The state has failed in the operation of welfare-to-work programs (Wisconsin plan), says State Comptroller Micha Lindenstrauss in a sharply worded report on the programs published today. He said that the state agencies failed to properly supervise the private companies that are participating in running the programs, and no verification was carried out to see that targets were met.
Lindenstrauss found that the Wisconsin plan did not properly distinguish between people who could work and those incapable of work, thereby harming the latter. He also found that the lack of supervision resulted in unjustifiable harm to welfare recipients, without improving their ability to participate in the labor force.
In February 2005, the government signed contracts with four companies experienced in operating welfare-to-work programs to operate employment centers for two years in four pilot areas: Nazareth and Upper Nazareth; Hadera and its environs; Jerusalem; and Ashkelon and Sderot. In August 2005, the companies began operating, while the Ministry of Industry, Trade and Labor set up an office to supervise them. The office included representatives of the ministry, the Ministry of Finance budget department, and the National Insurance Institute income support department.
The contracts with the companies stipulated that they must reduce income support payments in their areas of operation by at least 35%. In the first year of operation, 10,800 job placements were recorded for people participating in the program, and income support payments in the areas of the program fell 51%.
However, following complaints of unacceptable attitudes by the companies towards the participants in program, in January 2006, the Knesset State Control Committee asked the State Comptroller for an opinion on the program’s performance and the realization of its targets. The Office of the State Comptroller examined the activity of two of the companies: AGENS De Werkende Kracht BV in Hadera, and Agam Nazareth and Upper Nazareth. It also examined the Ministry of Labor office supervising the program.
Lindenstrauss found that, even though during Knesset discussions in December 2003, representatives of the National Insurance Institute and social organizations warned that there were recipients of income support who were capable of work but could not meet the criteria of the Wisconsin plan because of limited work skills, in practice the employment test used by the plan was unsuited for these people. Lindenstrauss believes that, as a result, the Wisconsin plan “is liable to severely harm participants who fail to meet its criteria.”
Lindenstrauss found that, before the Wisconsin plan was launched, the Ministries of Finance and Industry, which initiated the Wisconsin plan, and subsequently the operating companies and the Ministry of Industry’s supervision office, should have been ready to minimize possible damage to people with limited job skills.
Lindenstrauss said that the private companies running the program had a built-in conflict of interests: on one hand, they had to ensure to the wellbeing of the participants in the program; while they aimed to increase their profits on the other. Public supervision of the companies was therefore critical in order to achieve the Wisconsin plan’s targets, without the authority given to companies being abused by them.
In practice, the government only partially supervised the companies, which began four months late and was based on only two auditors. The Office of the State Comptroller believes that it was unreasonable for supervision of a program of this complexity, sensitivity, and innovation, carried out by four companies whose work procedures varied from each other to be handled by only two supervisors.
Published by Globes [online], Israel business news - www.globes.co.il - on June 4, 2007
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