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Adva Center report: Fruits of Israeli economic growth 2014

While Israelis view themselves as part of the West, the majority of societal and economic indexes place the country alongside Southern and Eastern European countries, according to the Adva Center’s annual report released Sunday. According to the report, in recent years the Israeli economy has grown significantly.

Israel was able to penetrate new markets in China, India, and Russia, while the employment rate increased and unemployment decreased. “But the fruits of this growth, rather than trickling down toward the bottom as the policy makers suggest, trickled unnaturally, upwards,” the report stated.
Between 2008 to 2013, the GDP in Israel grew by 3.6%, in comparison to an average of only 0.65% among OECD countries. Despite this, the findings indicated that this growth was “not enough” to bring Israel up to par with Western European countries, as Israel’s GDP per person in 2013 stood at $37,000 compared to $55,000 in Sweden and $45,000 in Germany.

While the economy grew, so did the share of the national income among the employers from 8% in 2002 to 15% in 2012. In contrast, the share of the national income among workers decreased from 67% in 2002 to 62% in 2012.

Furthermore, according to the report, the salaries of 99% of Israelis did not increase in relation to the economic growth experienced these past few years, while the salaries of leading corporate managers significantly increased.

In 2013, the average salary of five top corporate executives in leading Tel Aviv companies was 36 times greater than the average Israeli worker’s monthly salary of NIS 9,212 and 77 times greater than the minimum wage of NIS 4,300.

In addition, the report also alluded to conflicts with the Palestinians from the first intifada to Operation Protective Edge. It stated these are not generally discussed, but have had negative impacts on the Israeli economy, as the country is forced to dedicate substantial resources to its security budget.

With regard to the average yearly salary, Israel also ranks relatively low in comparison to other OECD countries, with a full time employee earning an average of $33,995 in 2013, in line with countries like Spain, Italy, Slovenia, and Greece.

With regard to wage gaps between men and women, the report indicated that in 2013 the average woman’s wage was 68.1% that of her male counterpart. However, when comparing hourly salaries, the wage gap slightly decreases, so that women make 85.6% of male salaries.

With regard to salary inequality among Jews and Arabs, and Jews of Sephardi and Ashkenazi origin, the gaps were even more evident.

In 2013, the average monthly salary in Israel stood at NIS 9,030, while the average monthly salary for Arab employees stood at NIS 6,076.

The data further showed that in 2013, the average monthly salary for Jews of Ashkenazi origin stood at NIS 11,897 compared to a salary of NIS 10,033 among Sephardi Jews.

Another point addressed in the report found that Israel boasted a relatively low unemployment rate of 5.6% as of November 2014. However, the report stated, this statistic is misleading, as it neglects the large gaps between different geographical regions and population groups.

Rates of unemployment were much higher in Arab municipalities than Jewish municipalities, in developing municipalities compared to well established cities and were higher among women in comparison to men.

For example, the report cited that in the Beduin town of Rahat, the unemployment rate as of September 2014 stood at some 33.3% – similar to other Arab municipalities throughout the country such as Umm al-Fahm (30.8% unemployment), Tamara (23.9%), and Sahnin (24.8). In addition, Jewish municipalities in the periphery had much higher rates of unemployment than central cities and localities, such as Yeroham (16.4%) and Dimona (15.4%).

The report concluded that if one statistic could sum up the findings representing inequality in Israeli society it would be the GINI index, which measures the level of a country’s inequality; with 0 being total equality and 1 being complete inequality. According to the OECD findings, in 2011 Israel was ranked fifth out of 34 countries, with a score of 0.377, after countries like Turkey, Mexico, and Chile.

“If another expression of anti-social policies of the government were needed, we received it,” said Prof. Yossi Yonah, a professor at Ben-Gurion University of the Negev who is running in the Labor Party primary on Sunday.

“Netanyahu, Lapid, and Bennett are promoting a concept according to which society serves the economy and not the economy which serves society. This is an economy that sees society as a means to increase the profits and assets of tycoons. It is time to change the order of things – economy in the service of society,” he said.

Lidar Gravé-Lazi