in 1973 katz was elected to the knesset on the labor party list, but gave up his seat before the knesset opened in order to establish the brookdale institute of gerontology to research ageing in israel. in 1977 he joined the democratic movement for change. the party joined the first government of menachem begin, and despite not being a member of the knesset, katz was appointed minister of labor and welfare. during his tenure, katz took it upon himself to form a mechanism to preserve the value of nii grants from erosion from the rapid inflation affecting israel at the time. he also directed knesset legislation which transferred financial funding to the needy from the welfare offices to the nii (income maintenance bill), as well as the law of nursing insurance which granted funding to pensioners in need of nursing care monetary or physical assistance. he was also among the initiators and first activists of the project for the rehabilitation of neighborhoods. he felt that the emphasis of the project should be on social change and not on rehabilitation of structures. however, his position on this issue was not accepted. katz served as minister of labor and social affairs until the end of the government’s term of office on 5 august 1981.