In a semiannual report evaluating continuous developments in the economy, the Bank of Israel concluded that "In Israel, the criteria for unemployment benefit eligibility, especially for young people, is among the strictest in the world."

The Bank of Israel published the report evaluating the second half of 2006 on Wednesday. In the report, Israel Bank harshly criticizes the finance ministry for consistently formulating policies that harm those dependent on unemployment benefits since 1990.

The authors of the report are especially critical of the treasury's new policy that targets unemployment benefactors under 28 years of age. The new policy was included in the recently approved 2007 Economic Arrangements Law, and stipulates a 25 percent decrease in the benefits granted to young people, and institutes a stricter set of criteria for the eligibility of young people.

The report concludes that "according to National Insurance Institute data, a large portion of the young unemployment benefit recipients provide for their own families independently of their parents, and some 30 percent of them have children of their own. It is unreasonable to expect these young people to rely on their parents for financial support while they look for employment. In addition, the new policy especially harms the members of lower socioeconomic levels due to their parents' limited ability to support them."

The report adds that the new policy will not translate into substantial savings for the treasury, in fact, the savings would be marginal.

The Bank of Israel stresses the fact that "the relatively strict criteria young people must meet in order to be eligible for benefits stand out in contrast to the compulsory military service in Israel. The young people serve in the military for a long period of time, during which they are unable to obtain an education or professional training, nor can they amass savings to allow for a long period of job hunting. Young people (in Israel) require a longer period of time to find appropriate employment that would serve as a good jumping off point and would make full use their potential."

The 2007 Economic Arrangements Law states that unemployment benefits granted to people under 28 would be cut by 25 percent, 25-28 year-olds would be eligible for benefits for a period of 67 days, instead of 100 days, and people under 25 would only be able to refuse job offers for 14 days, and those between 25 and 28 would be allowed to refuse offers for 30 days, rather than the 60 days previously given to them.

The Bank of Israel maintains that in most other countries the criteria for eligibility for unemployment benefits are much more lax. In some countries, such as Greece and Austria, the laws governing unemployment benefits are specially geared towards facilitating the process for young people in their first foray into the workforce.

The report says that since 1990, the general public has suffered a consistent worsening in unemployment benefit conditions. Among other things, the period of time during which people can collect benefits has been shortened, the criteria for eligibility has become stricter and the amounts of money granted to the unemployed have been significantly lowered.

According to the report, Israel encumbers the collection of unemployment benefits in several ways: in order to be eligible for benefits, a person must be employed for a full 360 business days prior to collecting unemployment benefits, and these 360 work days must be amassed within a 540 day period, while the person is only eligible for benefits during a much shorter period of time.