Financial crisis to impact on all social strata, says OECD

Experts predict effects of global financial crisis will impact all levels of society by next year.

By RUTH EGLASH
poor man poverty 298 (photo credit: Ariel Jerozolimski)
poor man poverty 298
(photo credit: Ariel Jerozolimski)
According to both international and local experts, the looming global economic crisis which began with the collapse of the financial sector last month could spread to all segments of society by the middle of next year. The two sectors usually hit first in such crises are the financial/banking services at the top end of the market, followed by construction workers in the housing industry at the lower end of the scale, Mark Pearson, head of the Social Policy Division of the Organization for Economic Co-Operation and Development (OECD), told The Jerusalem Post Wednesday. "After the top and bottom sectors have been hit, it usually spreads to other industries with [the] same usual suspects - new immigrants, the youngest and oldest workers - being affected," said Pearson, adding that while a depression similar to what followed the 1929 economic crash was not likely, a global economic recession was certainly possible. On Tuesday, the OECD published a first-of-its kind report examining poverty levels and growing socio-economic inequalities among its 50 member countries. Israel is not a member of the OECD and was not included in the report, contrary to some reports in the Israeli media. Entitled "Growing Unequal? Income Distribution and Poverty in OECD Countries," the report highlighted the widening socio-economic inequalities in most OECD member nations, despite the global economic growth in recent decades. According to the findings, Mexico and Turkey showed the highest poverty levels and the most contrasting socio-economic gaps, with poor people in Mexico making up some 25 percent and in Turkey at 24%. While Israel's most recent poverty figures - published in February by the National Insurance Institute - were not analyzed by the OECD team of experts, Pearson did note that it has a "jewel economy," with some parts, such as the hi-tech sector, being very strong and other parts being very weak, he said. "In Middle-Eastern terms, the amount of poverty and [socio-economic] inequality in Israel is fairly typical," added Pearson. However, with NII figures indicating that some 1,674,800 (24%) people and 35.9% of children are living below the poverty line, Israel's poverty rates appear to be far above the average for most OECD nations. In response, NII Director General Esther Dominissini told the Post that comparisons with the OECD report were unfair. "If we measure Israel on the same scale as the OECD then we will probably come out closer to US levels," she said, adding that Israel's poverty rate by international assessments was closer to 19% than 24%. "However, even though we are much lower than it initially appears, I am still not proud that we are in double digits and want for that figure to be even less," admitted Dominissini, who was appointed to head the NII in January. She also warned that the looming economic recession - with potential layoffs in all areas of the economy - would most certainly have an adverse effect on Israel's poverty levels. "We need to be careful with our predictions, but if there is a rise in unemployment then there is likely also to be an increase in poverty," she finished.