'Israel falling behind Western living standards'

Taub Center's 2011-2012 State of Nation Report paints “troubling picture" of government's response to socioeconomic problems.

Money cash Shekels currency 521 (photo credit: Reuters)
Money cash Shekels currency 521
(photo credit: Reuters)
The Taub Center released its annual State of the Nation Report for 2011-2012 on Tuesday morning, which according to the organization, paints “a troubling picture of the way Israeli governments have thus far dealt with Israel’s primary socioeconomic problems.”
The document is divided into various chapters, examining public policy in five research fields: economics, labor, welfare, education and health. The data collected showed that Israel is falling behind Western living standards.
First, the country’s labor productivity in 2011, which was measured by looking at its GDP, was found to be in the lower echelon of the OECD countries, just behind Greece.
This result is surprising when one considers the local universities and hi-tech industry for which Israel is known, which have long been described as being at the forefront of human knowledge.
Secondly, it was revealed that despite relatively low unemployment rates in Israel, employment gaps between Israel and the leading western countries are much more significant today than they were three decades ago.
The report also concluded that the interest payments that Israel paid on its debt last year are higher than the country’s entire education budget.
“Although Israel’s debt-GDP ratio is low compared to the West, its interest payments are among the highest – totaling more than its entire education budget last year, and double the health budget,” the document states.
In addressing the July 2011 social protests, the report shows a “collapse in the relative economic standing of young Israeli families.”
It states that this demographic’s position in society as a whole has dropped in recent years.
In addition, salaries have significantly declined for people living in the Center, a larger share of 25 to 34-year-olds is living with their parents, compared to a decade ago. The data also suggests a substantial drop in home ownership rates among the young middle and upper classes.
A recent study released last month by the National Union of Israeli Students also showed that the average amount of financial help given to students by their parents in 2012 reached NIS 14,355, a 15 percent increase from the year before.
According to Taub Center head Prof. Dan Ben-David, “Last summer’s protests represent only the tip of the iceberg when it comes to challenges faced by Israel in the realms of labor, productivity, education and income gaps. Without a change in national priorities, Israel will remain on trajectories that are not sustainable over the long-term.”
As far as education goes, the findings showed that while the number of annual instruction hours in Israel’s education system is greater than in most western countries, the achievements in core subjects is lower.
A smaller percentage of Jewish children is learning in preschools, elementary schools and secondary schools than in 1995, a number likely to change next year considering that preschool education for three and four-year-olds was made free three months ago and kindergarten staff have already reported an overload of work.
According the the data, the number of children in nonreligious elementary schools in the country has grown by 0.3% over the past decade. In religious schools, it has grown by 11% and Arab-Israeli schools have seen an increase in students by 37%. But the most significant growth applies to ultra-Orthodox schools where the number of students increased by 57% in the past decade.
However, the document also states that “the achievements of haredi and Arab children in core subject areas are below those of third-world countries,” raising concern over their “preparedness to function in a modern economy when they grow up.”
Furthermore, the Taub Center’s researchers agreed that education is the primary determinant for employment in Israel, based on data showing that a very small amount of Israel’s population, including the Arab-Israeli community, are employed without possessing an academic education.
The health and social welfare sectors also revealed some significant new data showing that Israeli Jews have one of the highest life expectancies in the world. For Arab Israelis, while their life expectancy is lower than in most western countries, it is still higher than it is in the United States and even in Arab countries.
Israel also spent less on public welfare than the leading western countries in the past year, a phenomenon that seems to be ongoing for the past few years. The country also spends less on benefits for unemployed citizens than its European counterparts.
The same goes for the amount spent on the elderly, which is relatively low in Israel.
In the opening chapter of the report, Ben-David wrote: “The current macroeconomic picture in Israel may appear to be currently rosy in relative terms.
“The main problem,” he stated, “is not how the country is faring vis-a-vis countries currently experiencing a downturn, but rather Israel’s problematic long-run trajectories.
These trajectories reflect slower rates of economic growth than those in leading developed countries over the long-term.”
“The implication of this is clear: Though it has been rising in absolute terms during the past several decades, Israel’s standard of living has been falling further and further behind, in relative terms, the living standards in the leading western countries,” Ben-David explained.
Labor party head Shelly Yacimovich said Tuesday that the report was a "serious scientific indictment" against Prime Minister Binyamin Netanyahu's economic policy. "Beyond the fact that it emphasizes problems serious and well-known problems - social inequality, unfair taxation and failed privatization - we are now witness the fact that the future is now in jeopardy. The study states clearly that there is no industrial horizon for young academics and that their salaries will continue to erode. If the youth were holding on to anything, it was their hope, and this morning that too has vanished, as long as Netanyahu continues to govern."
Yacimovich added that her Labor party would present an robust alternative to Netanyahu's economic policy within the coming days.