In a year in which the global economic crisis hit most economies around the world, income inequality over the past year increased sharply in Israel, according to the annual report released on Sunday by the Adva Center, a non-profit think tank that provides information on equality and social justice in Israel.
"The government and decision-makers are putting all the efforts to boost a renewal of growth in the economy. However, economic growth by itself will not reduce inequality. In 2004 to 2008, the economy experienced years of consecutive economic growth, while inequalities widened. One of the reason for this development is that growth itself was unequally distributed as investments were benefiting only a certain part of the economy and certain areas of the country," stated the report.
"Increasing equality and social justice requires a fair investment policy which includes all sectors of the economy and all areas of the country coupled with a government policy which advances education, the public health care system and a social safety net. In the long-term, another condition for economic stability and growth is a solution to the Israeli-Palestinian conflict."
According to the report, which measured the pre-tax salaries of Israel's population, the top 10 percent of earners saw a significant increase in their incomes during 2008, while the rest of the population made less money. While women and ethnic minorities saw their earnings decrease over the past year, senior managers employed at the top 25 companies listed on the Tel Aviv-25 Index, enjoyed large bonuses in their incomes. The annual average salary of a top manager rose by 7% last year to NIS 9,35 million or NIS 779,000 a month - 95 times the average salary in the economy.
In addition, the research found that the average salary for women over the past year was NIS 6,077 a month, only 63.1% of what men earned during the same period. Women on average received NIS 41.2 an hour or 82.7% of what men made per hour.
Furthermore, the proportion of middle class households - which the Adva Centre defined as those for which income is between 75% and 125% of median income - fell to 27.1% in 2008 from 27.7% in the previous year, and their share of the national income dropped to 20.7% from 21% a year earlier.
Stark inequalities were also noted between the Ashkenazi and Sephardi populations, compared to those from other ethnic backgrounds.
Average monthly salaries for those of European or North American origin rose by 1%, while the salaries of people born to parents from Asia and Africa decreased by 6%. This year was the first time such a discrepancy was noticed, the report said.
In the Arab-Israeli population, which is recognized as one of the weakest socio-economic communities in Israel, salaries went down by 4% from 71% of the national average in 2007 to 67% last year. Net incomes for the Arab-speaking population reverted to the same level they were in 2000, according to the report.
In addition, wide social inequalities were found in the area of basic education and higher education. In 2008, only 44.4% of the 17-year-old population finished school with a basic diploma, the lowest rate in the last decade. In the previous year, the rate stood at 46.3%.
The rate of students in the age of 20 to 29 living in Jewish neighborhoods and studying for a first degree at university stood at 10.1% in 2008 more than double the rate of students the same age group living in Arabic neighborhoods which stood at 4.9%.
Furthermore, in a year of which many people lost their jobs as a result of the global economic crisis, social inequalities regarding the accessibility to health care services widened as the expenditure of households on private and complimentary health insurance continued to rise. The average expenditure of households in the top 10% of earners increased to NIS 341 last year from NIS 327 in the previous year.