel and the United States and symbolized the seeds of connection between the global and the local. Many foreign companies entered the Israeli market as a result of the peace process that was mediated with American help (Gal, 2007; Shalve, 1992).

Ironically, the biggest shift symbolizing the entrance of American culture into the Israeli environment was the entry of McDonald’s in October 1993, which became a symbol of Global-

American culture (Ram, 2004). As in many other countries, the entry of the global market raised concerns and questions regarding its affect on the local market, culture and values, especially because this involved a shift from national to private ownership (Ram, 2004). Thus, changes in the global system influenced the local system (Ram, 1999).

Glocality refers to the connection between the global and the local that is a result of the globalization process (Ram, 1999). Local and global are often viewed as opposite trends. Barber

(1995) described it in terms of “McWorld” which is the global consumer world and the “Jihad” which is the local. Barber does not refer only to the Muslim religion but also to other religions and the non-religious. In practice, other, the McWorld does not harm the Jihad but rather

70 promotes it and uses it as tool to promote global distribution. ”Jihad not only revolts against but abets McWorld, while McWorld not only imperils but re-creates and reinforce Jihad. They produce their contraries and need one another“(Baber, 1995:5). The breaking down of the boundaries sometimes causes retaliation that enhances the fixation of borders and the strengthening of local identities. Globalization has far-reaching implications on political regimes and on social systems. Ram (1995) claims that globalist democratization is civil and political but not social, and at times even anti-social. In addition to the political implications of globalization, it also affects social policy such as illustrated by the Israeli case. Israel chose to adopt American liberal policy in a local socialistic environment.

Israel has become a different society from the society that was built on the Zionist ideology. The Globalization process challenged Israel and required it to adapt a new reality. This chapter introduced the Israeli welfare state’s history up until current days, where the desire to be considered a developed country and to become part of the OECD and also to find a solution to social problems, such as the increase in the unemployment rate, has led Israel to search and adopt a neoliberal policy. American hegemony paved the way to the Welfare to Work policy such as was conducted initially in Wisconsin. The implementation of the Israeli program was lengthy and complex. Therefore, in the next chapter, I first present the process using archival data and interviews and then discuss its more theoretical aspects.

CHAPTER FIVE

THE ISRAELI WISCONSIN WELFARE TO WORK PROGRAM – THE BIRTH AND DEATH OF A PROGRAM

5.1 Introduction

Nowadays, in a global world, more than ever, there is a tendency to look abroad, to see how other states have responded to similar difficulties and problems, to share ideas, to draw lessons, and to bring foreign evidence to bear within domestic policymaking processes (Bennett, 1991).

In the field of political science, this process is term ‘policy convergence.’ Convergence is the

“tendency of societies to grow more alike, to develop similarities in structure, processes and performance” (Kerr, 1983:3). The convergence argument implies that, as societies become more industrialized, certain determinate processes are set in motion, which tend over time to form similar social structures, political processes, and public policies (Bennett, 1991). Policy diffusion, policy adoption, policy transfer or isomorphisms represent similar concepts refelcting policy convergence (Knill, 2005).

Nations have always sought to borrow and adapt policies from other societies (Siegel and

Weinberg, 1977). In the Israeli case, the process analyzed in this dissertation concerning the adaptation of the Welfare-to-Work program began for several reasons. First, during 2003 Israel was experiencing a real problem in the labor force signified by a rise in the unemployment rate.

Second, Israel desired to become part of the OECD; that required a significant change in the perception of Israel as a social democratic country and toward neo-liberal perceptions such as privatization, which is considered more efficient and progressive. Drezner (2001) suggests that states on the periphery (i.e., non-OECD countries) are more likely to adopt convergence policy and, as in this case, to adopt policies from abroad. This chapter examines the adaptation process

72 of the American Wisconsin Welfare-to-Work reform. While chapter three examined the attitudes toward the welfare state, here I present an in-depth view of the implementation process of the program, showing how differences in basic values and attitudes can affect social reform outcomes.

The Israel implementation of the American Wisconsin Welfare-to-Work policy experienced problems from the beginning. The program in its initial form was reminiscent of the shift toward American policy that did not fit the Israeli culture and society. Therefore, the program had to keep changing in order to survive and to adapt to Israeli culture and ideology.

This constant change was a result of ongoing criticism that came from all levels including officials government, operators, non-profit organizations and the welfare recipients themselves.

These difficulties and their reasoning will be investigated in this chapter.

As Mesueguer (2005) explains, when adopting policy one should also adopt the perceptions that come along with the policy in order to make it successful. In Israel, it seemed that there was never a genuine attempt to understand how Israel differed from the society the reform was imported from as well as the significant differences. While Chapter 3 underlying the reasoning for the failure of the program due to different regimes and welfare perceptions, this chapter highlights the different ideologies and cultural differences that reduced the chance the program could succeed.

Chapter 5 examines why the transfer of the policy took so long and what made the adjustment process so difficult. The chapter will review the continual modification of the policy in order to tailor it to the new environment and to react to cultural constraints. The main research questions examined in this chapter are how did the Israeli public’s social perceptions of the welfare state presented in Chapter 3 influence the outcome of the Welfare-to-Work reform.

Moreover, to what extend did cultural differences affect the program, its performance and public receptivity of the Wisconsin model?

5.2 Methods

Using qualitative data allowed me to create a timeline of the formation of the Israeli Welfare to

Work program. Qualitative data were drawn from a content analysis of the newspaper archives of the most widely circulated daily newspapers in Israel, around the time that the Israeli Welfare to Work program took place (August 2005- April 2010). This provided data regarding public opinion and how the government presented the program and results to the public. The newspapers that were sampled are included in table 5.1.

Yedioth Ahronoth (lit. Latest News) was established in the late 1930s and is a daily newspaper published in Tel-Aviv, Israel. Since the 1970s, it has been the most widely circulated paper in Israel and is known to be open to a wide range of political views.

Maariv (lit. Evening) is a Hebrew language daily tabloid published in Israel that was founded in 1948. Up until 1980, Maariv was the most popular newspaper. Today it is second in sales after the Yedioth Ahronoth tabloid.

Haaretz (lit. The Land) is Israel’s oldest daily newspaper, established in 1919. It is now published in both Hebrew and English. Haaretz considered a high prestige newspaper in Israel as it is the oldest of the national dailies. It is also the paper with the most editorial and opinion- related content. It identifies itself as an "elitist" newspaper. With an editorial line to the left of

Yediot Aharonot and Maariv, Israel's daily of record is strongly secular, and moderate on security and foreign policy issues. A shorter English-language version of the paper is distributed with the International Herald Tribune (BBC, 2006).

Globes is a Hebrew language daily evening newspaper, published in Israel. Globes was established in 1983 and is considered a financial newspaper.

HaTzofe (lit. The Observer) was a Hebrew language daily newspaper published in Israel.

HaTsofe’s point of view is considered Zionist, nationalist and religious. It claimed to be the only daily newspaper of the Israeli political right, with an emphasis on religious Zionism. Hatzofe printed its last edition in December 2008.

Others. Local newspapers from different areas that came up in the online search when searching for the Israeli Welfare to Work program.

Table 5.1 Newspaper Archival Analysis NEWSPAPER 2002-4/30/2010 2002-4/30/2010 % Actual Pool Examined coded Yedioth Ahronoth (lit. Latest News) 215 212 98.9% Maariv (lit. Evening) 176 171 97% Haaretz (lit. The Land) 202 72 36% Globes 22 22 100% Hatzofe (lit. The Observer) 7 3 43% Total 622 480 77%

Sampling Procedure –an archival Computer Search was conducted using various names of the program such as "Wisconsin program"; "Mehalve"; Oroth L'Tasuke"; "Welfare to Work program" and such. Articles were searched for either manually or with the use of a computer database. Articles varied in their length and details. Additionally, many cases included the historical and contextual circumstances surrounding the program. These rich data also revealed the public opinion and the general atmosphere in which the program was received in Israel.

Furthermore, the content analysis provided an overview of the government process in implementing the activation policy in Israel and moving toward the privatization of welfare.

Measures- Data were coded broadly to ensure maximum depth of analyses. Measures were developed in the early stages of the research as part of the literature review and the

75 interviews conducted prior to the archival analysis. Measures used in this study include the following:

Privatization. Whether privatization was mentioned in the article.

Job Market. Whether the current situation of the job market was mentioned, such as mentioning a dearth of jobs for workers as a reason for unemployment.

Program’s Future. This measure is comprised of three measures that were collapsed during the analysis. Those three measures assess whether the article mentioned stopping the program (1), making changes to the program (2), or expanding the program (3) to more than its four original regions.

Article Atmosphere. This measure is comprised of two measures that were collapsed during analysis. Those two measures referred to whether the article contained positive stories and examples of the program and were supportive of the existence of the program, or whether the article took a negative stance regarding the existence of the reform. Some of the articles contained both types of comments and therefore were coded both negative and positive.

Victims. Whether participants in the program were referred to or referred to themselves as victims of the program.

Narrative. This measure is comprised of three measures that were collapsed during analysis and refers to whether the articles used personal stories. If a personal story was used, was it a positive story about the success of the program or a negative story about the problems the participant experienced?

Misplaced Jobs. Whether the article raised the idea that a center misplaced a person into a job.

For Profit. Was the economic model of the program in which centers received money for job placement mentioned?

Name Use. What name was used to present the program: the original Hebrew Name

Mehalve (“from the hearth”) or later on Oroth L’tasuka (“Lights for Employments”), or the

American name Wisconsin Plan?

Population. The program targeted different populations. The different populations were coded- Handicapped; Israeli-Arab; New immigrants; Single mothers; 45 years and older

(AgeFactor).

Government fault. Whether the article or the person cited/interviewed in the article blamed the government for their situation.

Center. This measure is comprised of the four centers that operated the program. This measure examined which centers were mentioned in the article. The four centers were Agam

(Nazareth), IWS (Ashkelon), Agents (Natanya-Hadera), and A4-E Amin (Jerusalem).

Interviews. 17 in-depth semi-structured interviews (16 in Hebrew and one in English) were conducted. The respondents included government representatives such as the head of the

Israeli program, the legal advisor, the private advisor who initiated the program, four center managers, a non-profit representative, a reporter and others (Appendix B). A snowball sampling method was used to locate interviewees. This is a technique for developing a research sample in which existing subjects recruit future subjects from among their acquaintances (Babbie, 2005).

Official Reports. I reviewed official documents such as government reports and statistical analyses from the Israeli Central Bureau of Statistics.

In seeking to understand the program’s path and the politics behind the program, I chose to use the newspapers as a source. This allowed me to capture more information. Together with the interviews and government reports, I was able to better understand the program through these sources. Even more importantly, I was able to understand the political forces and conflicts involved in this controversial program. Investigating the media allowed me to capture the informal public discourse regarding the politics of the program (Neuman, Just and Crigler,

1992). This chapter will present the program path and the policy diffusion from the American sphere to the Israeli sphere. Next, it will highlight the problems the program faced from the beginning and the way the government dealt with these problems.

5.3 The Birth of a Program "We got to the unbearable situation in which over 140,000 households with children are people that do not work. The chances of children who grow up in such houses to develop are very small. There is no doubt that in a house where both parents are working the education options and enrichment activities are much greater than from a home that lives on governmental income support which is 2600 NIS (~$680) per month (Dorit Novak, head of the program from Ben-Yehoda, 2006)."

In 1997, following the 1992 State Comptroller's audit report, an inter-ministerial committee was established to examine the welfare system in Israel and to make recommendations for reform.

The committee recruited private advisor, Mr. Shlomo Kramer, a former employee in the

Government Budget Office in the 1970’s, to search for alternatives to the Government

Employment Services and to examine what had been taking place elsewhere in the world. The advisor, Mr. Kramer, an economist, presented his first report in June 1998 under the title

"Experimental Program to the Extraction of the Free Market in the Area of Unemployment

Payment Entitlements." The report raised the idea of establishing independent employment services such as those found in the United States. In this report there was no indication of any of

78 the European alternatives, but it cannot be determined if that was intentional or not (Zohar,

2007). However, the European programs were partially influenced by the American program, which was the first to initiate the welfare to work program in the form of a one-stop-shop.

Following the release of the report, a delegation was sent abroad to examine the subject.

This visit was extended to European countries that had also adopted the American Welfare to

Work program. The Israeli government examined welfare policies in the United States (focusing on Wisconsin, Boston, New York and Washington), the Netherlands, and Denmark (Shaviv,

1999). The working group traveled abroad to investigate leading topics such as determining welfare entitlement, supportive services, implementation processes, costs of the programs, daycare solutions, job market preparation and other consequences implicated by the reforms.

Following their visit, Ms. Merav Shaviv, who was in charge of the ‘Social and Work’ issues in the Government Budget Division, published a report entitled "From Self Deficiency to Self-

Employment" (Shaviv, 1999). In this report, the committee proposed creating independent employment service centers in Israel.

The Israeli committee proposal, submitted to the Ministry of Finance, found that the USA was the most prepared in terms of years of experience and results. The Netherlands was still developing its program and experimenting with it, and Denmark’s reform was still not fully developed (Shaviv, 1999). Two additional programs that were examined were those of Great

Britain and Norway. The committee indicated that the European programs were also partially influenced by the American program. Further on in their implementation process, they were advised by the same private advisors that were now working for Kramer’s company such as Mr.

Jason Turner who later became the New York City Welfare to Work program (WTW) operator

(Zhoar, 2007). This was another reason for choosing the American Wisconsin Welfare to Work

79 model. Israel decided to adopt the Welfare to Work policy and turned to the United States to guide the process. While the programs were different in their participants’ characteristics, they were similar in their core premises.

In 2001, Israel passed Act 2195, which unified the efforts of the Ministry of Labor and

Welfare and the Ministry of Finance to integrate welfare recipients into the labor market. The

Act included a decision to focus on increasing the human capital of welfare recipients in order to encourage them to take part in the labor market. Act 2195 stated that each welfare recipient would enroll in a three-month program that would include completion of elementary school education, basic computer skills training, personal empowerment, job searching, job behavior and ethics, career planning, and more. The Act also stated that a minimum of 10,000 welfare recipients would take part in the first stage of this program and that participation in the program would become a condition for receiving welfare assistance. Unlike in the past when government offices distributed monetary benefits, private employment offices chosen by the government would take responsibility for administrating the program. The plan’s reliance on private organizations to distribute welfare money signaled a new era in Israel concerning the privatization of social services (Gal, 2007).

Following Act 2195, Mr. Shlomo Kramer was officially hired to design and start the program to be adopted in Israel. Prior to taking the position, Mr. Kramer was an employee of the

Budget Office from 1977 to 1981. His hiring to advise on the program was conducted without any bid process. This decision was criticized for the 15 million NIS salary that was paid to his company. The government countered that because Mr. Kramer was the only expert in Israel in that area with significant connections abroad, therefore, the process was legitimate (Regev,

2002).

5.3.1 Tamir Committee

In March 2002, the Minister for Welfare and Labor selected the “Tamir Committee” and appointed Professor Yossi Tamir, ex-CEO of the National Insurance Office, to head it. The purpose of this committee was to examine the policies dealing with unemployment, to design an experiment to engage the unemployed in experimental work centers, and to plan the schedule for the program. The Prime Minister’s letter of appointment stated that the main purpose of the committee was to design a program that required welfare recipients to work, study or participate in vocational rehabilitation as a condition of receiving benefits (The Government of Israel,

2000). Additionally, the Tamir’s Committee midterm report from 2001 stated that “The committee has formulated an Israeli model whose principles take into account the social and moral attitudes accepted in Israeli society. It should be emphasized that the proposed plan draws on knowledge and experience from similar programs in Europe and the U.S.” (The Government of Israel, 2001). One of the interesting facts is that the United States is mentioned explicitly, while other European countries that conducted similar experiments were only mentioned in a general way. The committee meetings tried to emphasize the fact that the Israeli program was merely taking inspiration from the American and the European programs. The meaning was only to learn from these models in order to fit them to the Israeli reality.

The Tamir Committee tried to create its own model, indicating that it “is not in any way a copy of any program that takes place abroad “(The Government of Israel, 2001: 9). Adding other populations such as the handicapped and mothers of children younger than seven years old who were not obligated to participate in the job search requirement, the committee emphasized the need to be more flexible with these populations. According to the committee's recommendation, every unemployed recipient of government assistance taking part in the experiment would be

81 required to accept some type of a job, from independent jobs to community service. These jobs would be subsidized by the government but hopefully would lead to individuals returning to the labor force. The timeline that was suggested for this new program was a trial period of two years.

The final report of the committee also discussed three centers, modeled on programs abroad but run only by Israelis. Finally, the recommended number of participants in each center was 3,500

(The Government of Israel, 2001). Interestingly, this was the exact number of participants that

Ms. Shaviv (1999) presented in her report summarizing the impressions of the committee visiting the Wisconsin centers in the United States prior to the initiation of the Israeli program.

An examination of the 2001 Tamir Committee report shows that the committee did its best to create a uniquely Israeli program. In practice however, the committee kept returning to the American model, reviewing only briefly the UK program and giving even less emphasis to other European programs (The Government of Israel, 2001). It seems that no real alternative to the American model was considered.

From the final report however, it appears that the committee adopted some of the

American characteristics while rejecting others (Zhoar, 2007). For instance, the committee did not suggest leaving the denials of the allowances in the hands of the centers’ operators, and it also suggested not including people with handicaps or recipients over the age of 55. The government, on the other hand, presented a different point of view in which it claimed not to give bulk benefits based on status such as to single motherhoods and to give economic benefits to those who work. The bottom line was simple and matched the Welfare to Work programs’ ideology- No Work, No Money. However, there was a huge gap between what was offered and what eventually happened. Contrary to the original plan, the program ended up with an

American-style setting as a real business, with for-profit operators (Tzhach and Fishbain, 2005).

As noted above, the state’s decision to hire Kramer’s consulting company as a private advisor without conducting any bidding process and paying his company 15 million NIS (~$3.75 million), which was 20% of the program budget, sparked a lot of public criticism as well. The program started to make waves in the Israeli media, and as early as 2002 (3 years prior to the official launch of the Israeli WTW program) the Ydihot Hacharonot newspaper published: "The program most severely harms the unemployed and recipients of income support. Now it turns out that this plan, which aims to cut expenses, will actually cost taxpayers millions of dollars"

(Regev, 2002). Non-profit organizations started to organize against the program, critiquing its privatization ideas and its American ideology (e.g. Sawirske, 2000, Katan, 2000). As the program took to form, the American model seemed to become the prototype the policy would follow.

To summarize these sections, the Israeli government initiated a learning process to see ‘what others have already done,’ Israel followed a world trend of policy learning and policy emulation

(Meseguer, 2005) in the search for a solution to a the growing unemployment problem and a growth in welfare allowances. Interestingly, the process of looking abroad, mainly at liberal countries such as Great Britain and the Netherlands, but mainly at the United States, provided cues to the outcomes of this policy diffusion process. As will be presented in the next few sections, while the Israeli government chose the “American Model” as the right model, the

Israeli public saw the American policy as representative of privatization and a lack of socialist perceptions. Although the local “Tamir” committee tried to modify the program, it took an extended period of time until the program was eventually fitted to the Israeli society.

5.3.2 Knafo’s March

In 2003 Binyamin Netanyahu, a strong supporter of Welfare to Work initiatives, was appointed

Finance Minister. In the same year, Vicky Knafo, divorced with three children, became the leader of the 'Single Mothers' struggle. She began marching from the north of Israel to Jerusalem, the capital, over 200 kilometers. Knafo protested against Netanyahu's policy that was about to reduce government expenditure for social welfare programs. The cuts seemed to particularly impact the constituencies that typically lack powerful advocates: single mothers, the elderly, handicapped and the very poor. Soon her solo protest became a social movement.

In response to the growing protest, Netanyahu replied: "That's not a welfare policy; it is an incentivized unemployment policy .... We have created a situation where the welfare allowance is worth more money than the average salary. The Israeli government is to blame.... we are creating a situation of a new generation of welfare recipients” (Plotzker and Gad 2003).

In response to the criticism that there were insufficient jobs in the market, Netanyahu said that there were many jobs available and that a woman who could walk 200 miles could work in packaging (Plotzker and Gad 2003). Examining the reality of labor conditions in Israel in 2003, experts agreed that there were not sufficient jobs and employers that could provide jobs were often 30 kilometers away from many unemployment centers. Furthermore, in Israel welfare recipients are not eligible to own a car (Eshet, 2003). One of the centers' managers explained in his interview that when they were looking for a physical place to locate centers in the Chadera area, one of the foreign agents was looking for a place with a large parking lot so welfare recipients would not have to search for a parking place. As the center's manager and an Israeli who is familiar with the welfare rules, he had to explain to the agent that welfare recipients are not eligible to own a car. This simple story illustrates cultural differences between the operators

84 and their clients, the welfare recipients, which will be further addressed in a later section of this paper.

Some have mentioned Knafo's protest as one of the triggers that expedited the implementation of the Wisconsin program (Pearl, 2003), a program that had been considered since 1997. However, even with Knafo’s protest as a trigger, it took the bureaucracy two more years to launch the program. Overall, it took over five years for the plan to pass the bureaucratic obstacles and internal politics between government offices.

At the time of Knafo’s March in 2003, an OECD (2005) report indicated that the Israeli unemployment rate was close to 11% (figure 5.1), which was one of the highest rates in the world at that time.

(1) The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Source: Labor market statistics: Labor force statistics by sex and age: indicators, OECD Employment and Labor Market Statistics (database) http://www.oecd-ilibrary.org/employment/unemployment-rate_20752342-table1

Figure 5.1 OECD Worldwide Unemployment Rate Percent of Labor Force 2003 5.3.3 Choosing the Areas of the Experiment

"We tried to choose different areas. Jerusalem which is the capital contained everything in terms of population. And then we chose three more areas……if you look at the areas you will see that you have everything….In Sderut you have the security threat of the bombs, single mothers and new immigrants…..Nazareth has Jewish and Arab 85

population…. In Jerusalem, you have religious people and an Arab population that is different from the Arabs in Nazareth….if we would have chosen Tel-Aviv for example, we would have not learned anything, and there was not a real learning process in that. That would have been the easy way to go and we did not look for that." (G.Y Interview)

While working on the concept of the Israeli WTW plan, a committee of experts gathered and examined the different geographic areas in Israel in order to identify sites that would adequately represent the Israeli population as a whole. The government chose areas that contained between

3,500 to 4,000 welfare recipients. The four areas chosen were East and West Jerusalem, Nazareth and Nazareth Ilit, Hadera and the villages of Wadi Ara, and Ashkelon and Sderot (figure 5.2)

(Report of the Regional Selection Committee, 2004). The committee chose areas with at least

30% unemployed Arabs and 20% both new and old immigrants represented. Both of these populations suffered from excess representation in the unemployment statistics (Sinai, 2004c).

I: Was there any attempt to prepare the different centers for the different population groups they were about to deal with? D.N.: “When we chose the areas in the first stage the idea was that we would have all types of populations: Ethiopian, New USSR immigrants, old immigrants, Arabs, religious, secular etc. There was an attempt to create a heterogenic gathering. Let's say that we found that none of the Ethiopians found a job. Then we could say – none of our models fits them. We really wanted to create flexible models" (D.N. Interview)

In addition to the four centers, the Government Employment Service was offered the chance to create a fifth center (Sinai, 2003). However, due to changes in the organization, they refused the offer and chose not to take part in the program. The fact that this governmental office was excluded created a lot of antagonism toward the program and increased the aura of privatization surrounding the program, making the public believe that private organizations would be in charge of their entitlement for welfare unemployment allowance instead of a governmental agency. despite these perceptions in fact, the government still supervised the welfare program.

Figure 5.2 The Mehalev (the Israeli Welfare-to-Work) trial Areas

5.3.4 The Israeli Governmental Employment Service

The Israeli Governmental Employment Service is a national service established under the Israeli

Employment Service Act 1959. Its primary purpose is to coordinate and connect employees and workplaces. The office is also in charge providing employment counseling and vocational guidance and determining eligibility for income support allowances (2013 Israeli Employment

Service Website). The budget of the Governmental Employment Service is approximately 141 million NIS with an average caseload of 100, 000 per year (1/4 of those are recipients of the employment security allowance) (Greenberg, 2009a; 2013 Israeli Employment Service Website).

According to Israeli law, a person who stops working is entitled to receive six months of unemployment allowance. Unemployment allowance wages are calculated as a percentage of the

87 average daily salary, three months prior to the unemployment (Gordon and Toledo, 1998). After six months, a person who has not found a new job is moved to a new allowance entitled Income

Security. Those workers who after six months still have not found jobs are the ones that the government planned to direct to the Wisconsin Welfare to Work program. The WTW program is designed to specialize in giving this class of unemployed persons training and extra guidance in order to help them back into the job market. Therefore, in reality, there was no real threat to the

Governmental Employment Service who forwarded to the Welfare to Work program those people who were considered “lost cases”, and the Governmental Employment Service became a passive intermediary between them and their governmental allowance (Horesh, 2010a). Another class of cases that were to be moved to the Welfare to Work centers were those who earned less than minimum wage and were entitled to an “Income Supplement Allowance” that allowed them to get to the minimum wage.

5.3.5 The Beginning of the Bid process – “American Wisconsin or European Wisconsin”

"The questions and comments of the foreign companies have revealed fundamental discrepancies between the economic world view - of the European Social - Democrat perceptions and that of the Americans which is more capitalistic (Sinai, 2004d). "

Examining the program foundation in its first module shows that the Israelis did not follow the

Tamir Committee’s suggestions in terms of the areas that were chosen, the incentive process and the decision to use foreign companies to operate the program. This demonstrates the power of the

Government’s Finance office, which took over the project entirely.

By 2004, the program was finally declared to be law and the bidding process began

(Korin-Liver, 2004). The program earned the title “Mehalve” (translated as “from the heart”) and the initials meant ‘from dependency to self-sufficiency’ (Levy, 2007). The media first used that

88 name on January 23, 2004. Interestingly, the second time the written media used that name was four months later on May 23, 2004. From that point on, we find use of the different program names (Mehalve which later became Orot L’tasuke) 104 times, as compared to the use of the title

“The Wisconsin Plan” which was constantly used in the 472 articles reviewed (even when the

Israeli name was mentioned). This is important to understanding the attitude of the Israeli public and media toward the program and will be discussed in a later stage of this research.

During the bid process, a great deal of criticism arose around the decision to use foreign operators. Eventually the Israeli government decided that each of the four foreign overseeing center operators would own at least 51% of the program, while up to 49% could be owned by the

Israeli operator that would join the American operators. "Israeli companies expressed opposition to the demands of partnership with foreign companies…Ministry of Labor and Trade waves the blue and white flag (the colors of the Israeli flag- O.F.), but is ready to dump millions of dollars abroad instead of keeping it here" said one of the Israeli corporation representatives (Sinai,

2004b).

In the first stage of the biding process, six American companies including the Cesar

Group FL; Maksimus2, America Works, and Goodwill, among others, plus three companies from the Netherlands and one from the UK expressed interest (Sinai, 2004a). In one of the earliest meetings conducted by the government with the companies, introducing the bid process and the program, and getting acquainted, Sinai Aartez’ reporter wrote in her article, "American

Wisconsin or European Wisconsin", that you could clearly find cultural differences between the

American companies and the European companies: "the demands upon the participants in the program are rigid, however in the eyes of the American companies they are not rigid enough.

The American operators claim that the government should be stricter. The Government allows

2 Worked in NY with Giuliani and was charged with corruption. Their contract there was never extended. 89 welfare recipients to miss two days a month without losing their entitlement, they object to that:

"They had enough time to rest when they were unemployed" said one of the (American) representatives….In regard to that issue the Netherlands company representative said "we found that one of the major disadvantages of the original American Wisconsin plan approach lies in the

American capitalist approach claiming that people would work only if you threaten to cut their benefits. We learned that we must first empower the unemployed. Using threats from the beginning is just not productive" (Sinai,2004d). Another difference indicated is that the

American model was tailored for the employers while the European model was tailored for the recipients (David and Izenberg, 2004). The question raised was: Which approach will be adopted by Israel?

The central premise of the American approach is that unemployment is a situation that people choose for themselves. Choosing American private advisors to lead the program in Israel along with the Israeli Financial Office meant the program was referred to using the American name "The Wisconsin Plan". This choice created the impression of American capitalism unmotivated by social concern for the needy.

"We called the program Mehalv but the media insisted to keep calling it "Wisconsin" because Wisconsin got the American connotation of exploitation, not socialist, not societal concerned, swinish capitalism (D.V. Interview)"

The main research in America (e.g. Institute for Wisconsin's Future. 1998; Department of

Workforce Development, 1999; Mead, 1999; 2004; Also see chapter 2) on the results and relative success of the Wisconsin program emphasized the decline in case loads but did not focus much on the long-term benefits of returning recipients to the job market. From the Israeli perspective, this antagonistic attitude accompanied the Americans' involvement and this would not improve the long-term situation of the welfare recipients, since it was not the main intent of the program in the first place.

“Here there was an American perception, a European perception and an Israeli perception….The Americans wrote it using American concepts and it did not fit the Israeli reality. They saw it all from the perception of how the center should look like... Out of town, a huge place, with lots of parking lots for all to reach by cars…..American stiffness there… Everything was very, very firm…. The European approaches, such as the Netherlands company, primarily focused on results of the program. They wished to have their clients active, doing courses, doing more courses - going out for interviews... I had to maneuver, diversify and bring everything to the Israeli reality. Guys, you do not understand, you cannot make people drive out of the city to the center and you do not need to have parking lots since welfare recipients in Israel can’t own cars. Hmm .. It was a very interesting process. Lots of meetings in Israel and overseas meetings, write the bids and so on…” (A.S Interview with Center Manager).

Before continuing this analysis, it is important to emphasize the differences between the

American program and culture surrounding it compared to the Israeli culture during the program formulation period.

5.3.6 The American Influence

Although the Tamir Committee did its best to create an Israeli Welfare to Work Program, the

American model became very established in the public and government discourse. In 2002

Prime Minster Ariel Sharon met Wisconsin Governor Tommy Thompson and Mr. Jason Turner, who was one of the leading experts hired by Kramer’s company to create the Israeli WTW program. Turner had also worked with Maximus , which was one of the companies that become the only American company chosen during bidding process to operate one of the program centers. Zhoar (2007) claims that this American-oriented view exemplifies the strength of the positive ideological hegemony of the United State over Israel. American hegemony was so entrenched in Israel that it prevented other alternatives from being considered (Zhoar, 2007).

At some point it appears there was an attempt to reduce the American influence by referring to the American advisors as “external experts” or mentioning “involvement of foreign specialists”. However, it does not seem that programs or experts other than the United States

91 program were really examined or used (Zhoar, 2007), although one of six advisors who later took on an active role in the bidding process was from the Netherlands (J.C Interview, 2011).

The system was also blamed for being skewed toward the American program, especially after Netanyahu became the Finance Minister in 2002. The fact that the program was initiated by the Ministry of Finance office and not by the socialist parties and its offices made the program suspect from the beginning (David and Izenberg, 2004). Debating the government's intentions, thoughts and wishes behind the program was important from its inception. Was its main concern an honest interest in welfare recipients' future and wellbeing or was it dominated by a capitalist economic ideology? Would the centers show concern for the future of the recipients or would they take the economic model as a guide in order to a profit from the situation?

A significant difference between the Israeli program and the American program is that at the time of the Wisconsin Welfare to Work reform, the unemployment rate did not exceed four percent. Between 1995 and 1997, when the W-2 reform was implemented, the annual rate of unemployment3 in the United States varied from 4.9 to 5.6 percent. Further Wisconsin’s annual unemployment rate was even lower, varying from 3.5 to 3.6% in these years (Bureau of Labor

Statistics, 1995, 1997). In the years prior to implementation of the program, Wisconsin also enjoyed robust job growth (Mead, 1999). It is evident then, that economic conditions helped the

Welfare to Work program show relatively positive results (Mead, 1999; 2004). The Israeli unemployment rate, on the other hand, was very problematic at over 11% and with no positive trend in sight (David and Izenberg, 2004; Sabag, 2008). Welfare to Work policies such as the

Wisconsin Works reform are more likely to have a positive outcome when labor market conditions are stable and there are positions open for new workers. Additionally, jobs need not

3 16 years old and older 92 only reduce financial dependence on welfare but also provide a suitable quality of life for employees and their families.

In addition to the market conditions, the recipient population between the two countries was different. Table 5.2 presents the population of both states that took part in the program in the first stages. It shows that while the Wisconsin WTW program mainly consisted of single mothers, in Israel only slightly more than half of the welfare population in the program was female. This meant that there were practical differences in the types of human capital that needed to be extended to workers in Israel and the United States. The Israeli program also threatened labor market stability by providing a cheaper and subsidized labor force. Assigning community work as one of the options in the program viewed as an effort to replace low-paid, unskilled jobs.

Although in practice this was forbidden, it was still perceived as a threat. This did not happen in

Wisconsin where the majority of program participants were low-skilled, young women and labor market participation rates were at ‘full employment’. Additionally, the heavily gendered population in Wisconsin was considered less of a threat to workers already in the labor market

(Gal, 2007).

Another important difference was the age range of program participants. While the

Wisconsin program mainly trained workers between the ages of 18 and 29, the Mehalev program had a larger age range, from 18 to older than 65. In fact, 55% of the people in the program were older than 45 (Levy, 2007; Sinai, 2005b). This had a large effect on people’s ability to find jobs and become part of the labor market, because when older people lose their jobs, it often takes them longer than others to find new jobs (Farber, 1993, Quadagno, 2002). Other characteristics of the Wisconsin Works program recipients, such as race, were important in its successful implementation. The Wisconsin program participant population was more homogeneous, which

93 allowed the state to create a program that fit most people, a “one-size” program. Even with this homogeneity, the state created four levels of job positions in order to deal with diversity among program participants. In contrast, Israel’s program was based more on nationality. With more than 40% non-Jewish participants, Israel had to adjust the program to different cultures.

Table 5.2 Profile of Welfare to Work Participants- Wisconsin vs. Israel Description Number Percentage Description Number Percentage WISCONSIN PROFILE OF ISRAEL PROFILE OF PARTICIPANTS W-2 (2000)* PARTICIPANTS MEHALEV (AUGUST 2005)** AGE No. % AGE No. % Under 18 2 < 0.1% Under 18 0 18 to 29 6,432 60.2 18 to 29 1650 9.38% 30 to 49 4,126 38.6 30 to 49 8889 50.51 50 to 64 127 1.2 50 to 64 6836 38.85 65 and over 0 0.0 65 and over 220 1.25 GENDER GENDER female 10,312 96.5% female 11266 64.02% male 375 3.5 male 6329 35.97 ETHNICITY RELIGION African American 6,056 56.7% Jewish 9726 55.27% White 2,226 20.8 Muslim 5944 33.78 Hispanic 879 8.2 Christian 922 5.24 Asian 131 1.2 Other 1003 5.7 American Indian 130 1.2 Native Israeli 9,790 55.64% Other 1,265 11.9 New immigrants++ 5,575 31.68 Old immigrants+++ 2,230 12.64 LEVEL OF LEVEL OF EDUCATION EDUCATION No formal 114 1.1% 5,103 29% No formal education education Grade 8 or less 386 3.6 Grade 8 or less 3,695 21 Some high school 5,030 47.0 Some high school 3,695 21 High School+ 4,168 39.0 High School+ 5,103 29 Some post 989 9.3 Some post secondary secondary HOUSEHOLD HOUSEHOLD STATUS STATUS Single 7,161 40.7% One parent 10,454 97.8% One parent, 4,627 26.3 child(ren) Two parents 167 1.6 Couple 1,372 7.8 Two parents, 4,434 25.2 child(ren) Unknown 66 0.6 Unknown DISABILITY DISABILITY STATUS STATUS Reported disability 278 2.6% Reported disability

Table 5.2 Profile of Welfare to Work Participants- Wisconsin vs. Israel [continued] No reported 10,409 97.4 Not reported disability disability N 10,687 N 17,595 * Source: Wisconsin Department of Workforce Development. 2001. An Evaluation: Wisconsin Works (W-2) Program. Wisconsin: Office State Print. ** Source: Novek, Dorit. 2006. Mehalev Program: Overview of the First Year of Activity. Jerusalem: Office of Labor, Trade and Labor Minister of Israel + includes those who graduated from high school and those who have completed the equivalent of a high school education. ++ Immigrant to Israel prior to 1.1.1990 +++ Immigrant to Israel after 1.1.1990

Another aspect that was ignored is the gender perspective. Some critics claimed that the program reproduced the inequality in the labor market. Women were the majority of participants in the program (64%). In this situation, one would expect the program to adjust to the needs of women.

However, in many cases the program was not fully ready to help women by providing daycares from the beginning.

On May 31st, 2005 Aaretz published a personal opinion column by the Israeli government’s head of the program, Ms. Dorit Novak. Her column was a reply to a newspaper article that cited facts from a Wisconsin State Legislature report stating that "80% of welfare recipients who participated in the Wisconsin Works program remained in poverty". In her reply, Ms. Novak stated that this needed to be explained differently. Rather the report showed that "20% of

Wisconsin-Works participants were able to get back into the labor force." Ms. Novak reminded the reader that these were the hardest cases among American welfare recipients, people whom the government had tried for years to get into the job market. Only after the state was unsuccessful were they referred to the WTW program. She also mentioned that this was a different population from the Israeli group, mainly consisting of single mothers and persons with disabilities. Novak again mentioned that in a healthy society, children should see their parents go to work, which provides a positive role model for their future (Novak, 2005).

5.3.7 The Economic Model

In the actual bid process, there was general disappointment about the small number of companies that competed. Part of the reason for the low participation was Israel’s strict conditions for profit and the economic model of the program (Sinai, 2004e). According to the Israeli economic model, the government would give monetary incentives to the four employment companies chosen for taking welfare recipients off of welfare dependency and for ‘closing their case’.

Companies that reduced the welfare participation rate by 35% in the two years of the experimental program would not gain or lose (Sinai, 2004b). If they reduced the welfare participation rate by more than 35%, the state and the company would share the amount of the savings by dividing it equally between them (meaning 50% each). If the company’s welfare participation rate was not reduced by at least 35%, then a penalty would be imposed on the operator in the sum of the differences between the loss and the target that was set (Levy, 2007).

Additionally, the state would give a full reward to a company that kept at least 50% of the cases closed for at least 9 months. A ‘case’ was considered closed when the recipient did not receive a welfare allowance for at least 6 months. If the case was only closed for 6 months, then the operator would be given half of the reward (Levy, 2007). Furthermore, the companies could remove welfare recipients who refused to work and that would also count towards the company’s caseload reduction.

Many non-profit organizations saw this economic model as very problematic, because it allowed operators to count those welfare recipients denied their allowance for refusing to do certain jobs as successful cases that would, in turn, count toward their profits. The companies, on the other hand, felt that the promise of profit only after a reduction of 35% of the welfare caseload was a very rigid and risky condition. The government tried to encourage companies to

96 enter the bid process by explaining that this trial could become national if it showed success, and that they could be a profit from results (Sinai, 2004e).

The main concern about the new reforms was that, due to the economic model, the operators would choose the easy solution and would be motivated by profit. As a consequence, welfare recipients would be placed in jobs that would not provide them with long-term improvement, being low-paid and low quality. This came from the reward system the government operated, where only companies that saved the country at least 35% of the money spent on welfare in the company's operating area would get rewarded and see a profit. Prior to its start, the program had already earned the title "manufacture poverty" (Lan, 2005;Chorev,

2005).

Other rules were also added to the economic Israeli model. For instance, people who missed more than three unexcused days of a center's activities or work in a month jeopardized their welfare entitlements (Sinai, 2003). Registering "job or appearance refusals" from welfare recipients, no matter their cause, was considered sufficient for the participants' exclusion from the lists. This meant that the company could achieve the desired budgetary savings without any investment in professional training. Wisconsin local operators would have to produce "refusals" to survive (Tzhach and Fishbain, 2005).

Much of the public criticism centered on the incentive program. Headlines such as

“Israel chose to adopt mainly the sticks and less the carrots" (Benish, 2003), "How to Get Rich from Unemployment" (Leshem, 2004), and "Benefit at the Expense of the Needy" (Frenkel and

Benish, 2004) appeared in newspapers prior to the start of the program. These articles mainly criticized the incentive plan of the program and the for-profit plan for the private companies.

Some claimed that the incentive program created a situation where the companies did not necessarily have an incentive to help people find jobs.

Many concerns were raised on the subject of the economic model. For instance it seemed doubtful that a significant number of new jobs would be created within the two year trial period and that the "chronically unemployed" could receive significant training in such a short period of time. These conditions would force operators to find other solutions to meet the government requirement for profit of reducing the welfare caseload by 35% (Tzhach and Fishbain , 2005).

Additionally the plan did not provide benefits to the employee or to the employer incentives for employment stability. Nine months of continuous employment would trigger the coveted bonus for the operator. Yet, nine months is just the barrier in temporary employment, after which employees would be either permanently hired or fired (Tzhach and Fishbain, 2005).

Following the bidding process, four foreign companies were chosen to operate the program. The foreign companies included one from the United States, one from the United Kingdom, and two from the Netherlands. All of the foreign companies had experience implementing the Wisconsin

WTW model in their countries (Levy, 2007). Each of the companies chose an Israeli partner to work with. The American company Maximus choose O.R.S and was assigned to work at the

North of Israel- at Ashkelon and Sderut, while the British company A4E chose the Amin company and was assigned to the Jerusalem area. One of the companies from the Netherlands, named Calder, received the Nazareth area and worked with the Israeli Martens-Hofman group.

Finally, the second company from the Netherlands, named Agens, worked in the Chadera area with the Israeli company Yeud (also translated: Purpose).

Table 5.3 Percentage of Former W-2 Participants above the Poverty Level in 2003, by Agency (1) Individuals who left from October through December 2002 W-2 Agency Number Number Average Percentage Average Percentage Who Left with Data Annual Above Income Above W-2 Available (2) Income Poverty with State Poverty Level Based and Federal Level with on Income EITC and Tax Credits Homestead Credit Brown County 67 61 $9,468 27.9% $11,763 41.0% Racine County 105 88 9,833 25.0 11,991 39.8 OIC-GM 619 444 9,524 21.6 11,763 37.4 Rock County 103 81 8,311 19.8 10,399 37.0 Waukesha County (3) 47 40 9,960 27.5 11,585 35.0 UMOS (4) 741 550 9,987 24.4 12,153 34.6 Outagamie County 40 33 11,302 27.3 13,300 33.3 Dane County 182 130 8,415 23.1 10,130 33.1 Maximus 389 300 9,258 20.3 11,270 33.0 YW Works(5) 646 476 8,939 18.8 11,026 21.5 Winnebago County 36 29 7,516 10.3 9,807 31.0 Kenosha County 119 93 7,674 15.1 9,542 25.8 Marathon County 72 62 7,597 12.9 9,600 24.2 Fond du Lac County 34 28 6,903 17.9 8,379 17.9 Statewide 3,624 2,756 9,291 21.6 11,351 33.7 1. Includes agencies with 25 or more former W-2 participants who had income data available. 2. Includes individuals who filed Wisconsin income tax returns or those for whom only quarterly wage data were available. 3. ACS State and Local Solutions provided W-2 services in Waukesha County. 4. UMOS served Regions 2 and 5 in Milwaukee County 5. YW Works served Regions 1 and 4 in Milwaukee County. Source: Wisconsin Department of Workforce Development. 2005. http://legis.wisconsin.gov/lab/reports/05-6Full.pdf Table 29 Page 56.

Interestingly, the company that gained the most publicity prior to the operation of the program

was the American company, Maximus. As seen in table 5.3 Maximus was ranked 9th out of 14th

companies operating in Wisconsin in terms of its success rate. According to the 2005-06

Wisconsin Legislative Audit report, 20% of Maximus clients improved their annual income,

rising above the poverty line, compared 38% in the most successful company. Still, recipients’

incomes only improved by a small amount. In terms of fines for the recipients who refused to

take part in the program, Maximus scored high in the Wisconsin program (Sinai, 2005a).

Interestingly, these data were cited in the Israeli newspaper without any source; rather only the

numbers were reported. Yet table 5.3 indicates an increase of approximately $2,000, on average,

which is considered a significant increase compared to the poverty line. It is challenging for the

99 average reader to ascertain the facts. It is important to add that there were no data available for

2,672 participants for various reasons such as not biling tax reports. Thus, the assumption of the report published is that they were still earning less than the poverty line or had no earnings.

Another fact published regarding Maximus (Sinai, 2005a) was that the company employed Jason Turner’s wife in New York as part of the New York Welfare to Work program.

While none of the claims were considered to have influenced the bidding process, it was sufficient to create public criticism and raise concerns regarding the program.

In summary, the media were portraying the program in the worse light reporting on corruption, looking for data that indicated the program was a failure, and questioning the government’s motivation to export the Welfare-to-Work program to Israel. The program operators continuously had to defend the program and their decisions every step along the way. A central question concerned whether the decision was a process of “symbolic imitation” (Meseguer,

2005) where the motivation was the desire to gain status and conformity from the international community or was rather a real attempt to solve a growing social problem.

5.4 August 1st 2005-The Israeli Welfare to Work Program is Launched

"I believe that most people, who do not work and can work, want to work. However, it is possible those years without work caused them to have a sense of failure and lack of faith in themselves. When you do not believe anyone will hire you to work, this deal to attending the government employment office once a week for an average benefit of 1,600 NIS becomes worthwhile (Dorit Novak, head of the program, Ben-Yehoda, 2006: 18- 20)."

The Israeli Wisconsin WTW Plan that was finally approved was very different from the Tamir

Committee’s recommendations and was, in fact, similar to the American program. From the beginning, it was clear that the program in its American shape did not fit the Israeli environment.

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Interestingly, only after the program was approved were many of the changes made (Zohar,

2007). The reasons for the changes varied and included changes in the government, the experiences of the centers, and public pressure. However, even with the changes it was hard for the media and the public not to focus on the economic model, which profited the operators and contrasted with the social welfare values of Israelis (Zohar, 2007).

Even prior to the official national opening of WTW, the program demonstrated flexibility when the government began to change the regulations of the plan. For instance, three weeks before the official launch, the Israeli plan’s board of supervisors decided to reduce the fees that were required from recipients for filing a fourth appeal if the first three appeals had been rejected. Another change allowed the centers to reduce the required number of hours spent in the center for recipients if no adequate job had been found for them (Lavy, 2005). Thus, the program sought to make adjustments as it moved forward. The legal advisor of the program, Ms.

Yackobov said in our interview that "with every stone that we moved out of the way we found another hole that needed to be blocked….it was an ongoing effort that was not appreciated by the public” (G.Yackobov Interview).

5.4.1 The Basics of the Program

The program was supposed to include a private plan tailored to each participant by a case manager. The case manager would examine a client’s skills, education and wishes, and then create a personal path for the client. The recipients would have to spend 30 to 40 hours a week in the program doing vocational training, voluntary work, or paid work in exchange for their allotment. Like the Wisconsin Welfare to Work Program, the Israeli WTW program formulated a one-stop-shop creating four different models for each of the four different operation companies.

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In July 2005, eight years after the Israeli government first raised the idea of the program, the first center was opened in Nazareth (3 weeks before the rest of the centers and the official announcement by the government) (Sinai, 2005b). Nazareth was one of the more difficult areas.

The center in Nazareth had a large proportion of clients from Arabic villages and cities. There were riots there and threats against the center’s employees and managers. Imams (an Islamic leadership) issued a fatwa (a religious ruling) calling on the public not to cooperate with the program. In addition, from the first day, the administrators in the Nazareth center learned that not all of the clients assigned to them were really unemployed. Some faxes and telephone messages received in the center indicated that people were not going to show up for the program since they had “just found a job". The center managers said that they had anticipated that this would happen, since some people who are fully employed still claim welfare entitlements. Making them participate in 30 to 40 hours a week in training in exchange for their welfare entitlement would prevent them from continuing their work in the labor force, which in most cases paid more than the welfare entitlement. The center administrators expected this situation to apply to about 10% of the cases (Sinai, 2005c).

5.4.2 Cultural Differences

Approximately 25% of the welfare recipients who participated in the program were from the same household (husband and wife) (Novak, 2006). The program put conditions on their welfare entitlement by stipulating that both parents had to attend the program for 30 to 40 hours a week.

This regulation was most problematic for the Arabic population due to the cultural custom in which most wives stay at home. As a result of wives staying home, daycare services were not very common in the area. This requirement for both parents to attend the centers created a belief

102 among the Arabic community that the Israeli Wisconsin plan intended to deny families benefits rather than to improve welfare recipients' lives and conditions. This problem mainly arose in the

Israeli WTW Center in Nazareth, which had a large proportion of clients from Arabic villages and cities.

I: We got to the situation where the center chose to put the woman in a job first because it is easier to place the women….Then the man left the program, and then they got off from the allowance since they both had to attend the program. The husband refused to cooperate with the situation that his wife worked but he is not working. The cultural insensitivity was very large. Now the centers had difficulty finding a job that was suitable for him (I.L Interview, a nonprofit organization activist).

Another problem in the Nazareth Centers were concerns raised by the Arabic clients regarding the mutual training session of both male and female. Further, some centers’ training sessions put members of feuding clans together. These situations represent only a small portion of the criticisms raised against the Israeli Wisconsin plan, whose operators were not ready for or familiar with the cultural customs of their clients. This was true despite the fact that every center had an Israeli operator as well. In comments, the centers’ operators and the Israeli government claimed that in the job market their clients would face the same reality. That said, they were open to hearing claims and judging each on a case-by-case basis (Sinai, 2005d).

When the center operating in that area was asked whether the program was actually suited to Nazareth's specific ethnic population, one of the managers answered: “what you call adjustment for the population someone else will refer to as discrimination….the program is a law and everyone is equal in the eyes of the law” (Mor, 2006).

I: Did you have any problems with Arab women working with men? A: Look. If someone contacted us we treated that problem. However, very few contacted us with this problem... Look, the center was trying to simulate the world. You are going to the market, you ride the bus, going to the health clinic…everything is mixed... So let's not make this more than it is supposed to be. This is the reality of the world of work.”

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Another population that felt hurt by the Israeli Wisconsin Program was the Ethiopian population, which was mainly located in Hadera. Their community's spiritual leader- "Qss" was sent by the program to work in a juice factory. He left the house for work each day at 5am and returned exhausted. As a result, their synagogue remained closed. In the Ethiopian population the Qss is the one who is also in charge of the funerals and ceremonies. In 1993 the Israeli government agreed to provide special status for the Ethiopian community Qss who had served in Ethiopia.

The list of people entitled to special status was determined by a special committee headed by the chief Qss. This Qss's father was on the list and received a pension from the state until his death.

At that point his son replaced him and since he had not served in Ethiopia as a Qss, he was not entitled to this allowance (Navon, 2006).

“The Ethiopian community has religious leaders – “Qss”. They are Qss because their fathers were Qss. However, the state of Israel does not acknowledge them as rabbis and therefore does not give them salaries. They get welfare support….Now they have to come to the center- and I cannot report that they are there if they are not, so the Ethiopian community is upset and demonstrating on Highway 4. What are we supposed to do?” (A.S. Head of the one of the centers, Interview)

Another problem that the centers faced is that they also received groups that were not supposed to be under Income Support Allowance. Five percent of the participants should not have been in the program, because they were sick, old, or handicapped (Tal, 2005). For instance, the center at

Ashkelon had 4,300 welfare participants, of whom 1,900 had medical problems, 2,200 were over the age of 45, 50% were new immigrants and 1,000 were single mothers who had problems finding arrangements for childcare (Sinai, 2005g).

B:One of the good things that the program created was that many people that were actually receiving income support needed to be on other allowances. They were ill, or drug addicts….So 80% of the people that showed can work but 20% are those who cannot work. For instance, women with children under two years, drug addicts, alcoholics, street people, those who have been sick over 30 days, learn in Ulpan (i.e. new immigrants)…..Then what happened was that we found out that people cannot demand work - So here we made a change. We met with them. We had this in two-time point - Aug 2005 then December, 2007 when the program was expanded. Each person passed to 104

the WTW program actually goes on an interview with our clerk with questions. Directed…I mean.. “why do you not leave the house”, “what do you do during your spare time?” Did not Question “Why do you not working – then they would say – “because I cannot find a job”..., but understanding if there is a reason that prevents them from demanding work… find them. Today there is a self-administered claim it is becoming more and worse with the lack of frontal contact. Man filling out the form, where in the service, and the form comes to the clerk, the clerk checks.. Says missing documents, sending letters, almost people do not meet the official's income. A: What allowed you to make the changes in the program? B: First of all it was part of the terms of the plan, that ... One Stop Center, people received services under one roof. And of course a treasure personnel gave. Finance Ministry gave us everything we asked for. Only cooperation,.. And it proved itself (B.C interview official in the Social Security office).

The setting of the program allowed organizations such as the Social Security office to examine and adjust their systems. The centers claimed that some of the people who were referred to them were not supposed to be there. Ironically, welfare participants who were identified as handicapped or sick deserved a better governmental allowance then their current unemployment allowances which they may have received for years.

5.4.3 Poor Job Market or Lazy People?

"I can say with confidence that those who rely on welfare support will stay poor for the rest of their lives. However, those who start working, even in a low-income job- have a chance. Even a cleaner can get promoted to be a shift manger, later a branch manager and in two years can become an area supervisor…This is how I see it - If I go to work in a restaurant with a salary of 25NIS (~$6/hour) I can grow from there. From welfare money you have no place to grow (D.V. interview)".

One of the claims that kept appearing in the Israeli media is that people are not lazy or unwilling to work as was assumed by the architects of the American program. Rather there were simply not enough jobs to go around. For this reason, the Israeli WTW plan could not be effective in Israel.

In interviewing numerous government employees and center managers, none admitted that there was an insufficiency of jobs.

“Those who wanted to work found jobs…You cannot anticipate that a person who did not work for the last 10 years or who does not speak the language will find a high ranking

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job, even if he or she was a doctor in their home country. They need to build a resume, to start from the bottom (D.N. interview)”

One of the government officials mentioned in her interview that there was no need to create new jobs:

"There was no need in creating new jobs, no need. You talk to the centers - we talked all the time with centers... I never had a claim saying- "I do not have enough jobs". Have never had such a claim. And believe me that if that was the problem, you would see this argument – we also would have had to change the models .... No .. Was not. Open a newspaper, you open the newspaper today and look at the needed ads. Look how many, there is a lot of demand. A LOT! ... Lots and lots and lots .. most of the economy is good- despite the recession perception .. you can see a real requirement. No problem on that side. There is a problem, however, of matching the employee to the job. For example... I cannot forget that XXX (one of the center’s managers), director of XXX said .. I need more healthy men who can go to work today - I have 200 jobs for them (G.Y Interview).

The chicken and egg question was raised - do we have a generation of unemployed welfare recipients who do not wish to work, or do we have a bad economic situation that makes it hard for people to find jobs and pushes them to claim welfare benefits? (David and Izenberg, 2004).

5.4.4 August 1st 2005 On August 1st 2005, the Israeli Wisconsin Welfare to Work program was officially launched.

The Israeli WTW Center in Jerusalem provided participants with clothing, jewelry and cosmetic tips in order to prepare them for job interviews. “If we want a man to walk out of here for a job interview, we will be ready even with an ironing board” said one of the center employees (David,

2005a). Netanyahu and Olmert launched the Wisconsin program making their speech under the headline "The culture of work is about to change" (David, 2005b). Using this phrase again reminds us the difference between the American culture which assumed people do not wish to work and are lazy, and the Israeli WTW policy which conflicts with the Israeli culture and does not hold that same perception of work.

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5.4.5 The Nonprofit Social Organization in the Program

Even if this program was successful, and some of the successes I do know... Its failures and its damage to some of the people is so horrible that the success is not worth it., And really as I said at the time, if we can fold up home and go, we would do it instead of setting up and growing. I began working part-time, and today there is, in different job scope, around five people working.. Oh .. so .. and there is another organization the “Mizrahi Democratic Rainbow” and someone else there ... Oh .. and really .. it was just terrible. It was much worse than I could imagine in terms of the impact and harm on this people ..(I.L Interview, a nonprofit organization activist).

Prior to the declaration regarding the official adoption and launch of the Israeli WTW program, the social nonprofit organizations learned from their United States counterparts about the injustices associated with the implementation of the Wisconsin program in their country. For these organizations (table 5.4), this was a red flag signifying the dangers of privatizing social services. Therefore, it is not surprising that the decision to implement the program in Israel caused these social nonprofit organizations to unite (Sinai, 2005e).

Some organizations decided to work outside of the governmental system as a kind of

"Wisconsin Watch" in order to protect the rights of the needy. Other organizations decided to join forces with the operators of the program and work for the clients within the system. The need to choose a form of action reflects a constant problem of social nonprofit organizations:

Should you fight from the outside or cooperate with "the enemy" and work for change from the inside. In the Jerusalem employment centers, one of the social nonprofit organizations “Yadid”

(translation:”a friend”) decided to copperate with the system administrator in the first stage until they learned the system, moving into an office in the center itself. Other social nonprofit organizations claimed that this move would hurt their organization’s judgment and ability to fight the system (Sinai, 2005e).

There was constant conflict between the centers and the social nonprofit organizations.

Many of the centers’ managers claimed that most of the nonprofit organizations and the

107 government activists they worked with refused to step into the centers and get a closer look and in-depth understanding of the operating system. From day one of the Israeli WTW program, protests and other demonstrations were organized outside the different centers (Moshkovich and

Regev, 2005).

Table. 5.4 The Social Nonprofit Organizations by Area CENTER AREA SOCIAL NONPROFIT ORGANIZATION(S) Jerusalem Meir Panim (Welcoming); Yadid ("a friend"); Community Advocacy; Ma'an (“for” or “to”). Sderot Revolution (established by Community Advocacy); Dignity Nazareth The Communist Party, South - El –Amal (Arbic:"The Voice of the Workers"); Ma'an (“for” or “too”). Hadera Rabbis for Human Rights, Alon (established by the Democrat Rainbow) Source: Sinai, Aaretz 2005e

In August 2005, when the official Israeli Wisconsin Works program was initiated, another major event happened in Israel, "The Disengagement Plan", in which illegal settlements were evacuated from areas considered to be owned by the Palestinian authority. This resulted in more welfare recipients and unemployed people involved in job-searching. As a result of this political act, Netanyahu resigned from the government. This left the program in chaos due to the fact that

Netanyahu was a strong supporter and a key player in the initiation of the program. Netanyahu resignation added to the chaos the program suffered from. This was a change that the program had to deal with at a very early stage when it was still fighting for its existence and recognition and was still forming its principles. Nevertheless, Minister Ehud Olmert, who replaced

Netanyahu at that time was also a supporter of the program and continued Netanyahu’s path.

This was not the last time governmental or political changes and events affected the program.

5.4.6 Competing with the Governmental Employment Service

Eighteen days after the program was launched, the Israeli Wisconsin Centers succeeded in creating pools of what were considered adequate jobs (David, 2005c). The Israeli WTW Centers’

108 numbers of workplaces presented were almost identical, and in fact were larger in some centers than the Governmental Employment Service had in their pools (table 5.5). Yet the CEO of the

Employment Service raised concerns regarding the quality and availability of the jobs found by the centers. In response, the Government Employment Service mentioned that with time they believed they could match the number. The Government Employment Service also mentioned that their resources were very limited, allowing them to have just one case manager for every

400-500 job seekers while the Israeli Wisconsin program had between 50 to 75 clients for each case manager.

Table 5.5 July 2005-Number of Available Jobs in the Market by Areas Area and Agency Welfare-to- Work Governmental Employment Service Hadera- Agens 1300 804 Nazareth- Agam 600 405 Ashkelon, Sderut- Maximus 1000 1009 Jerusalem- Amin 759 1979 Source: David, Ma`arive 2005c

On the one hand, this notion of competition from government offices could motivate both organizations; however, the fact that they shared the mission of helping the needy also exemplifies one of the problems that the program suffered. The program was presented as a one- office project instead of a joint effort with the government to help the needy. Mr Kremer, the person who conceived the program in Israel indicated in his interview that the initial idea was to create a multidisciplinary program that would be a collaboration between the different offices in the government. In practice, according to him, once the Finance office discovered the financial benefit the program contained, it assumed leadership over the program.

“the first Tamir Committee actually included - The social services, the Ministry of Immigrant Absorption, the Ministry of Education - completion of adult education, the Employment Service, the Department of Labor, the Department of Budget and Finance - and I forgot anyone? .. And even Joint Distribution Committee (JDC) .... . Suddenly Accountant General decided that it interest him. Once it became interesting to him, he began to show that he has authority. Now, he is the side that complements the Budget Division –it is impossible without it….”(Mr. Kremer Interview) 109

It is also important to remember the Mr. Kremer, himself, was a former employee of the Budget division and a trained economist. However, the general direction that the program took created the perception that those who needed help the most were not always the focus of the effort. Only in a later stage, once the CEO of the Governmental Employment Service was replaced, did the office become a key player in fighting the WTW program. This will be further discussed later.

In September 2005, Ehud Olmert replaced Netanyahu in the Finance office after the former resigned, while maintaining his position as the Trade, Labor and Employment Minister.

When Olmert presented his plan to diminish poverty, he endorsed the Israeli Wisconsin WTW plan. He proposed extending it to more cities in Israel and investing more government money in order to support daycare centers that would allow parents to return to the labor force (Lior and

Regev, 2005).

To summarize the prior sections, we can conclude that when the policy involves high stakes, people often prefer to stick with what they already know and are familiar with, which was in this case well-established institutions and policy programs, regardless to their effectiveness

(Helderman, Schut, van der Grinten and van de Ven, 2005). This tendency was in order to avoid uncertain risks and unexpected outcomes. This ambition to stick with the familiar was the case in the Israeli Welfare-to-Work reform. The program was perceived as a reform that would put at risk a vulnerable population that could lose their welfare allowances and governmental support.

In the Israeli case, the learning components of the policy social goals were missing, and the state earnings were on focus. The Government did not match the policy to the different cultures, ideologies and customs and the public did not support a new plan that, from their perception, might benefit the country but not the welfare recipients themselves. The next sections will

110 provide an overview on the first year results and describe the modification the program went through in order to try to shape it to Israeli culture and social views.

5.5 The Israeli WTW Program's Results over the Trial Period - The First Year

"The program "tells" people: "Let's make a genuine effort to get back to the labor force...." The rationale of the program is to create an environment that mimics a work environment mainly for those who have not worked for a long time. Another goal is to make it worthwhile for those people who do not want to work. For those who chose not to work, a benefit of 1,600 NIS for an hour a week appearance required in the Governmental Employment Service is worthwhile, but it is much less worthwhile when you have to spend 30 hours in the center for that amount” (Dorit Novak, head of the program; Ben-Yehoda, 2006).

One month after the Israeli Welfare to Work program was launched, Aartz reported (Sinai,

2005f) that out of the 18,000 people participating, 450 (3% of the participants) had found private sector jobs, 5% were working in community services, and 18% did not show up at all for various reasons. The assumption was that they were working while still claiming welfare benefits and that the program’s demand for 30 to 40 hours per week attendance at the centers forced them to stop claiming the money. Another assumption was that some people did not understand the attendance policy. In that case they would be likely to appear at the centers when they failed to receive their monthly stipend (David, 2005d). The main private sector jobs were in cleaning, security, catering and housekeeping in hotels. While many of the jobs were close to the minimum wage, this was still higher than the welfare stipend. The poverty line for a single person (in 2004) was 1,777NIS, for a couple- 2,843NIS, for three people – 3,766NIS, and for four people 4,548NIS (Tal, 2005). If two adults worked for the minimum wage, there was a chance for a family of four to get above the poverty line.

Three months after the program started, 18,000 were enrolled in the program and 1,980 found jobs at a salary close to the minimum wage (3,335NIS at that time). Of these, 920 were in

111 community service. However, 1,060 refused to take part in the program and lost their welfare entitlements, and 2,200 never showed up (Regev, 2005)

On December 13, 2005, four months after the program was launched, Globes newspaper published an article citing the Association for Civil Rights. In the article the Association for Civil

Rights indicated that a year and a half after the Israeli WTW program began, it had failed in its goals to return welfare recipients to the labor force (Magen, 2005). In practice however, the program had only been working for THREE MONTHS with a success rate of 11% (Magen,

2005).

Five months after the program began, the State Comptroller was asked by the opposition parties to review the Israeli Wisconsin plan (Atsofe, 2006; Baram, 2006).

“There was so much resistance to the program. The request from the State Comptroller to make a report at such an early stage of the Welfare to Work program is to me a first-class scandal. The State Comptroller should review the work of bodies according to procedures; now we were still forming procedures. Also many of their findings were already things that we saw and fixed and they took credit for that as well. We did not get any credit in here….(Interview with Dorit Novak, Head of the Israeli WTW program).”

Interestingly, the State Comptroller’s report did not appear in the newspaper after almost two years later under the headline “Indeed: Severe Findings” (Tzaig 2007) with the criticisms made a year earlier, prior to the changes that were made in the program (Sinai, 2007e). The criticism of the State Comptroller referred to the lack of governmental supervision on the centers and to the fact that centers did not tailor the program to the different groups but rather applied all to rules on all participants, regardless of their age or physical condition. The governmental program administration claimed that these problems had been recognized and fixed. They claimed that reasons these issues were brought up were becouse the new minister, Mr. Yshai, wished to dismiss or change the program.

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Six months after the program was launched, 20% (3,683) of the 18,000 welfare participants had been placed in jobs. The number of welfare recipients in the cities where the experiments took place had declined by 35%. Among these 15% had found paying private sector jobs, 10% who never showed up; 7% did not cooperate and 3% refused jobs that were offered to them. Out of 1,800 cases of welfare entitlement denials, only 200 appealed (Myers - JDC -

Brookdale Institute Report 2, 2007b; Mor, 2006). From the data, it appears that the first few months of the programs mainly distinguished between those who needed income support and unemployment allowances and those who did not. Nevertheless, the process of returning welfare recipients to the labor force was noticed. While it was still early to determine whether those outcomes were considered good or bad, there was a notion of change.

At the end of 2005, Israel was facing an election. The social factors and war on poverty became a tool in the hands of the candidates: “Suddenly Everyone is Talking about Poverty”

(Lior, Weiss and Aichner, 2005). As the election drew near in the middle of 2006, many voices, mainly from the opposition parties, began trying to freeze the program (Fikrsh, 2005). The

Israeli WTW program was affected and became a platform for many parties, who used the program’s unpopularity to attract voters by offering to either change (Heler, 2006) or end it

(Krytman, 2006). Another effect is that some changes that the Office of Industry, Labor and

Trade had proposed to ease some of the program restrictions (such as the 30 to 40 hours participation obligation) were postponed until after the election so it not to would considered bribery (David, 2006a). Interestingly, despite all of the negative publicity the program received, each of the parties’ economic plans after the election talked about expanding the program (e.g.

Doron, 2006).

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In May 2006, Eliezer Yshai from "Shas" party (Sephardim ultra-orthodox Party), which is one of the Israeli religious movements, replaced Ehud Olmert and became the Minister of the

Industry, Trade and Labor office. During the campaign Yshai promised to cancel the Wisconsin program, and in his first interview he declared that he intended to change the program (Regev,

2006a).

Nine months after the program was launched, 5,000 out of 18,000 participants stopped getting their regular welfare allowance (28%). 10% found jobs that allowed them to stop receiving the allowance, while 9% did not show up in the centers for various reasons, likely because they already had jobs. For the other 9%, the allowance was stopped because they did not cooperate, or refused to take part in the program. 60% of those who worked at that time worked for 5 months, while the other 40% moved between jobs (David, 2006c). The National

Insurance report indicated that the population that was most successful in finding jobs was young participants without children. Unemployed women, new immigrants and single moms were the least successful in being assigned jobs (Myers - JDC - Brookdale Institute 2007a. Report 2; figure 5.3). These groups were also the ones that were hurt the most by the welfare allowance cuts (Regev, 2006b) that were conducted on 2003 by the former Finance Minister Netanyahu. At the same time the Minister of Industry, Trade and Labor, Rabbi Eli Yshai, reduced the required participation hours for some groups such as the handicapped and the elderly (David, 2006c).

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Figure 5.3 Percentage of Welfare Recipients Returned to the Labor Force at the Beginning of the Program and in February 2006, by Family Type Source: Myers - JDC - Brookdale Institute 2007a. Report 2, p.4

Even with the numbers showing a positive trend, at this point it was still hard to determine whether the program had succeeded or failed. No real numbers were shown regarding the quality of the assigned job, even though they were mainly low-skilled, low paid jobs. Additionally, the long-term effect on recipients’ life was still unknown. The lack of knowledge about those who had stopped receiving welfare benefits also became a concern among the social non-profit organizations. Many claimed that it was also possible that those who had been assigned to work at this stage were those who were easy to assign, leaving the hard-core unemployed without work.

Interestingly, the continuing reduction in program participants created a paradox where the centers had to fire employees (Regev, 2006c).

"It was sad, because these people ... We found them jobs. It became a paradox facing my employees - I told them: "get the job done, work with your soul, you will succeed …We will do well in XXX (the center's name), it's just the beginning of the road, of this pilot project. We will go nationwide, and will have more tools to let people develop professionally… and so on. So let us at all times be with one hand on the pulse - to succeed succeed succeed. And we had success, we were not sure if they were going to extend the program at that point and I had to fire workers..." (M.M one of the center’s managers, interview).

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5.6 The End of the First Year- the Second Tamir Committee

In July 2006, a year after the program was launched, the Trade Minister Yshai announced changes in the program. He assigned Prof. Yossi Tamir to create a second Tamir Committee to recommend how to proceed. The first Tamir Committee of March 2002, which formed before the beginning of the program, provided many social recommendations that were later dismissed by the Governmental Finance Office, which took the lead in launching the program. Yshai decided to bring back the emphasis on the social aspects. As a result, various changes in the program were suggested, such as excluding people over the age of 45. This decision was highly criticized.

One of the researchers from the company that was hired by the government to analyze the program noted that:

"Specifically the age of 45, compared to the control group, there was an increase! They showed the best results; the most ….why are you excluding them from the program? And I said … probably they have not read the report, and we downsized it, gave an abstract- two pages. You do not have time to read, just read the main conclusions. My head of department, a woman I really appreciate she said: "Look he is the policy maker, he can read and can make a decision contrary to that. And I with logic think - there are conclusions, you get it, you see tables, diagrams.... He has his agenda and he can legitimately say what he wants." (J.K. Interview)

In addition to the statistic, that supported individuals 45 years and older returning to the labor force, there were another conflicting issues that made the debate more complex. Simultaneously, there was a proposal to rise the retirement age in Israel. Up until April 1st 2004 the age of retirement for women and men was 60 and 65 respectively. Starting April 1st 2004, the law was changed for women and men to 62 (going to 64) and 67 respectfully. The head of the program

D.N. noted in her interview:

"The decrease of the age to below 45- What message does this send to people aged 45 to 57? That the state gave up on them? That the state is no longer able to bring them back to work? ... Why?.....and in the same year they are talking about changing the age of retirement for men and women and adding two more years of work? This is conflicting (D.N. Interview)

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Others interviewed off the record indicated that 45 was a “political age” that was aimed toward certain populations that vote for certain parties.

“If you are asking me why 45, 45 was a political age. Why political age? That the parties have wanted to get the ...new immigrants .. These are specific ages that some groups are accustomed to retire- at age 45 .. It was really political. But it is not something I will sign my name on (anonymous source- interview).”

On July 12, 2006, the second Lebanon War took place. As a result, many of the social agendas were shoved aside, and the focus was put on security issues and budgets (Lior, 2006).

On September 19, 2006, a year after the program was launched, Mrs. Dorit Novak, the program head, resigned (Regev, 2006e; David, 2006d). At the same time Minister Yshai, the

Minister of Trade, Industry and Labor followed the second Tamir Committee’s recommendations

(Regev, 2006f) and initiated changes in the program. The changes included different ways of treating various groups that were referred to the WTW centers. For example, single mothers with children under 12 were only required to come to the centers for approximately 20 hours per week, participants who were to retire within 5 years or less or had not worked for the last 7 years did not have to participate in the program, and handicapped and sick participants did not have to come on a daily basis. This governmental step threatened the companies' profits derived from assigning people to work as well as from denying welfare allowances. As a result, the foreign companies declared that they were going to reexamine their contracts with the government

(Regev, 2006g). Yshai, with his list of “improvements” to the program and his easing of the rules, was accused of missing the main point of the program, which was the idea that every person that is capable of working should work. The groups that the new rules excluded were the groups for whom the program was created (Plotzker, 2006). Around 25% of the original referred population received alleviations under the new changes offered by the second Tamir Committee and adopted by the Minister Yshai (Regev, 2006h). Many criticized these changes, because they

117 took place only a year after the program was launched and before it could show real results

(Plotzker, 2006).

5.7 A Third Year to the Trial Period The initial trial time period for the program proposed by the Tamir committee and by the official program was two years. By the end of the second year, the program was very different from the initial program. For instance, the economic model that allowed the centers to deny allowances and profit from denials was changed; the 40 hours mandatory participation role became more flexible; petitions became easier and more user friendly to submit. More changes were to come.

The numbers showed some improvement in the return of chronic welfare recipients to the labor force. Some consideration of an extension of the trial period was discussed in order to be able to get a better sense of the program’s success in the long run.

After of Minister Yshai announcement of his intention to extend the trial period of the

WTW program in another year, the social nonprofit organizations submitted a High Court

Petition to halt the Israel WTW program. The nonprofit organizations claimed that this action was unconstitutional because it violated the right to a dignified life for the unemployed. The organizations argued that before extending the program, official reports evaluating its results must be analyzed (Regev, 2007a).

On January 25, 2007, Yediout Harunoth published Minister Yishai’s decision to shut down the Israeli WTW program. The newspaper described Minister Yshai’s visit to one of the centers; during this visit the center handed him a large check like those presented to winners of the lottery. In the space where the amount would appear, they wrote 2,000. Minister Yshai was told that this was the number of welfare recipients who had found jobs through the program. His advisors then reported that Minister Yshai became very upset, removed the check from his hand

118 and asked the center to give him the names and job assignments of those people in order to examine the quality of these jobs and to determine whether the quality of life had improved for these workers. His adviser reported that the program had turned people into numbers, which upset the Minister and prompted him to declare that the program must be shut down (Regve,

2007b). On February 2, 2007 Marrive published an article stating that despite prior reports,

Minister Yishai would not cancel the plan. On the contrary, the program was extended for another year and a new area and welfare recipients were added. Nevertheless, changes would be made to the economic model to create different paths for different populations. The State

Supreme Court responded to the nonprofit organizations, mentioning that the program seemed to be successful and that more than 50% of participating households stopped receiving welfare support. Additionally, the state argued that another year was needed in order to see real results

(Sinai, 2007a).

A day after the state, with the support of the Finance Minister, announced a third year extension of the WTW program, Minister Yishai declared it would be canceled. Minister Yishai referred to the program as a “slave market” and insisted that the program should only include young participants and should help them to return to the labor force (Sinai, 2007b, Regev,

2007c). This suggestion contradicted the WTW’s basic structure, which was meant to deal with all of the chronically unemployed who were healthy and claiming welfare benefits.

Olmert, the Prime Minister, gave Yishai one month to meet with the Finance office and the Social Security office and develop alternatives (Regev, 2007d). As a result, the contracts with the center for expanding the program were frozen (Regev, 2007e). The instability of the situation also became a source of conflict between the Finance office and the Industry, Trade and Labor

119 office. The latter claimed that money had been withheld from their office unltess they would sign the extension of the law (Regve, 2007f).

Beginning on April 1st 2007, Minister Ali Yshai followed two governmental committees' recommendations (the second “Tamir Committee” and the first “Dinur Committee”), and initiated changes in the program. First, the trial period was extended from two years to three years, ending on July 31st 2008. Additionally, new areas were added to the program, which resulted in the addition of 9,000 unemployed people to the Israeli Wisconsin program (figure

5.4). A year after the program was initiated, the government saved 122 million NIS from either job assignments or allowance denials. Because of growing criticism of the program, however,

Minister Yshai decided to change the economic model so that 60-80% of the centers' profits came from job assignments and only 20-40% from allowance denials. Additionally, the centers’ profits would increase with the participants’ continuance in their job and according to their progress and salary level. The participants themselves would receive perseverance grants if they stayed in the job for a year or more. Participants who kept their job over a year became entitled to governmental funding for vocational training (Regev, 2006h). Hours of participation in the program were adjusted for the different populations. For instance, mothers with more than five children or single moms with children under 12 years of age were required to come to the centers for 22 hours a week instead of 30. Finally, in order to recruit local communities and to encourage them to cooperate with the program, the government decided to transfer 5% of the savings from the program to the communities, for their own purposes (David, 2006e; Sinai, 2006).

In July 2007, the Myers-JDC-Brookdale Institute (hired by the government) published a fourth study that examined the Wisconsin plan’s accomplishments after fifteen months. The report was unique because it was able to compare welfare recipients in areas with comparable

120 characteristics to those at the four WTW centers. The findings were intended to help the government decide whether the program needed to be expanded and where to make changes. The study found that 17.6% of the participants who did not work before the program were sent to work and were still employed after 15 months. In the control group, only 7.8% found work.

Additionally, 7.5% of those who already worked expanded the scope of their work, while in the control group only 3.5% increased the scope of work. The average wage was the minimum wage, which was similar to the control group’s average wage. In sum, a total of 22.6% of the participants improved their employment status where only 7.4% from the control group improved their situation (Myers-JDC-Brookdale Institute, Report No.4: July 2007). According to the report, the findings were similar to the data of employment programs implemented in the

U.S. and Europe (Sinai, 2007c).

Figure 5.4 The Extension of the Israeli Welfare to Work Plan by Area Source: Sinai, 2006

The Myers-JDC-Brookdale Institute findings created a harsh dispute between the Prime Minster

Olmert and the Minister of Industry, Trade and Labor, Mr. Yshai, who asked officially to change the program to exclude those aged 45 and older. The findings suggested the opposite, that there was no reason to dismiss such a large group of people who could be out of work for more than

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20 years prior to retirement age. The committee based its claims on findings that showed that the

45 and older group were the main group that benefited from the program (figure 5.5) (Myers-

JDC-Brookdale Institute, report number 4: July 2007; Sinai, 2007c).

One of the center managers commented on the exclusion of the 45+:

"It is to declare that this person will have twenty years of poverty for people who are still in the prime of their health and life and have a lot more benefits for the workplace. Sometimes even more than young people - for the world of work." (TBH center manager interview)

In response to the report, the social organizations argued that the report presented only a partial picture and that the numbers did not match the reality (Regev, 2007g). Mr. Yshai himself claimed that there was a need to replace the current WTW program with a new program.

Figure 5.5 The Impact of the Program on Work After Fifteen Months by Age Group Source: Myers-JDC-Brookdale Institute. Report number 4: July 2007: 55

To summarize the prior section, the Israeli complex political system harmed its policy diffusion and learning system. Since none of the political parties in Israel were able to gain an absolute majority in the parliament, the government combined coalitions from several parties with different views. Additionally, the complexity of policy and decision-making processes exacerbated the problems that WTW reform had to deal with.

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5.7.1 Dinnur Committee and the Academy Council Committee (aka Yaari Committee)

Two months before the contracts with the foreign operators ended (July 31, 2007), the Israeli

Wisconsin plan had not yet been extended and the operators began preparing to close. Minister

Yishai again consulted Mr. Dinnur’s committee (table 5.6) to discuss changes to the program.

Yishai asked Mr. Dinnur, the director general of the Prime Minister, to review the program and give their committee recommendations. The committee supported the continuation and expansion of the program, with few changes. The most important change was to the business model. Now the centers would only benefit from job placements that the government considered as high quality and void of denials from welfare allowances. Additionally, the committee offered to create different paths for different groups depending on age, immigration status, disability level, and seniority in the program.

Table 5.6 Dinnur Committee, June 2007 2nd Dinnur Committee Mr. Raanan Dinur Director General of the Prime Minister. Attorney Michael Atlan Attorney General of the Ministry of Industry Prof. Zvi Eckstein Deputy Governor of the Bank of Israel Dr. Yigal Ben - Shalom CEO of the National Insurance Institute Prof. Manuel Trajtenberg head of the National Economic Council at Prime Minister Office Mr. Moses Levian Current Wisconsin Head Mr. Emanuel Mudrick Chairman Tender Committee inter - ministerial reform the labor market Mr. Shaul Meridor Employment and Integration Coordinator Finance Ministry officials Attorney Shay Somekh Advice and Legislation Department of the Ministry of Justice Mr. Yossi Farhi Advisor to the Minister of Industry for Employment Professor Yossi Tamir CEO of Tevet - JDC Source: Dinnur Committee, June 2007 Official Report

Parallel to this process, a committee of the Academy of Sciences led by Prof. Menahem

Yaari published its report. The Yaari committee was established on December 2005, and began working on January 2006. The committee was assigned to follow the Mehalve program. The committee consisted of six officials from academia and six officials from government services

(table 5.7). Like to the Dinnur Committee, the Yaari committee also recommended extending the program for three to four more years. Among their recommendations, the committee suggested

123 creating an incentive system for employers and for the centers for referring clients to high quality job placements, improving the appeal system and creating different paths for different groups such as mothers for small children.

Most of the changes were agreed to by the participants, except Minister Yishai who asked to exclude participants older than 45 and the Finance office which asked to exclude only people

55 years and older. Minister Yishai announced that unless the maximum age was set at 45, the program would be shut down (Regev, 2007h). The centers also opposed the idea of excluding the 45+ age group, as they were considered to be the most successful group in assignments

(Sinai, 2007d). The Academy Council also supported the extension of the program for another year and did not support exclusion of participants based on age category (National Academy of

Sciences, 2007). Both the Academy Council and the Dinnur Committee agreed on the need to change the economic model, recommending instead that the centers would receive incentives based on the quality of assignments, the length of time employed, and the salary level of the employee.

Table 5.7 Yaari Committee, January 2006-December 2007 Yaari Committee Academia Representative Prof. Menahem Yaari Chairman, President of the Israel Academy of Sciences Prof. John Gal School of Social Work and Social Welfare, Hebrew University of Jerusalem Prof. Alian Alkrinaoi Head of the Department of Social Work, Ben Gurion University of the Negev Dr. Judith Brown Department of Social Work, Ben Gurion University of the Negev, former acting director of the Personal and Social Services, Ministry of Social Affairs Prof. Yoram Weiss Head of the School of Economics Prof. Nili Cohen A member of the Israel Academy of Sciences and Humanities, Faculty of Law, Tel Aviv University Governmental Officials Prof. Zvi Eckstein Deputy Governor of the Bank of Israel; School of Economics Tel Aviv University Ms. Orna Warakowitzki Income Support Division Director and Deputy Chief of pensions, National Insurance Institute Ms. Claudia Katz Director of Employment, Ministry of Immigrant Absorption Mr. Shaul Meridor Employment and Integration Coordinator, Budget Division, Ministry of Finance Attorney Somek Shay Consulting and Legislation Department of the Ministry of Justice Mr. Benny Fefferman Director of the Planning Director, Research and Economics, Ministry of Industry, Trade and Labor Source: Yaari Committee, December 2007 Official Report 124

The committee published its recommendations again in December 2007, suggesting that the WTW program be extended and that the model be used nationally: “The number of participants in the program that have found employment or have extended their jobs because of the experiment was relatively higher than that found among the number of welfare recipients who did not participate in the program, and in other countries that operated similar programs as well (National Academy of Sciences, 2007:110)." The committee opposed the proposal to exempt the 45+ age group due to their difficulties. "Clearly, there is no group that can be determined as having low chances for work assignments that we need to give it an exemption in the first place .... (National Academy of Sciences, 2007:7).”

5.8 Lights for Employments

In July 2007, a new program was launched with the recommendations of the Dinnur Committee.

The program was entitled “Lights for Employments.” While it contained the same characteristics as the first program, some changes were made. The main change was the exclusion of those aged

45+ from the program. Other changes included the implementation of four different routes: for the disabled, immigrants, academics, and the regular route. Minister Yishai announced that until the different routes were ready, these groups would be excluded from participation in the program (Arlozerov, 2007). In addition, persistency bonuses were added for those who kept their jobs for more than three months (Regev, 2007i). Changes in the economic models of the operators were made as well and closer supervision of the centers began:

I will use the name Wisconsin plan only in order not to use the names that the government tried to use in order to hide the real program beneath – Mehalve or Lights for Employment.,….that was just an effort to hide the same program and meaning .. ..(I.L Interview, a nonprofit organization activist).

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The Finance Office claimed that they “won” since the program was not limited. The Minister of

Industry, Trade and Labor claimed that they “won” by applying all the changes they wished

(Regev, 2007i). After the new program and changes were launched, there was a decline in complaints against the Wisconsin program. “There are only five complaints per month compared to 70 in the past” (Regev, 2007k).

“A Labor Minister Eli Yishai closed the "Wisconsin Plan" that failed and initiated a new program "Lights for Employment " for pensioners and young people.” (Morgenstern, 2007 pp.5).

At the end of 2007, 420 participants from the WTW program received grants from the Office of

Industry, Trade and Labor for persistence in joining the workforce (Lior, 2007). Around 6,072 people left the program after they were excluded due to their age; 574 participants chose to stay in the program of their own free will. This was almost half of the people that initially were assigned to the program. Therefore, Minister Yishai added more people to the program. More areas such as Natanya and a few Arab villages were added (Regev, 2007l; 2007m). Welfare recipients who were excluded from the program due to their age were referred back to the governmental agencies. The governmental agencies were incentivized to find jobs for them

(Regev, 2007j). The main difference was that they did not have to attend the centers full time anymore or be under the continuous threat of their welfare allowance being denied.

By the beginning of 2008, the unemployment rate had declined to 6.6% compared to 11% in

2004. This final step had taken place during 2007, when the number of new jobs increased by approximately 120,000, over and above the increase in the number of citizens of working age.

Additionally, more Orthodox males joined the workforce, as did more Arabic women. New jobs opened up in rural areas, and in places that up until 2006 had no chance for job growth. The decline in unemployment, which reached nearly 50% was a result of the rapid growth of

126 technology industries, which showed up weaker areas. Additionally, Israel experienced a surprising renewal of traditional manufacturing industries such as textiles, clothing, food, plastics and more. During these years, Israel invested capital to encourage investment (which was subject to many criticisms due to the tax benefits given), and factories matched the assembly lines to the employees’ skills and to their wages. Finally, it appeared that a program as controversial as the

Israeli WTW program began to bear fruit (Plotzker, 2008). Despite these gains, the rate of the aged who were unemployed (aged 50+) was five times higher than it was in 2003 (Regev and

Lior, 2008). Furthermore, part-time employments remained high, accounting for about 4.5% of the labor force compared to 1-2% in Europe (Plotzker, 2008).

5.8.1 The End of the Governmental Employment Service

In February 2008, the government declared that it was planning to expand the program and eventually apply the model to all of Israel. The Israeli government would follow the recent changes suggested by the Yaari Committee recommendations. For instance, one of the changes suggested was to allow non-profit organizations to run the program instead of private companies.

At this point, the Governmental Employment Service experienced a change in management and declared itself in conflict with the WTW program. The Governmental Employment Service saw itself as the main organization affected by these recommendations and feared that it would be abolished. The government was expected to present its new model by April 2008 (David, 2008a).

As a result, the Governmental Employment Service workers threatened to strike (David, 2008b).

One day after the government’s decision on expansion was published, Minister Yishai said in response that the decision had not been coordinated with him and ordered his office not to cooperate with the committee appointed by the Prime Minister, PA Director of Finance.

According to the minister, the program would not be extended until he received reports regarding

127 the pilot of the new program "Lights for Employment ". As Minister Yishai announced: "Any discussion conducted under the fluorescent lights and in a closed room is not really a discussion.... I will not support changes that will affect the public without talking to the public.

The time in which the human factor in economic moves is being ignored is over" (David,

2008b:2)

Minister Yishai’s office offered a new initiative to move the responsibility for "Lights for

Employment" (former Wisconsin) to the Governmental Employment Service and thus to close the Israeli WTW program. This initiative was opposed by the Prime Minister's Office and the

Treasury, who supported the program because it had returned many of the unemployed to the labor market (Regev, 2008a). As a result, a dispute began between the Governmental

Employment Service and the Treasury. The Governmental Employment Service claimed that the

Treasury office froze its budget and refused to transfer millions of shekels. A source from the

Governmental Employment Service was cited as saying that the Treasury informed them, that until Minister Yishai extended "Lights for Employment", the budget would not be delivered. As a result, the Governmental Employment Service decided to strike. Minister Yishai was in no hurry to sign the warrant expanding the program (Regev, 2008b). The Governmental

Employment Service employee chairperson, Mr. Hotovely, ordered the offices to remain closed and employees to stop seeing welfare recipients. This resulted in a situation in which 30,000 newly unemployed did not receive unemployment benefits before Passover. The Ministry of

Finance said in response that the budget was not transferred because the money was transferred last year as part of the experiment, and they yet to obtain the experimental results (Regev,

2008b).

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The Governmental Employment Service claimed that the Ministry of Finance was making an attempt to harm them, so that they would not compete with the Wisconsin Plan. The

Treasury, on the other hand, argued that there was no connection between the budgets of the plan and the Employment Service. "The decision about the Wisconsin program is based on a report and on professional findings that the program is useful for finding employment and directing the unemployed. We wonder why the Employment Service, instead of welcoming the government's decision, chooses to harm their customers. Additionally, it is important to note that there is no connection between the program "Lights for Employment "and the Employment Service budget"(David, 2008c).

A month after the Governmental Employment Service began its sanctions, Minister

Yishai promised not to sign the extension of “Lights for Employment ". The breakthrough that brought the end of the sanctions came after Minister Yishai sent CEO Farhi a letter and pledged not to extend the program to 2009 (Regev, 2008c).

The CEO of the Employment Service, Farhi, began to present new initiatives in order to optimize the Governmental Employment Service and introduced new projects such as integrating the academy students’ internship into the employment services and using occupational psychologists to streamline the Employment Service (Regev,2008e). Although the competition may have helped the Governmental Employment Service, it also revealed a complex system of internal struggles at the expense of welfare recipients.

Minister Yishai then tried to move the program under the Governmental Employment

Service. The Finance office, however, opposed the process and the battle continued (Regev,

2008d). In July 2008, a proposal was formulated in which the Wisconsin program would be

129 expanded across the entire country and would be subject to the Employment Service, which would become an independent authority (Regev, 2008f).

In 2008, two years after the elections, Israeli Prime Minister Ehud Olmert resigned from his position (Greenstein , Sharoni, Densh and Morgenstern , 2008). This meant that the state of

Israel would face new elections after only a three-year term (March 2006 to February 2009 instead of October 2010). This governmental instability created again a situation in which parties negotiated their needs, and public were frozen until the election process was completed.

5.8.2 Tax Reforms

In December 2007, Israel initiated a new law involving a negative income tax. It was the first time that negative income tax returns were adopted in Israel. The purpose of the law was twofold. First, it was meant to reduce poverty by increasing the wages of employees below the poverty line, and second, it was meant to provide incentives for employment among working populations. The law was applied only in the WTW program areas. According to the new law, workers aged 23 and older who earned at least 45% of the minimum wage but were paid no more than NIS 5,000 (~ $ 1,200) a month would be eligible to receive tax incentives from the state.

Minister Shalom of the right wing party proposed the law, but after it become highly popular, the government offered its own additions to the law. For example, the number of children now affected level of eligibility. In practice, social organizations claimed that the country was just creating a new welfare allowance instead of dealing with the real issues such as raising the minimum wage (Dansh, 2007).

The Israeli Arrangements Act of 2008 (the equivalent of American Appropriations Acts and to the Reconciliation Legislation) solidified the desire to expand the Wisconsin program as

130 well as to expand the negative income tax law (Lior, 2008; Greenstein , 2008). The Act said that the negative income tax program would be available only for employees who were residents in areas where “Lights for Employment” operates. Therefore, when the program will become nationwide, the negative income tax program also would become nationwide. In that way, the negative income tax law became a tool in the hand of the Finance ministry in order to gain support to continue and expand the WTW program.

5.8.3 2009 Election Year in Israel

Elections for the 18th Knesset were held in Israel on February 10, 2009, following the resignation of Prime Minister Ehud Olmert. Although the incumbent prime minister's party,

Kadima, won the most seats in parliament, the Likud party won the elections, because its leader,

Benjamin Netanyahu, became the new prime minister. The new Finance Minister was Yuval

Steinitz and the New Minister of Industry, Trade and Labor was Binyamin Ben – Eliezer.

Minister Ben- Eliezer was followed the same path of the former Minister, Eli Yshai, who had declared his intention to end the WTW program even prior to his election but ended up adopting and modifying the program. Once again, the process of policy learning become an important aspect in the survival of a program (Meseguer, 2005). While Minister Yishai and Minster Ben –

Eliezer opposed the program in the beginning, learning the program and the desired outcome become key elements in the program endurance (Meseguer, 2005). While the program changed over the course of the years in order to fit itself to the Israeli environment, the desired outcomes and goals remained the same.

Once officially appointed, Ben Eliezer decided that the program would continue to operate in the coming year at the four centers, while a committee chaired by Professor Yossi

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Tamir reviewed the recommendation to bring back the 45+ age group but with new regulations

(Densh, Greenstein and Morgenshtein, 2008; Rozenfled, 2008). The committee also examined the quality of the jobs assigned by the program, which had been the main criticism (David,

2009). Netanyahu, who had initiated the program in the beginning, was opposed to the idea that the program would not be extended. The social nonprofit organizations supported the expansion and the Wisconsin plan but only under an official body with governmental representation

(Plotzker, 2009). The Government began to negotiate with the Governmental Employment

Service (Greenstein, Greenberg and Bangel, 2009).

In June 2009, the government published a report that 30% of the WTW program participants had found jobs (table 5.8) and stated that it wished to open 16 centers across the country. The initial investment was estimated to be 250 million Israeli Shekel (~ 68 million dollars). The Ministry of Finance was convinced that this was a worthwhile investment that would pay for itself within three years - provided that the necessary changes took place (Horesh,

2009).

Table 5.8 Number of Participants that Found Jobs using “Lights for Employments” IWS Ashkelon IWS AMIN AGENS AGAM Total (without Sderut) Sderut Jerusalem Hadera Nazareth Until April 2009 1,092 4 1,650 2,136 1,531 6,413 Active Participants (Cumulative) 3,353 883 6,994 5,843 4,949 22,019 Percentage (Cumulative) 32.6% 0.5% 23.6% 36.6% 31.1% 29.1% Source: Internal Report of the Director of Employment 2009 (Horesh, 2009).

After Minister Ben-Eliezer studied the program and demanded some changes, including participation up to age 60, he then announced that he would sign the extension of the program

(Regev,2009a, Kaspit, 2009).

In July 2009, five months before the contracts with the centers and of the program were about to end, Prime Minister Netanyahu, Minister Ben – Eliezer and the Finance office were prepared to announce the extension of the program (Kaspit, 2009). At this point, a few members

132 of the Knesset, the Governmental Employment Service, and the nonprofit organizations began to put pressure on the government to close the program.

According to the booklet "No, Minister" collected by the Association for Civil Rights

(ACLU) and the Mizrahi Democratic Rainbow, the program was a failure on every dimension.

The “Lights for Employment” budget was 155 million shekels for 9,144 participants on average each month. Compared to that, the Governmental Employment Service budget was 235 million shekels and handled 197,000 unemployed each month. One official in the Governmental

Employment Service handled 420 job seekers, while in “Lights for Employment” a clerk handled

50 job seekers. According to the ACR and the MDR, the program’s successes did not justify its high cost (Denesh and Sela, 2009; Association for Civil Rights in Israel and the Mizrahi

Democratic Rainbow, 2009).

The law was about to end on Dec 31st, 2009 when the government exercised pressure by creating a draft document suggesting an agreement between the Treasury Committee and the

Governmental Employment Service that would provide the office with a bonus worth 8.5 million

Shekels (NIS) in return for “industrial peace” (Greenberg, 2009b). However, the Treasury would only provide the Governmental Employment Service the funds if the WTW program was extended (Greenberg, 2009b). The Governmental Employment Service refused the agreement, because it was attached to the approval of the WTW program extension. The head of the union organization Mr. Eini stressed that this position was not necessarily in opposition to the expansion of "Lights for Employment", but only sought to separate the agreement with the

Treasury and legislation (Greenberg, 2009c).

In contrast, support for the program came from city mayors who sent a joint letter to the committee asking the government to apply the WTW in their cities as well. Since the program

133 improved recipients’ income, it allowed cities to reduce discounts on property taxes in addition to the improving the city’s image. It also provided rehabilitation, relieved urban welfare departments and reduced crime. "We want to see that in our cities, the residents have an opportunity to join the program, and therefore we urge you to approve it," wrote one of the mayors. Additionally, two Arab authorities joined this petition, Nazareth and Ain Ma’Al. "I went into the centers and saw the success of the program where it is implemented," said Ain Ma’Al’s mayor. "Although my city has a low percentage of unemployed, I look at the individual. We have quite a few people who found themselves as income support recipients since they did not receive appropriate guidance from the beginning, and we are committed to them" (Levy, 2009).

The Nazareth pilot was considered a great success. Mayor Shimon Gapso, who previously had opposed the plan, became a supporter: "Today I can say that the program is very vital to the city. It is important that all mayors unite around a call to support the approval of the program and its expansion. "

Three weeks prior to the government meeting regarding the future of the program, the newspapers published articles on each side of the debate. For instance, Sharon Kedmi, the CEO of the Labor, Employment and Trade office wrote to explain about the program and to state that he opposed it until he learned more about it. Kedmi announced that there was a need to expand: the WTW program is a social program and justified (Kedmi, 2009). On the other side, Knesset

Member Ms. Levy-Abecassis fought for single parent families and argued that the program forced mothers to choose between spending time with their children and starving. Another claim was that the government’s promise to apply the Negative Income Tax to their cities was what drove the mayors to support the program and sign the joint letter (Levy – Abecassis, 2009).

About a week before the end of the program, the "Israel Beiteinu” (“Israel Our Home”) Party

134 opposed the plan and wanted to remove the various populations, such as the academic unemployed and new immigrants, who also happened to be their main political supporters

(Denesh and Sela, 2009). Knesset Member Yachimovich claimed that the program did not produce even one job: "the jobs the program assigned were likely to be taken anyway by the unemployed, without paying the outrageous cost of the program." (Denesh and Sela, 2009).

One of the criticisms of the program was that the economic model used at the beginning of the program allowed the centers to cut participants’ benefits and to profit from those cuts.

While the economic model had since been modified, the newspapers and the people opposed to the program kept reminding the public of the original model.

5.8.4 The New Economic Model presented for “Lights for Employment”

The economic model of the program became its Achilles heel. The model had experienced many transformations over the five years after its launch, yet people mostly remembered the initial model where centers were granted money for welfare allowance denials.

One of the significant changes in "Lights for Employment" was a grant of 1,000 NIS a month for a year to compensate for the transition from being unemployed to being employed, since participants lost some rights and allowances that come with the status of being unemployed. Additionally, there was a grant for persistence after four more months. Companies received grants only for successful assignments (Regev, 2009b).

A: That status [of being welfare recipients] has a monetary value. He has extra value than just having a monthly allowance entered to the bank. Once you are on income support- you can buy tickets for public transportation at 50% off, (you are) exempt from the annual television license fee. You can assign the children in the daycare without paying or with paying less. Ok? Not to mention .. Development of a huge industry around this- like giving clothing, and food. Especially among the religious but not limited to, all kinds of organizations that give families food in the weekends- milk cardboard, chickens, a tray of eggs, oil, flour .. I cannot just stand in line and get this. I need to get confirmation that I am receiving income support. Then this status of welfare recipients

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has more financial applications… such as all my debts to the IRS being frozen. Whether I had debts – or bankruptcy- .. or alimony for my ex-wife.. Ok (A.S one of the Center Managers interviewed).

Initially, the plan’s aim was to include only the chronically unemployed from the Governmental

Employment Centers, which was about 80,000 for at least a year. The new program, was intended to reach groups that had not been included until that point, such as areas with high unemployment rates, and mainly Arab and Ultra Orthodox populations. According to the state, they had invested in the WTW program, 480 million NIS thus far, and had gained 500 million

NIS from terminating welfare benefits (Regev, 2009b).

After being unable to reach a full agreement to extend the law, the Treasury and Minister

Ben Eliezer were able to extend the law for four more months in order for a governmental committee formed by Knesset members and social workers to discuss the program and to learn more about it. In the meantime, the Government continued to do everything in its power to try and keep the program running.

Once again, the government tried to use the negative income tax as a tool, claiming that if the program was abolished, the negative income tax would be as well (Eshet, 2008). The Treasury threatened to undo the negative income tax payments (EITC) following the cancellation of the

"Lights for Employment" (Wisconsin) plan. The Ministry of Finance said that EITC, which aimed to raise the income of low-income people and to encourage work, could not be given without including the employment program. " EITC payments are designed to provide an added incentive for the unemployed and increase the gap between unemployment benefits and income support and the wages they can get if they work," said the Treasury. "EITC is part of a package of efforts to get a larger number of workers into employment and cannot be separated” (Horesh,

2010b).

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5.9 The End of the Program

I: So what happened to the program? A: Politics. Yes. It sounds too easy an answer, but it is not. I was in most of the Knesset debates .. Politics in its most superficial level. And second of all, off the record, it feels like a market in there. Because of the government structure, the system of the government, the coalition. Sometimes I think that the program has paid a price that was not even related to the program. It became the scapegoat. Another problem was that the program did not have a father. There was not someone who really was ready to take it under its guidance .. but that's how the system works .. someone who would say “this is important to me and I'm going for it”. Ben-Eliezer at first was like that, but then .. Barak retired .. so Ben-Eliezer was no longer there, and it's a new minister again…(anonymous interview).

On April 29, 2010 the Wisconsin program closed. The Welfare Committee that was in charge of the program headed by Knesset member Katz did not extend the law for four months as requested by the Ministry of Finance and the Prime Minister. “Nothing will change in four months as nothing happened in the three months of the current extension of the program," said

Mr. Katz.

A day after the WTW program canceled was the 1st of May –The International Labor

Day, which signifies solidarity between unions and symbolized the fight for better working conditions. The nonprofit organizations along with the unions presented the cancellation of the

Wisconsin program as an impressive achievement in the struggle to reduce privatization, and return responsibility for providing public services to the government (Goren, 2010).

Rehabilitation programs, payments for nannies, after-school activities and even training courses were halted overnight. In the Agens center, the “billing clerks” certification course that was supposed to end in four days, including the billing clerks’ certification test, was terminated.

“The recipients, who were already registered for the course and for internships at law firms, now walked around the center, heads down, refusing to believe. In the name of "society”, they were thrown into the street, in the name of principles such as human dignity, fair wages, and against the red flag of privatization. It did them a great injustice” (Sela, 2010a; A.S Interview).

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"The absolute responsibility for the death of the program," says Mr. Melamed from a

“Yadid” ("friend") non-profit organization “belongs to the arrogance and bullying of the Ministry of Finance. From the beginning of the decade, the Tamir Committee proposed that the operators of the program along with the commercial enterprises would be the Governmental Employment

Service and non-profit organizations. The Ministry of Finance canceled this recommendation as well as to other recommendations and instituted an unacceptable economic model of "work first", or in plain language "Please save us as many allowances as possible as fast as possible."

"Finance must understand that real social change does not come from aggressive behavior"

(Moskona-Lerman, 2010).

5.10 After the Storm

The Prime Minister instructed Minister Ben Eliezer to submit within two months an alternative plan, correcting the deficiencies in the WTW program (Goren, 2010). Less than a week after the program ended, the office of Trade, Industry and Labor presented a new plan – nationwide this time, based on the same principles as the Wisconsin program. The main change was that only a state representative could deny participants a welfare allowance. The centers would only benefit the employee and only state representatives could "harm" them. Mr. Farhi, the Governmental

Employment Service representative, said in a meeting that the outline of “Lights of Employment

"was good, with the appropriate changes". Knesset Members that did not approve contining the program argued that the Ministry of Industry was seeking to bring the program in the back door and that "the Israeli government once again denies responsibility and prefers to glue state funds to profiteers and work mediators" (Goren, 2010).

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Two weeks after the "Lights for Employments" was canceled, the National Insurance reported a significant increase in the number of welfare applicants. According to the National

Insurance, the rise in the number of welfare applicants was due to the closure of the WTW program. This not only included workers who had lost their jobs or were fired following the closure of the program but also new applicants who were also the "professional unemployed".

These were working citizens who could not participant in the program due to the demand that they participate for 40 hours a week and had therefore had their allowance denied for not attending the centers. Now they were able to go back and demand income from Social Security

(Sela, 2010b).

5.10.1 Fraudulent or Unhappy?

According to the centers and Social Security, many of those dropped out of the WTW program were people who chose not to participate, due to the long time that took to actually receive benefits while working without reporting. According to social organizations, the program caused so much harm and stress to some recipients that they chose to leave the program and not attend even though they needed the money (Sela 2010b). However, some of the returning applicants’ for benefits were people who had to stop working when the program ended supportive services such as, after-school activities and subsidized transportation to jobs. The cancelation of the program throws them back to the starting gate, of being without work or hope (Sela, 2010b).

5.10.2 Final Governmental Report

A year after the program ended, a final report was published online. The report was never officially printed or provided to the newspapers because the programs’ budget was canceled. The

139 findings indicated that 41% of those who participated in the program started working during the program. High persistence rates were found among all groups (age, education, immigrants, veterans, and others). 80% of those who entered the program and worked when the program closed were still working eight months later. About 50% of respondents who worked during the program received grants for work perseverance. In the areas where the program was implemented, there was a significant improvement in regional employment. First, there was growth in employment including an increase in the number of hours worked. Second, the number of full-time employees increased. Finally, average monthly income from work improved. About

50% of the WTW program participants received at least one support service (travel services, help with daycares, and etc.). Finally, 50% of participants who started working during the program indicated that at least one of the components of the employment assistance had helped them to enter the labor market (Neon and Fishman, 2011).

According to Meseguer (2005) there is a need to remember that policy diffusion is a learning process and can come from a failed program as well as from a successful program. The failures are no less crucial than success. While examining the final report, some changes were made and the program presented a new way of thinking. However, the program failed to change public perceptions toward welfare and became a key example of a failed program and failed attempt of the government to privatize social services in Israel.

5.11 Conclusions and Discussion

The purpose of the chapter is not to judge whether the Israeli program was good or bad but rather to present the model and both sides of the debate. It is possible that the dominant American model and the lack of other initial alternatives hurt the program in its early stages, which made it

140 difficult to change in later stage. From the program’s initiation in 1998 to the beginning of the trial in 2005, the American model dominated. The reason was the hegemony that was given to

“America” over Israel, which gave the program its accreditation. An example can be seen in the name of the program, which was referred to as "The Wisconsin plan”.

The main purpose of this chapter was to examine the implementation process of a policy that was being transferred across local borders. Welfare to Work program or activation policy that had become common among the developed countries was considered problematic in the eyes of "Socialist Israel". The diffusion of ideas from one country to another is complex and includes many steps and many players both at the global and local level. The Israeli Wisconsin program involved various players with different interests that were greatly affected by the local and global level.

It is clear that the program in its initial implantation did not fit the Israeli environment, culture, perceptions, or ideology. When the program was adapted to Israel, the set of attitudes and perceptions that came along with it did not transport well. While the program kept changing, the learning process needed to change the public’s attitudes was neglected. It is possible that this played a significant part in the abolishment of the program.

The results of the program, suggests that officials have an incentive to initiate policies supported by voters to reduce the risk of electoral losses for their parties and for themselves. It is possible that because the government was following a popular trend, the diffusion process become a symbolic act whereby politicians sought to enhance their authority, credibility, and appear progressive (Meseguer, 2005). This concert has been a key systematic innovation within the emerging tradition of opinion/policy research (Brooks and Manza, 2006) This, along with an

141 unstable government and security issues that the Israeli state was facing during the years the program took place, influenced the program’s ability to grow and function.

The use of media revealed a lot of conflicting information and confusion. There was a collision between the institutional perspectives of the government that a healthy society is a working and productive society and the individual perspective being mainly represented by the nonprofit organization which posits that if one person hurt then, the process as a whole is not worthwhile.

Since the program had ended by the time this dissertation was written, the fact that this is a retroactive analysis needs to be taken under consideration. This made it difficult to receive welfare recipients’ perspective but rather more the general public and political notion.

While Brooks and Manza (2006) showed the connection between mass-opinion and social reforms, this chapter extended this notion and shows how public attitudes at the state level become a vital part of state policymaking.

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CHAPTER SIX

CONCLUSIONS

This dissertation asked whether we can successfully transfer policies from one country to another and how attitudes toward welfare state issues and government responsibility influence welfare reform outcomes. Specifically, this dissertation asked how the Israeli public’s perceptions of welfare influenced the outcomes of the Welfare-to-Work reform in Israel, and whether the problems with the Israeli Welfare-to-Work program could have been prevented. Finally, this dissertation also examines the role of cultural attitudes and social agents' representation in the policy diffusion process.

Chapter One presented the background of contemporary activation policy and visited its historical roots. Chapter Two examined activation policies, focusing on Wisconsin’s Welfare- to-Work reform, a program that is considered a milestone among activation policies around the globe and a model for other nations. Other activation policies reviewed were Great Britain’s and the Netherlands’ policies. These two countries along with the United States were chosen to operate the activation policy centers in Israel. Chapter Three is a quantitative analysis of attitudes toward welfare issues such as benefits and unemployment, and the government’s role in the labor force. This analysis compared attitudes in the United States, Great Britain, the

Netherlands and Israel and found significant differences between the three operators and Israel.

The differences in attitudes were primarily present at the country-level of analysis and less present at the individual-level analysis, which strengthens the hypothesis that attitudes are often reflections of the general culture and are the results of historical sensitivities. Chapter Four reviewed the Israeli foundation of the welfare state and the socialist ideology that guided Israeli

143 governmental policies for many years. The chapter also described how unemployment became a social problem that could no longer be resolved in the conventional socialist way and using tools that were ineffectual in a global market. This need for change also resulted from a need to move toward privatization. Specifically, Israel was forced to adapt to the neoliberal view that had become highly accepted and expected among Western countries. The Israeli government therefore chose to search and see “what others have done”, which resulted in an activation policy guided by the American model of Wisconsin Welfare-to-Work reform. Using qualitative research methods, Chapter Five follows the adaptation process from the initiation of the program through to the continuous changes required to tailor it to Israeli culture. From the beginning, it was clear that the program in its initial approach did not fit the Israeli environment, because the public and the target population of the programs held different views about how the Israeli government should deal with the needy. While Israel did attempt to implement the program efficiently by using foreign companies’ knowledge and experience, government officials did not pay sufficient attention to the social perceptions that accompanied the program. Yet, without changing public perceptions, the program could not survive due to the opposition of the Israeli population.

In answering the research questions, past evidence suggest that policies can be transferred from one country to another, as in the case of Great Britain and the Netherlands, that adopted their Welfare-to-Work policy from the United States. There are many other examples of this adoption of reforms from around the globe (e.g. Weyland, 2004). However, when policy is transferred to a new environment with a different culture and customs, perceptions become an important component to consider. It is important to acknowledge that reforms are not only a set of rules and regulations, but also a set of norms and related attitudes (Meseguer, 2005). In

144 relation to public perceptions and their influence on the Israeli welfare reform outcomes, this dissertation found significant differences among the Israeli population and the other three operators. Citizens of the Netherlands, Great Britain, and the United States were more similar in their social and economic attitudes toward government and welfare issues. These attitudes differed from Israeli citizens’ perceptions, which favored socialist views that favored more government responsibility to take care of its citizens. Additionally, differences were found between the two Israeli groups- the Jewish and the Arabs- which highlight the complexity of

Israeli society.

The outcome of the Welfare-to-Work reform in Israel needed to be addressed not only by looking at the statistical patterns, but also in terms of the intense public debates raised in Israel.

Public attitudes toward welfare and government rules played a significant part in the final abolition of the program. The Israeli government chose to diffuse the WTW policy, being familiar with the complexity of Israeli society. However at no stage did the foreign operators or the local operators make a genuine effort to familiarize the public with the essence of the program. There was a need to educate the public and to highlight the attitudes that accompanied the activation policies, such as the importance of becoming an active, contributing member of society, and of providing your family with a better future and more possibilities. This need for a change in perception was ignored. The social component of this reform was neglected while the economic model became the center of the public debate. Debate centered around whether the problems with the Israeli Welfare-to-Work program could have been prevented. This dissertation suggests that at least some of the problems could have been predicted and resolved in advance.

As is still the situation in Israel, minimum wage and low-skilled jobs pays amount that almost identical to receiving welfare unemployment allowances. According to the economic

145 model of welfare allowances in Israel, people who choose to stay unemployed rather than working in minimum wage jobs (which may result in losing unemployment benefits) receive almost equivalent money as those who work. The solution Welfare-to-Work presented was to reduce benefits and to sanction welfare recipients in order to show them that work could be more lucrative. However, some argued that instead of reducing the allowances, and cutting benefits

(e.g. deducting municipal tax benefits for those who receive allowances) the government should add these benefits for working people. The change to a new policy needed to demonstrate that returning to work would not harm the conditions of the unemployed but rather would benefit them, and that those who were unemployed would earn enough to meet their basic needs. A poor man does not good for the economy and is not drives the wheels of the economy. Preventing poverty is in the cold economic interest of the State of Israel, and should be treated as such, despite the apparent paradox of giving more benefits to improve the economic situation.

It is true that in many countries, many of the unemployed who were "pushed" or

"prepared" to enter the labor market have integrated into the market (Mead, 1999). It is also worth noting that the advantages of training the unemployed to enter the labor market are not just moral and ideological (for policy makers and the public), but also orivide psychological benefits for the unemployed and their families. It is also not an instant gain but an investment in the future of citizens and society. Studies often do not refer to an increase in GDP caused by the fact that a person produces something instead of getting a benefit. The actual production is of economic significance, so although it is not easy to measure, it benefits the state. thus, it is wrong to assume that the investment will not pay off, as has been argued by those opposed to the WTW program. However, one should keep in mind that the economic circumstances that led to the relative success of placements in the U.S. were not available during the reform, which happened

146 during an economic downturn in Israel. The activation of the program at that time was a risk due to the economic situation, and so the government faced a situation in which the funds might be wasted.

It is clear that some groups that do not work for a long period are suited the educational agenda of the Welfare-to-Work program. However, the large differences between groups in

Israel meant that they could not be treated with the same policy tools. The Orthodox population cannot be dealt with using the same tools as the Arab population, which suffers from high unemployment (Khattab, 2006).

It is possible that the problematic situation of encouraging employment should come not in the form of sticks to those who are unemployed but as carrots for employees. Although it will be expensive, economists often assert that in hard economic times, a temporary increase in expenses is exactly what is needed to stimulate growth in the economy. Also, if you take economic measures such as disconnecting or privatizing the Governmental Employment Service, the taxpayer can also save money on professional work more efficiently by these entities. All measures must be taken with caution and wisdom.

There is a huge difference between Roosevelt’s speech, "The Only Thing We

Have to Fear Is Fear Itself" and Prime Minister Sharon’s 2004 speech, presented during the meeting that approved the Israeli Wisconsin Welfare-to-Work reform, that “they should clean roads. Our cities are dirty, work in hospitals or be a security man in a kindergarten. Even if it is not paid work, at least they will do something in return for the unemployment allowance they receive. From this moment, you do not get anything without giving something back. The economy is on fire, we cannot wait for the results of the experiment. We need people to start working now." They may both be right. Cleaning provide an excellent example to demonstrate

147 momentum and inspire hope and economic growth, as shown by Giuliani in New York City.

Nevertheless, Sharon elected to emphasize fear, in a different way than Roosevelt. Instead of putting the spotlight on the unemployed themselves, it is possible that if he had emphasized the importance of cleaning roads and doing community work, it would have made a difference by encouraging people to feel Zionist and patriotic instead of being perceived as a problem for society. Maybe there is a need to look further and to create an educational program in schools about the importance of work, that one should not be ashamed of any type of work, and to create a reward system for manual labor.

This dissertation has provided an inside perspective on the diffusion of policy across countries, which is becoming common in the age of globalization. Currently, decisions are not made in isolation, but often build on the experience of other nations. Ideas and models travel fast in the modern world, giving rise to waves of reforms (Weyland, 2004). Foreign models become an important source of input for governments and policymakers. Governments need to learn how to maximize the benefits of this learning and diffusion process and to avoid problems it can cause.

This dissertation offers insight into the Israeli effort to adopt WTW policy, their experience, problems and results. This dissertation suggests some advice for policymakers to encourage beneficial learning from others experience. It is unrealistic to assume that policies can be diffused based on an ideal type without any adjustment.

To reiterate my results, public attitudes can influence the outcome of efforts to adopt policies designed in other nations to serve different population groups. By anticipating problems that might arise in a different culture, population, and ideology, it is possible that the program could

148 have survived and could have had a positive effect on the Israeli labor force and in societal perceptions toward the benefits this policy contained.

Further research needs to be devoted to an examination of the operationalization, learning and imitation process of policy diffusion. The Israeli case study presented here is an example of the problems, but also of the advantages, of exporting policy from one country to another. This dissertation highlights the problems as well as the incentives in the policy diffusion process.

149

APPENDIX A

INTERVIEWS

Governmental Mr. Shlomo Kremer – CEO of Managing Economic Consultants Ltd. One of the program advisors and creator in the very early stages of the program Mr. Sharon Kedmi - 2010 Director General of the Industry, Trade and Labor Ministry of Israel. Mrs. Dorit Novek- The first director of the Mehalve program Mrs. Galit Yakobov - Legal advisor of the Mehalve program and the last director of the ‘Orot L’etasuka’ program. Mr. Amichai Katz - Mehalev administration communications director (heading of the bidding process). Professor Yossi Tamir- Advisor for employment at the Ministry of Industry and Trade Mr. Jim Clark – One of three American private agents that were hired by the Israeli government to assist with implementing the program in Israel Mrs. Batya Choen- Senior Coordinator, Income Support Division, National Insurance Institute/

None-Profit Organization Rabbi Idit Lev – Rabbinic for Human Rights - opposed the welfare-to-work program worked in the Hadera area.

Mehalev Centers Mrs. Tirza Bar-Chaim- Nazareth Center Manager / Agam Company Mr. Mickey Manor- Ashkelon Center Manager / IWS Company Mr. Arie Sivan- Natanya-Hadera Center Manager / Agents Company Mr. Meshi Shryber- Jerusalem Center Manager / A4-E Amin Company

Newspaper reporter Mrs. Ruti Sinai- Haretz (Hebrew Lit. The Land) reporter

Outsourcing- Evaluation and Consulting Agency Mrs. Jhodith King- Myers-JDC-Brookdale Institute (Research that was conducted for the government) Mrs. Nitzan Kollet - Ernest and Young advisors (E&Y), private company hired by the government to manage the IT system and later reported and evaluated the centers' activities. Ms. Michal Scala - Ernest and Young advisors (E&Y), private company hired by the government to manage the IT system and later reported and evaluated the centers' activities.

150

APPENDIX B

TIMELINE THE ISRAELI WELFARE TO WORK PROGRAM

February 1992 USA Wisconsin Works welfare

2001 Government Decision 2195. The Economic Policy for 2001: Strengthen Welfare Receiver Ability to Integrate in the Labor Market.

2001 First Tamir Committee

January 2003 The Israeli Legislative elections The 30th Israeli Government Prime Minister: Ariel Sharon Minister of Finance: Binyamin Netanyahu (03-05)/ Ehud Olmert Minister of Industry, Trade and Labor: Ehud Olmert

2003 Accepting Chapter Seven in the Arrangements Law for 2004. Economic Policy Act for Financial Year 2004 (Legislative Amendments) Law 2004).

January 2004 Israeli Parliament decides to experiment with activation policy programs. The beginning of the outsourcing and privatization process in the welfare service.

2004 Gadish Committee approval of established business model.

June 2004 International tender in order to outsource Mehalev program.

December 2004 Four foreign companies that linked to four local employment companies win the tender.

February 2005 Contracts are signed between the government and the companies. Assigned: Ms. Dorit Novak, head of the Wisconsin program August 2005 The Disengagement plan

September 1st 2005 Mehalev begins. 18,000 participants in four centers.

December 2005 Nomination of Yaari Committee

February 2006 Half a year after the program starts 15% find jobs.

March 2006 The Israeli Legislative elections The 31st Israeli Government

151

Prime Minister: Ehud Olmert Minister of Finance: Abraham Hirshzon / Ronny Bar-on Minister of Industry, Trade and Labor: Eli Yishai

June 2006 First Dinur Committee

September 2006 Second Tamir Committee

September 19th 06 Mrs. Dorit Novak – head of the program resigns. Mr. Moses Levian- Israeli Wisconsin Programs’ Head

June 2007 Second Dinnur Committee

July 31st 2007 Mr. Eli Yishai, former head of Industry, Trade and Labor Minister of Israel stops the program and changes it to “Orot L’tasuka”.

Mr. Ron Bar-Yosef - Chairman Lights to Employment Program Manager

December 2007 Yaari Committee Report

Feburary 2009 The Israeli Legislative elections Prime Minister: Binyamin Netanyahu Minister of Finance: Yoval Stynitch Minister of Industry, Trade and Labor: Binyamin Ben-Eliezer/ Shalom Simhon

Attorney Galit Yakubov - Chairman Lights to Employment Program

April 29th 2010 Expiration of the Welfare to Work Experiment agreement

152

APPENDIX C

QUESTIONNAIRE GUIDE FOR FORMAL INTERVIEWS

A. People with different positions in the program implementation: (**the questions asked will be chosen from the interview guide according to position of the interviewee)

1. Can you please elaborate about your background and position during the ‘Mehalev’/ ‘Light for Employment’ program? Prior to the program: 2. What was the leading policy in Israel prior to the W-2 program? Why was there a need for a new program? 3. How did you first hear about the W-2 program? What did you think about it? 4. Are you familiar with the decision process that led to choosing the Wisconsin Welfare to Work program as a model? Were any other programs considered? 5. What were the main goals of the program? During the program: 6. Can you elaborate about the implementation process, and explain what was done in order to tailor the program to the Israeli environment? 7. Can you provide an overview of the adjustments that were made to the Wisconsin W-2 model to fit to the Israeli population and labor market? 8. Why were these four areas (East and West Jerusalem, Nazareth and Nazareth Ilit, Hadera and the villages of Wadi Ara, and Ashkelon and Sderot) chosen to participate in the first stage of the program? 9. What was the rationale behind choosing the specific classes that were given in the centers? After the program: 10. Do you feel that the program is considered a success? In what way? 11. Which elements of the program would you keep and which would you change? 12. Do you remember any special cases/stories of people who took part in the program (positive or negative)? 13. Overall, what do you think are the pros and cons of the program? What would you change? Have you talked with other key members about these issues? 14. Is there anything important that I should know and didn't ask you?

153

B. Members in charge in the centers: 1. Can you please describe your background and position during the ‘Mehalev’ program? (i.e. background, education, prior or current occupation). 2. How did you first hear about the W-2 program? What did you think about it? 3. What was your professional preparation for your position? Who was in charge of the preparation? 4. Could you please describe your first period in the center? 5. Do you remember any special cases/stories of people who took part in the program (positive or negative)? 6. What kind of training did the center offer? From your experience, what training was most and least useful in the center’s activities? 7. Looking back, do you feel that the centers were a success in bringing people back to the job market? 8. Overall, what do you think are the pros and cons of the program? What would you change? Have you talked with other participants about these issues? 9. Is there anything important that I should know that I didn't ask you?

154

APPENDIX D

HUMAN SUBJECTS APPROVAL

Office of the Vice President For Research Human Subjects Committee Tallahassee, Florida 32306-2742 (850) 644-8673, FAX (850) 644-4392

APPROVAL MEMORANDUM

Date: 7/8/2010 To: Orit Fisher [[email protected]] Address: Sociology Department, Florida State University, 526 Bellamy Building, Tallahassee FL 32306-2270 Department: Sociology

From: Thomas L. Jacobson, Chair

Re: Use of Human Subjects in Research Activation policies- Wisconsin welfare to work program and its implementation in Israel The application that you submitted to this office in regard to the use of human subjects in the proposal referenced above have been reviewed by the Secretary, the Chair, and two members of the Human Subjects Committee. Your project is determined to be Expedited per 45 CFR Â§ 46.110(7) and has been approved by an expedited review process. The Human Subjects Committee has not evaluated your proposal for scientific merit, except to weigh the risk to the human participants and the aspects of the proposal related to potential risk and benefit. This approval does not replace any departmental or other approvals, which may be required. If you submitted a proposed consent form with your application, the approved stamped consent form is attached to this approval notice. Only the stamped version of the consent form may be used in recruiting research subjects. If the project has not been completed by 7/6/2011 you must request a renewal of approval for continuation of the project. As a courtesy, a renewal notice will be sent to you prior to your expiration date; however, it is your responsibility as the Principal Investigator to timely request renewal of your approval from the Committee. You are advised that any change in protocol for this project must be reviewed and approved by the Committee prior to implementation of the proposed change in the protocol. A protocol change/amendment form is required to be submitted for approval by the Committee. In addition, federal regulations require that the Principal Investigator promptly report, in writing any unanticipated problems or adverse events involving risks to research subjects or others. By copy of this memorandum, the Chair of your department and/or your major professor is reminded that he/she is responsible for being informed concerning research projects involving human subjects in the department, and should review protocols as often as needed to insure that the project is being conducted in compliance with our institution and with DHHS regulations.

155

This institution has an Assurance on file with the Office for Human Research Protection. The Assurance Number is IRB00000446. Cc: Jill Quadagno, Advisor [[email protected]] HSC No. 2010.4490

The Florida State University Office of the Vice President For Research Human Subjects Committee Tallahassee, Florida 32306-2742 (850) 644-8673, FAX (850) 644-4392

RE-APPROVAL MEMORANDUM Date: 5/23/2012 To: Orit Fisher [[email protected]] Address: Sociology Department, Florida State University, 526 Bellamy Building, Tallahassee FL 32306-2270 Dept.: SOCIOLOGY

From: Thomas L. Jacobson, Chair

Re: Re-approval of Use of Human subjects in Research Activation policies- Wisconsin welfare to work program and its implementation in Israel

Your request to continue the research project listed above involving human subjects has been approved by the Human Subjects Committee. If your project has not been completed by 5/21/2013, you are must request renewed approval by the Committee.

If you submitted a proposed consent form with your renewal request, the approved stamped consent form is attached to this re-approval notice. Only the stamped version of the consent form may be used in recruiting of research subjects. You are reminded that any change in protocol for this project must be reviewed and approved by the Committee prior to implementation of the proposed change in the protocol. A protocol change/amendment form is required to be submitted for approval by the Committee. In addition, federal regulations require that the Principal Investigator promptly report in writing, any unanticipated problems or adverse events involving risks to research subjects or others.

By copy of this memorandum, the Chair of your department and/or your major professor are reminded of their responsibility for being informed concerning research projects involving human subjects in their department. They are advised to review the protocols as often as necessary to insure that the project is being conducted in compliance with our institution and with DHHS regulations.

Cc: [] HSC No. 2012.8178

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BIOGRAPHICAL SKETCH

Orit is a native Israeli. She earned her Bachelor of Arts in Interdisciplinary Studies from Bar Ilan

University in 2004, and a Master of Art in Organizational Behavior from Bar Ilan University in

2007 in Israel. She began doctoral studies at Florida State University in Fall 2006, earning a

Master of Science in Sociology in 2008 and a PhD in Sociology in 2013. Her interest areas are

Globalization, Social Policy, Welfare State, Organizations and Social Psychology.

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