Israel is still the most economically unequal country in the developed world, according to figures published Thursday.
The number of poor families is rising, the poor are getting poorer, and while only around 14% of Jews are poor, more than half of Arabs fall below the poverty line — and that rate is going up.
On the bright side, poverty is down among children and the elderly, one-parent families and the ultra-Orthodox Jewish population, the National Insurance Institute’s annual report on poverty shows.
The government has taken several steps to close poverty gaps, the report says, and these have had a positive influence on some sectors of society.
A poor person in 2015 — the year covered by the report — was defined as one living on a monthly income of less than NIS 3,158 ($823). A poor family of four had less than NIS 8,086 ($2,107) to live on, a family of eight under NIS 13,139 ($3,423).
In 2015, there were 460,800 poor families in Israel, representing 1,712,900 citizens, of whom 764,200 were children.
That represented a tiny (0.3%) drop in the poverty index compared with 2015 (from 22% to 21.7%) explained by increased employment, especially among Arab women and ultra-Orthodox Jewish men, and a rise in salaries accounted for largely by a raise in the minimum wage.
Improvements registered within particular sectors of society largely reflect steps taken by the government, the report shows.
A rise in the minimum monthly wage in July to NIS 4,825 ($1,257) — a further rise to NIS 5,000 ($1,303) is planned for January — has combined with a 2.8 per cent rise in employment to benefit middle income earners.
An increase in in child benefits — after a cut in 2013 — led to a 1% drop in poverty among the population of children and youth, up to age 18, and — combined with a rise in income from work and a decrease in the average number of children — led to a 5.6% drop in the percentage of ultra-Orthodox Jews below the poverty line.
Welfare changes also benefited working single parent families, whose presence below the poverty line dropped by 16%.
The proportion of elderly among the poor saw a very slight 1.4% reduction (from 23.1% to 21.7%) in 2015, thanks to benefit increases for those on income support introduced in December 2015. The fruits of these increases, together with those of a further benefit included in the 2017 state budget, will be more visible in future poverty reports, the NII says.
A rise in disability allowances last year and a new children’s savings scheme due to start in January — the government will invest NIS 50 per month per child up to the age of 18, backdated to May 2015 — are also expected to have a positive impact, although the benefits of the latter will only be seen over the long term when the savings schemes are cashed.
Gross monthly income available to the average family — including benefits and compulsory payments — now stands at NIS 18,674 — $4,865 (the net salary of NIS 15,431, or $4,020 — having gone up by 2.5% compared to 2014).
But while salaries and selected benefits have gone up, benefits on the whole have not been adjusted for four years. This helps to explain why poor families with children became 4% poorer (where the distance between average income of a poor family from the poverty line is measured).
The reason for increasing poverty among Arabs — from 52.6% of the poor in 2014 to 53.3% last year — is not clear, says the report, given the rise in child benefits.
A survey of available household income carried out among some 9,000 families by the Central Bureau of Statistics showed a drop in earnings from work in this sector, while income tax authority figures showed that employment and salaries had actually gone up in real terms. The NII speculates that the discrepancy might be due to an insufficient number of people polled by the CBS.
Welfare and tax benefits have brought the percentage of people living below the poverty line in Israel down from 26.8% to 19.6 percent, the report says, but that is not enough to shift Israel from top position in inequality among countries of the Organisation for Economic Co-operation and Development, where the poverty average stands at 11.5% of the population.
Welfare Minister Haim Katz told Army Radio that he planned to change the way income benefit was determined.
The average salary currently determined the poverty line but not the level of benefits, he said. The latter were linked to the consumer price index.
“If we linked income support to average salaries we would immediately remove 187,000 people from poverty,” he said.
Gidi Kroch, the head of Leket Israel, a food security NGO, said, “It is very sad to see, year after year, the NII’s release of its poverty report with more or less the same statistics.”
“According to the report, Israel is the poorest of the Western countries, with the widest gaps between the rich and the poor — a situation where the weakest populations, the elderly and children are suffering the most. This just does not fit with our Israeli culture and our Jewish identity. It is not our way,” he said.
“However, even with this, there is a wind of change from within the Welfare Ministry. The welfare minister has been pushing for changes and food rescue is being included for the first time.”
NII director Shlomo Mor Yosef said he was optimistic that the results of steps taken over the past two years to reduce poverty would be seen in the future.
An “alternative poverty report” on the poor and food insecurity issued by the NGO Latet earlier in the week said that poverty cost Israel’s gross national product NIS 48 billion a year.
An investment of NIS 7.6 billion a year for ten years and implementation of the recommendations of the government’s war on poverty committee, currently headed by lawmaker Eli Alalouf, would bring Israel down to the OECD average and would add NIS 132 billion to the economy, the organization said.