Poverty rates in Israel similar to Mexico

Jan 11, 2015 12:00 AM

Large economic gaps exist in the country. Data suggest that each additional military campaign exacerbates the problem.

The Adva Center for Equality and Social Justice in Israel indicates a mixed trend in the Israeli economy.

On the one hand, Israelis have relatively high disposable income, the country shows impressive growth, unemployment figures are enviable and wealth grew.  But on the other hand, poverty rates are similar to those in Latin America.  Wages are stuck, the growth does not trickle down to the entry level employees, and the wages of the employers goes up.

According to the data from the center, most socioeconomic indicators in Israel are similar to Southern and Western Europe.  The middle class in Europe has shrunk and poverty rates are similar to those in Mexico and Chile.

The Israeli economy is growing, especially after 2008, when the economic crisis hit Israel less compared to other countries.  The Israeli growth, according to the report, instead of trickling down to the workers, goes up to the employers.

The growth of the employers grew 4% to 15% and that of the workers decreased at the same rate to 62%.  The data show that wages hardly changed over the past decade, while Israel’s GDP grew by 45%.  Almost a third of employees earn minimum wage and 70% earn below the national average.  The center highlighted the decreasing power of unions and blames the phenomenon on the transition to employing contract workers.

On the other hand, there is continuous growth of the salaries of managers and officials.  The growth in the financial field is in fact in the hands of the wealthiest, such as pension funds for some employees.  In the last decade, the salaries of the senior level management has increased.  The wage gap between men and women has remained stable, as a woman’s monthly salary is about 68% of a man’s salary.

The salaries of employees of European descent went down from 42% to 32% above the average, while the salaries of employees of Middle Eastern descent remained the same.  The salaries of Arabs are way below average and in the last five years, 67% are below the average.

Israel boasts low unemployment, but the center points out that the current unemployment affects the poorest people— Arabs, women, and development towns.  Toping the list of localities with the highest unemployment rate are Arab towns, and after that, Jewish settlements.

Israeli inequality is particularly high.  A measure of inequality showed it is the fifth-highest among the 34 OECD countries and is growing at a rate greater than the other developed countries.

The Bank of Israel points out that public expenditure in Israel (government's expenses for the general public) and in particular, civil expenditure is very low compared to the average in developed countries.  This means that the range of services and investment in infrastructure is low compared to the West. The result is impoverishment and the decrease of social services provided by the state, such as education, healthcare, welfare, and social security.

The government's tax policy makes it easy for the large corporations, capitalists and those who earn very high salaries and allows for most Israelis to improve their situation. According to the Center, the absence of a political order in the region and high incidence of military operations severely impacts the economy, and combining the two causes a cumulative effect of continuous attacks on the population, instability, fear of investors, and fragile credit rating, and all of this is in addition to the large investment in defense resources.

Only 29% of young people end up continuing on to higher education. The reason is that the number of those who matriculate is only 53%.  Despite the data, there is a steady increase in the number of students matriculating each year.  Rates of those eligible for matriculation are highest in established towns, and the lowest are in Arab and ultra-orthodox towns.

Those who choose professional or technical tracks usually come from neighborhoods with low income families.  An inspection of the locations of two of Israel’s largest vocational schools, Ort and Amal, showed that of 159 schools of these two networks, 71% of students were from towns with low socioeconomic statuses: Arab towns, developing cities, and from other low socioeconomic towns.

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