Focus on weakest pupils ‘could boost GDP 301%’

By
November 15, 2016 06:59

Shoresh Institution study: Socioeconomic situation a ‘gigantic missed policy opportunity.’

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Students in a classroom [Illustrative]. (photo credit: REUTERS)

If Israel were to concentrate on raising the achievement levels of its weakest pupils, it could potentially increase its GDP by 301% over the next eight decades, according to a study released Tuesday by the Shoresh Institution for Socioeconomic Research.

The study, conducted by the institution’s president Prof. Dan Ben-David, chronicles Israel’s unique socioeconomic story – what Ben-David refers to as the country’s “gigantic missed policy opportunity” – detailing some of the fundamental changes necessary for implementing a positive change in direction.

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“For years, I have been writing and speaking about the importance of education as the fundamental instrument for dealing with the root determinants of poverty, inequality and economic growth,” Ben-David said.

“The emphasis needs to be not only on the quantity of education [number of schooling years and number of degrees] but on the quality of education.”

The study drew upon the scores of the recent PISA international assessment exam, which found that onethird of Israeli children attained a score below 420. That reflects a minimum basic level of knowledge needed for coping in a modern and competitive economy.

The Shoresh study noted that if Israel would concentrate only on raising the achievement levels of its weakest students to the minimal score of 420, the impact on the entire economy over the lifespan of these children would be enormous – far greater than just raising many of them above the poverty line as adults.

The addition to Israel’s GDP over the next eight decades would be 301% of its current size – estimated at an additional NIS 3,462 billion to the GDP – compared to NIS 1,150b. in 2015.

“When this is the magnitude of the economic gains as a result of upgrading the education levels of just the weakest pupils, one can only imagine the kind of a turnaround that the Israeli economy would experience as a result of a reform that would upgrade the entire system,” Ben-David said.

According to the study, at the beginning of the past decade a difficult recession caused significant increases in the government’s budget deficits and in the public debt. New policies were implemented, designed to halt these increases, leading to substantial cuts in welfare payments.

Ben-David said the cuts in benefits, however, led to a substantial increase in employment – though almost entirely among relatively poorly educated people.

The large-scale entry of new workers had seemingly positive effects, particularly with regards to turnaround in market income inequality.

However, the study stated that since the turnaround resulted primarily from less educated and poorly skilled workers entering the work force, the wages that they began receiving did not sufficiently compensate for the loss in welfare benefits.

This unique dynamic led to outcomes, which Ben-David said were “unseen in any other developed country.”

On the one hand, the market income poverty levels (income before taxes and transfers) in Israel are among the lowest in the OECD, lower even than countries like Sweden, Norway, and Denmark.

However, in sharp contrast, the disposable income poverty rates (income after taxes and transfers) are the highest in the OECD.

Ben-David said this is because the wages received do not sufficiently compensate for benefits that were lost.

The Shoresh Institution’s study shows that this is the principal reason behind the phenomenon of the working poor whose numbers have been rising in recent years.

Ben-David also noted that while the cuts in welfare benefits induced large numbers of poorly skilled and educated to enter the labor force, no effort was made to significantly upgrade the tools and conditions that would enable these new workers to successfully contend with a modern economy.

This lack of investment in upgrading adult skills, he said, is “exacerbated by the fact that primary and secondary education in Israel is among the worst in the developed world.”

“As long as Israel’s education levels remain very low, the system’s graduates will have difficulty remaining above the poverty line in the future, while the entire economy will find it difficult to stop the steady increases in the productivity gaps between the leading developed countries and itself,” Ben-David said. “A systemic reform in the education system requires, among other things, a major change in the way that teachers are chosen, taught and compensated.”

Ben-David concluded that it is still possible for Israel to “change direction.”

Though, he warned, “in light of the fact that a large and growing share of its population is being educated at the level of Third World countries, the ability to implement the necessary changes is continuously declining while the time to do so is running out.”


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