Israel will join OECD as its poorest member

Report shows benefits of strong growth shared unequally.

By SHARON WROBEL
January 24, 2010 20:09
2 minute read.
Angel Gurria  298

Angel Gurria 298. (photo credit: OECD Web site)

The economy has weathered the global downturn well and is experiencing strong growth, but the benefits are shared unequally, the Organization for Economic Cooperation and Development, said in a report released Wednesday.

As such, Israel is approaching the final stages of being accepted into the organization as the poorest member with the largest social gaps.

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"Israel's deep socio-economic cleavages must be given due priority. Israel's poverty rate is higher than in any OECD country and is almost twice the OECD average," stated the OECD report on the labor market and social policies.

"The high incidence of poverty is linked to high rates of non-employment and a high incidence of low-paid work concentrated among Arab and haredi households as they are often jobless or one-earner families with many children, and relatively low levels of education."

Just over 20 percent of households in Israel are below the relative poverty line, nearly twice the OECD average of 11%, and higher than in Mexico, Turkey and Portugal. Poverty is concentrated among the 20% of the population who are Arab-Israelis, where the poverty rate is around 50%, and the estimated 8% who are Ultra-Orthodox Jews, where the poverty rate is around 60%. Arab-Israeli poverty is fuelled by poor education leading to low-paying jobs for men and by cultural norms limiting learning and working for women, according to the report.

"There is an urgent need to deal with the sources of poverty, with a focus on tackling low participation and attainment in education and employment of Arab Israelis and haredim. This is important for the future of Israel as a society," said OECD secretary-general Angel Gurria in a presentation of the report at a seminar in Jerusalem on Wednesday. "Although public spending and investment on education in Israel is high, at about 8% of GDP compared with an average of 6% in OECD countries, the results are not satisfactory. While the Israeli population as a whole has a high level of education attainment, current Israeli students perform poorly in international student tests, raising serious concerns about the quality of education."

The report praised the reforms under way in state primary and secondary education in support of the New Horizon program and recommended that a similar package be negotiated for higher education.

"Another attempt should be made to boost state tertiary education funding while raising tuition fees and strengthening the student loan program," said the report.

On the whole, the OECD is urging the government to accommodate higher investment in social policies and measures to increase employment participation either by a shift in the composition of government spending and/or an increase in tax revenue.

"The report shows the real picture of the socio-economic situation in Israel," said Social and Welfare Minister Isaac Herzog in response.

"For a long time Israel has not dealt with the problem of poverty. I am convinced that Israel will be able to live up to the recommendations and conditions set out in the report, which provides us with a textbook of how to operate."

In a similar vein, Education Minister Gideon Sa'ar, said that the report was a reflection of the reality of Israel's society.

"Investment in human capital and higher education is the future of Israel," said Sa'ar. "We are going to make every effort to improve teacher skills and qualifications and ease the entry and participation in education for the Arab and haredi sector."


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