‘Middle class sector could threaten economic stability

National Insurance Institute official says economy endangered by those who work for a low wage and cannot absorb unexpected financial blow.

By NADAV SHEMER
June 17, 2011 06:42
2 minute read.
Picture from the Parasha

workers 311. (photo credit: Israel Weiss ([email protected]) http://artfram)

The population just above the poverty line is the one most likely to endanger Israel’s economic and political stability in the near future, the National Insurance Institute’s deputy director for research and planning told a panel hosted by The Jerusalem Post in Tel Aviv on Thursday.

Seven representatives from differing sectors – including the public service, hi-tech industry, investment houses and trade organizations – spoke on the panel, where they discussed the state of the economy in the aftermath of the global financial crisis. The participants were near unanimous in agreement that the economy is strong, but they did warn about social instability as a result of economic pressures.

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The NII’s Daniel Gottlieb said 110,000 families currently receive unemployment benefits and that their situation is terrible, but despite the figures they are not the ones who endanger stability.

“Those who endanger stability are those who are just above the poverty line: the person who has a job, who works for a wage that is too low, who works hard and is not able to absorb an unexpected financial blow, [such as an expensive] dental operation,” he said.

If the economy takes a turn for the worse, he warned, “this could push the class above the poverty line below the poverty line…turning people who are not used to being poor into poor people. [Then] they will take to the streets, especially those who are young, frustrated and not so well-educated.”

Gottlieb noted that the NII’s data shows that poverty is gradually shrinking, although he emphasized that OECD figures show Israel still near the bottom of developed countries in terms of equality of income distribution.

On the general state of the economy the panelists were overwhelmingly positive. Hi-Tech Industry Association CEO Oded Hermoni said the conference hosted by his organization in Jerusalem two weeks ago had been its most successful yet, with the “unprecedented” attendance of CEOs and deputy CEOs from all the major American hi-tech companies showing that Israel is still seen as a world leader when it comes to technology.

Daphna Nitzan-Aviram, representing the Manufacturers Association of Israel, said even though exporters are missing out on deals because the strong shekel has decreased their competitiveness, the situation is still good from a demand perspective and sales are still increasing.

Other panelists pointed to key indicators, such as unemployment, which has hit a decades low of 6 percent, and the continued rapid economic growth as proof that the economy is still getting stronger.

A full report on the panel will appear in the financial supplement to the Post’s Friday edition next week.


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