Fischer urges progress on poverty

According to Bank of Israel statistics, 40% of Israel's poor are Arabs and ultra-Orthodox Jews.

chabad poverty 88 298 (photo credit: Ariel Jerozolimski)
chabad poverty 88 298
(photo credit: Ariel Jerozolimski)
The battle against poverty took center stage at a Tel Aviv conference Monday as Bank of Israel Governor Stanley Fischer stressed the need to consolidate social policy and examine the situation from a number of perspectives. Economists, business leaders and academics agreed that the battle against poverty must now be the first priority of Israel's policymakers. Speaking at the Globes Israel Business Conference, Fischer pointed out that although the Israeli economy had seen fairly rapid growth since 2003, the work that needs to be done, in particular in the battle against poverty, is far from finished. "GDP can be expected to grow by over 4 percent, which is a fine growth rate," he said. "We have started the process of reforms but compared with international standards regarding interest rates and percentage of unemployment, we still have a long road to go." Prime Minister Ariel Sharon, who was preceded by a performance of a choir of new immigrant kids, attacked Likud opponents, blaming them for preventing approval of the 2006 budget, which offered more help to the poor. He called for approval of the budget before the elections. "We will stand by our targets that were set - annual economic growth of 4.5%, cutting unemployment, creating more opportunities for people to get back to work and closing the social gaps," Sharon said. Fischer emphasized that one of the country's two economic challenges was to ensure that political uncertainty before the elections does not turn into economic uncertainty. "Sustainable growth is the key to boost immigration to Israel in order to support security strength and raise the economy's ability to deal with social problems," he said. The second challenge, according to Fischer, was dealing with social problems within an economic strategy since it was interconnected to sustaining growth. He stressed the importance of continuing a macroeconomic strategy that acts to achieve sustained growth while at the same time tackling poverty in policies that address the short- and long-runs. "Without taking care of social problems, growth won't help us in the long-term, but we need growth to take care of the social issues," Fischer said. As such, he believes social policy should address the problem of poverty in the short-term, by providing incentives for those who can go to work. Allowances, he said, should be given to those unable to work. Instituting a negative income tax is also one of the solutions the Bank of Israel supports, Fischer added. Business leaders also expressed concerns about the poverty level. "Poverty is the main obstructor to economic growth," said Teva Pharmaceuticals chairman Eli Hurvitz. "Today about 30% of the public are near to or below the poverty line and we are second to Mexico." According to Bank of Israel statistics, 40% of Israel's poor are Arabs and ultra-Orthodox Jews. Sharon, in his address, also confirmed his support for an initiative presented by Hurvitz to promote the integration of more technology into traditional industry in order to improve productivity.