Poverty costing Israeli economy NIS 48 billion annually, NGO report finds

The government has been asked to cut poverty by 40% in order to reach the OECD average.

By
December 13, 2015 17:01
2 minute read.
Boxes of food for the poor

Boxes of food for the poor. (photo credit: LATET)

 
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The economy is losing NIS 48 billion a year due to poverty, according to a study by humanitarian aid organization Latet.

The study, conducted by the ERI research institute, examined the overall cost to the economy, both direct and indirect, of poverty.

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According to the report, the economy loses NIS 36b.

in opportunity cost, or the loss from the potential earning capacity of people who grew up in poor households, while NIS 12b. is lost due to the direct and indirect costs, such as public spending on assistance to populations living in poverty.

These findings were published just days following the annual National Insurance Institute poverty report, which revealed that there are 1,709,300 people, accounting for 22 percent of the population, including 444,900 families and 776,500 children living below the poverty line.

The Latet study, released a few days prior to the publication of the organization’s Alternative Poverty Report, concluded that the economic cost of poverty far outweighs the budget investment needed to eradicate the phenomenon.

The report stated that if the government were to adopt all the recommendations of the Committee to Fight Poverty at an estimated cost of some NIS 7.6b. annually, the expected economic benefits would reach NIS 132b., or a 93% return on the investment, over the period of 2016-2035.

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The Committee to Fight Poverty was appointed by former welfare minister Meir Cohen and headed by Eli Alalouf (Kulanu) and issued recommendations in June 2014 on the actions required by the state to combat poverty in all aspects of life.

The committee called to reduce the poverty rates by 40% to reach the OECD average of 11% within 10 years.

According to the findings the only way to accomplish this goal is to adopt and begin implementing all the recommendations within the next three to five years.

Yet despite the lofty recommendations, to date the government has been unable to allocate the entire portion of the required budget to implement all the necessary recommendations.

“In other words, this is an especially good deal to deal with poverty, in this perspective, the cost of implementing the conclusions of the Committee to Fight Poverty looks like a real bargain for the Israeli economy and society,” said Latet executive director Eran Weintraub.

“So stop telling us that there is not enough of a budget, that the pie is too small or that the blanket is too short. We are not talking about justice or charity anymore, on what should be, on worldviews, social responsibility, mutual support, equality or a concern for the weak.

The excuses are over, we have proof that treatment of poverty costs less than not treating it,” he said.

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