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Wealth and poverty in Israel: social gap widens

As Israel heads for elections on March 2, we cannot help but notice that the campaigns of the various parties have neglected a major issue: the economic situation of its citizens. It’s not too late for this to be rectified.

According to the Adva Center’s annual report released on Wednesday, Israel’s successful economic growth in recent decades has not benefited most Israelis. The report’s authors also offer some sound advice to the next government: “It’s high time for a turnabout in public policy that places the public interest at the center.”

But first, some background. The Tel Aviv-based Adva Center, which was established in 1991, calls itself “a leading Israeli progressive think-and-do tank that monitors social and economic developments.”Its new publication, titled “Israel: A Social Report 2020,” was written by Shlomo Swirski, Etty Konor-Attias and Aviv Liberman, based on household expenditure surveys by the Central Bureau of Statistics. Among its major findings:

• More than 20% of Israelis earn low wages: According to data published by the Organization for Economic Cooperation and Development for 2017, 22.6% of wage earners’ pay was considered low compared with other OECD countries in which the average is 15.4%.

• Some 26% of Israeli households live in poverty or near poverty.

• Increase in minimum-wage earners: In 2017, the percentage of Israelis receiving no more than the minimum wage was 33.6%, up from 30.8% two years before, evidence that many of the new jobs created are paying no more than minimum wage. The proportion of workers making no more than the minimum wage grew in all sectors: haredi (ultra-Orthodox) communities – 55%; Arab communities – 45%; development towns – 37%; non-haredi communities – 31%.

• Israel has one of the most diminished middle classes in the OECD, shrinking more than those of other OECD countries, with the exception of Estonia and Lithuania. Only 53.8% of Israeli households are considered middle class.

• The top income decile (10%), whose average income was NIS 138,000 per month in 2018, gets 12 times more than the bottom decile. The average monthly gross income of households headed by salaried persons from all four sources of household income – wages, capital, income transfers and pensions – amounted to NIS 66,584. This sum is 12 times the average income of households in the bottom decile – NIS 5,501.

• Salary growth lags behind GDP growth: During the two decades between 1968 and 1989, GDP growth was accompanied by a parallel growth in real salaries. However, beginning in the 1990s, the paths of growth diverged, with GDP per capita increasing more than the average salary.

• In 2018, nearly half, 44.7%, of households headed by persons aged 67 and over had no pension income, and fewer than half of households headed by salaried or self-employed persons in the bottom income decile were saving for retirement, 47.2%.  A total of 20.7% of households were not saving for retirement.So what can be done to narrow the economic gaps and make this a more equitable society?

According to the Adva Center, the data presented in the report question the accepted wisdom that “an economy based more and more on market forces” is best. Swirski, one of the authors, argues that “placing the public interest at the center of public policy” does not involve weakening the business sector, but rather strengthening the arms of the state.”“The national budget needs to include engines of equality and not just engines of economic growth,” he says. “The government needs to invest in regions of the country neglected by the business sector. It needs to establish higher wage norms for minimum-wage earners employed in its own services.

“The Israeli government needs to upgrade the public education system and increase higher education opportunities. It needs to deal with the growing needs of the public health system and to halt the process of privatization taking place within it. It needs to develop a public housing option for long-term rentals, and to strengthen the social safety net.”How do the different political parties stand on these questions? It is certainly worthwhile finding out before you vote.

The economic well-being of Israel’s citizens is too important to ignore.