OECD: Israel is poorest of all developed countries

Israel ranks 5th among countries with widest rich-poor gap.

By DANIELLE ZIRI
poverty homeless dirty 311 (photo credit: Marc Israel Sellem)
poverty homeless dirty 311
(photo credit: Marc Israel Sellem)
Israel has the highest poverty rate among OECD countries, according to a report released by the 33-nation Organization for Economic Cooperation and Development on Wednesday.
The data revealed that Israel’s poverty rate stood at close to 21 percent of the population in 2011, compared to the 11.1% average among the rest of the members.
In addition, Israel was ranked fifth with regard to income gaps after Chile, Mexico, Turkey and the United States.
Labor MK Itzik Shmuli, one of the leaders of the summer 2011 protests, addressed the report saying that it is “the result of a failed policy that not only left Israel with a budget hole of NIS 42 billion but also placed it at the top of the poorest countries.
“This report only reinforces what we have all been feeling in our stomach for a while: There are too many poor among us and the gaps between the haves and the have-nots are increasing,” he said.
“Even the inflated cleaning and makeup budget of the Prime Minister’s Residence fails to blur this sad and shameful reality,” Shmuli said. “The finance minister should wake up and realize that his plan is worsening the situation further and puts another 50,000 children and 20,000 elderly below the poverty line.”
Opposition leader Shelly Yacimovich (Labor) said the data is an important “warning signal to a government that only yesterday approved a plan to add many more people to the economic cycle of poverty.”
OECD secretary-general Angel Gurría said the worrying findings highlight the need to protect society’s most vulnerable, “especially as governments pursue the necessary task of bringing public spending under control.”
Governments should not neglect fairness when they craft their policies, especially when they reform their tax systems, Gurría added.
A growing divide between rich and poor risks growing even wider if cash-strapped governments keep cutting back the welfare state, the OECD warned.
Weighing into a debate on inequality in developed countries, the Paris-based think tank said welfare spending had mitigated an increase in the wealth gap that emerged with the 2008- 2009 financial crisis, but that was running out.
Excluding social transfers and taxes, income inequality rose more in the three years up until the end of 2010 than in the previous 12 years, a report by the Paris-based think tank found.
“As the economic and especially the jobs crisis persists and fiscal consolidation takes hold, there is a growing risk that the most vulnerable in society will be hit harder as the cost of the crisis increases,” it said.
With many developed countries facing the pinch of austerity, economic inequality has become a hot topic, especially after a European Central Bank study last month found that households in many peripheral eurozone countries are on average wealthier than those in the bloc’s core as a result of higher levels of home ownership.
Long a staunch advocate of free-market reforms shunned by some left-wingers, the OECD has become an increasingly vocal supporter of the welfare state for its capacity to soften the blow of hard economic times.
The study said the pain of the crisis was unevenly spread. Poorer households lost more income from the recession and benefited less from recovery efforts. Children and young people suffered more than the elderly, whose incomes were relatively immune.
Reuters and Jerusalem Post staff contributed to this report.