soup kitchen 311.
(photo credit: Ariel Jerozolimski)
Data published by the Central Bureau of Statistics on Sunday to mark the UN’s
International Day for the Eradication of Poverty should serve as a wake-up call
for the government’s economic policy- makers.
show that Israel ranked worse than any of the 27 countries that belong to the
EU. For example, in 2008, 29 percent of Israelis were at risk of poverty,
compared to an EU-27 average of 17%.
This means that after various
welfare benefits nearly one-third of Israelis were living under the “poverty
threshold,” which is defined as 60% of a country’s median income. Only Latvia
(26%), Romania (23%), Bulgaria (21%), Greece, Spain and Lithuania (all 20%) came
close to Israel’s worryingly high poverty rate.
figure was income inequality. Israel ranked highest in this category as
well. In 2008, the top 20% of wage earners made 7.5 more than the bottom 20%. In
contrast, the EU average was just 4.9.
Israel’s struggle with rising
poverty and income inequality is nothing new. In January of this year, Mexican
OECD Secretary-General Angel Gurría, a friend of Israel, presented his
organization’s economic survey as a precursor to Israel’s acceptance to the
OECD. Gurría criticized the fact that one-fifth of Israelis live under the
poverty line, which is defined as half of the median income. This is much higher
than the OECD average of 11%.
Particularly unsettling is the fact that
nearly half of all Israeli Arabs are poor. And though they make up just a fifth
of the population, one-third of Israel’s poor are Arab.
The low level of
participation in the labor force, particularly among Arab women and among older
Arab men, is a partial explanation. Over the past few years, Arabs’ poverty
rates have gradually fallen due to higher employment rates. But more needs to be
done to provide the Arab population with better and more education. High-school
dropout rates, while falling, are still over four times higher, at 36%, among
Arab Muslims aged 25 to 34 than among Jews.
Also, though the 2000 Fair
Representation Law was supposed to integrate more Arab Israelis into the public
sector, they remain just 6% of a work force of about 57,000, about the same
proportion as a decade ago. Security concerns might explain part of the
underrepresentation, but not all.
Haredim are another chronically poor
population. About 60% live below the poverty line, due in large part to
low employment rates. This week’s declaration by haredi spiritual leaders that
they would refuse to introduce English, math and science into their schools’
curricula was the latest reminder that our fastest growing population sector –
which will soon make up a quarter of all Israeli 18-year-olds – is producing
students unequipped for the modern labor market.
Bank of Israel Gov.
Stanley Fischer warned in July that the high rates of haredi unemployment were
“unsustainable,’ and it is clear that considerably more efforts need to be made
to streamline the transition of yeshiva students into the job market, after they
perform military or national service.
IN THE past decade, economic
policy-makers – including Prime Minister Binyamin Netanyahu – have successfully
reduced inflation, introduced fiscal discipline and improved competition in the
economy. Now a concerted government effort must be made to fight
It is possible to fight poverty without increasing welfare
transfers that discourage people from getting off the dole and into the labor
market. Expanding implementation of a negative income tax – which we have
advocated in the past – and enforcing wage laws for Israeli as well as foreign
workers are just two examples.
Sadly, the government has postponed until
2013 a plan aimed at fighting poverty by ensuring that the net incomes of our
lowest wage earners would grow no slower than GDP per capita. The plan was an
example of how the government should set a specific goal and take steps to
We hope that the CBS’s poverty figures and the upcoming
National Insurance Institute’s Poverty Report will persuade economic
policy-makers that the time has come to adopt a coherent, goal-oriented plan of
action to reduce, if not eradicate, poverty in Israel.