The sky-high prices in Israel need to change - editorial

A study conducted by money.co.uk showed that Israel is the 6th most expensive country in the world for groceries.

 ACTIVISTS PROTEST against the raising of prices on Osem products, outside the Osem Investments Ltd. factory in Shoham, in December.  (photo credit: AVSHALOM SASSONI/FLASH90)
ACTIVISTS PROTEST against the raising of prices on Osem products, outside the Osem Investments Ltd. factory in Shoham, in December.
(photo credit: AVSHALOM SASSONI/FLASH90)

Israel is now ranked among the most expensive countries in the world. Everyone who has been to Israel knows this to be true. Hotels in Israel regularly cost hundreds of dollars a night, with prices comparable to exclusive hotels in London or New York, rather than what one might expect.

Automobile prices can be up to twice as much as they are abroad, with some costing up to three times in Israel what they do in the United States.

Housing in Israel is so expensive – a half-million dollars for a tiny apartment – that most people can’t understand how anyone can afford them.

The data is now in and we know that Israel has the sixth-highest cost of groceries in the world, according to a new study by money.co.uk that analyzed the average cost of a “standard” trip to the grocery store in 36 countries around the world. These prices are going up due to inflation, supply chain difficulties and other issues that affect costs.

For many Israelis, the increases and out-of-control prices on basically everything come alongside the fact that they earn dismal wages that often have not increased for years. 

Finance Minister Avigdor Liberman checks food prices at a Jerusalem supermarket. (credit: Courtesy)Finance Minister Avigdor Liberman checks food prices at a Jerusalem supermarket. (credit: Courtesy)

Average salaries in Israel are supposed to be around 11,000 NIS a month. However, many Israelis make less than average and data on average salaries often does not capture the reality of what people face in this country.

For many normal jobs, such as civil servants in Israel’s large government bureaucracy, or police officers and teachers, salaries are dismally low, tending to be around 6,000-9,000 NIS a month. Numbers are deceptive. Teachers, for instance, make on average 13,000 a month, according to a report last year. In fact, entry-level salaries are around 8,000 NIS.

Anyone who lives in Israel and has to experience what actual salaries are, compared to what news reports and government surveys claim they are, knows that while we hear people are making decent sums of money, many are barely able to pay their monthly bills. It wasn’t so long ago that elite counter-terrorism Yamam police were only making NIS 5,000, and civil service workers working for a decade in government service were earning the same.

At the same time that people are making low salaries and many industries have seen inflation that far exceeds wage increases, the reality of the cost of living is such that Israelis not only pay more than most for basic things but are earning less than their OECD peers. 

This means that while some 20 countries in the OECD are paying higher salaries than Israel – such as Canada and Ireland, Belgium and even Slovenia – in many cases the cost of basic goods in those countries may be half what they are in Israel. 

In effect, that means purchasing power for those countries is twice or four times what it is in Israel. When we compare Israel to other countries in the region it is true that Israel has a phenomenally better economy. However, that still means that while Israelis may make more money than people in Greece or Turkey, they can’t buy as much with it.

The pandemic has accelerated the worst aspects of this caged economy. It means that Israelis have to suffer the outrageous prices that hotels charge, and enjoy even a lesser quality of life. 

That means that price-gouging can occur whenever companies want to charge more for tomatoes or olive oil. While we regulate some items, overall our economy still has shackles designed to support local production, which means we are often gouged for basic goods in order to “support” industries here, instead of forcing the industries to be competitive. 

That would be more palatable if these industries made decent products and we were paid reasonably, but in essence it means paying for less at a higher price. Just do a test, buy regular bread or butter in Israel and compare it to the same product abroad. We pay twice or three times more. It is time for this to change.