1 in 3 Israelis faces lower income as Iran war deepens financial strain

About a third of employees in Israel are battling lower monthly income and a worsening financial situation as they struggle to recover from the economic fallout of more than two and a half years of hostilities sparked by the October 7, 2023, Hamas massacre, according to a survey by the Israel Democracy Institute (IDI) released on Monday.

“The survey presents a troubling picture of a worsening economic impact across almost all population groups, reflected in rising shares of respondents reporting harm to their income and scope of employment,” said IDI’s Daphna Aviram-Nitzan, who co-authored the report. “We hope that the findings of this survey… will assist decision-makers in shaping and directing economic assistance.”

The poll, conducted between April 23 and May 10, found that 31 percent of workers (salaried and self-employed) in Israel are under financial strain as they contend with lower salaries or personal income from their business compared with the pre-war period. That was up from the 27% who reported financial damage from the Hamas war in a January 2026 survey, which was conducted about two months before the start of the latest US-Israel war with Iran.

The survey by the non-partisan think tank is based on a representative sample of 1,202 salaried and self-employed workers.

Aviram-Nitzan cautioned that the figures are a worrying sign of a deepening impact on the country’s working population, the backbone of the economy, following the US-Israel war with Iran, which broke out on February 28.

“The figures raise concern that we may remain in a new static situation, in which the population harmed by the war is left behind and unable to recover,” Aviram-Nitzan warned.

For the first five days after Israel and the US jointly launched the war against Iran, most of the economy, except for essential businesses, was shut down. While Home Front Command restrictions for workplaces were eased on March 5 to allow the economy to get back on its feet, some businesses remained shut, and many workers were unable to fully return to the workforce because schools in most places remained closed under continuing missile fire.

The worst hit are residents of the north, where about 51% reported that their income was harmed, 46% suffered a decline in the scope of employment or business activity, and 38% reported that they had no liquid funds at all.

The survey also showed that the average decline (47%) in personal income from business reported among the self-employed was sharper than the average 34% decline in wages suffered by salaried employees.

In addition, almost one in five salaried employees said that their scope of employment, including working hours, declined by an average rate of 48% compared with the period before October 7, 2023.

About 36% of workers whose salary was below the minimum wage before the Hamas war reported a reduction in work hours, compared with just 17% of those who were earning NIS 27,600 ($9,782), or twice the average wage.

The survey also indicated that the economic impact of the war is no longer concentrated only among weaker groups of the working population, but has also spread to high-income earners.

Among high earners, 26% reported income losses, compared with 15% before the war with Iran.

“We call on decision-makers to act to create and strengthen economic support mechanisms for populations that have been more severely affected by the war,” said Aviram-Nitzan. “In particular, focused attention is needed for the self-employed, the Arab population, residents of the north, young people and low-income households.”