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Despite pandemic, poverty rate dropped in 2020 due to government aid — report

National Insurance Institute says proportion of poor Israelis fell 0.6% to 21%; estimates quality of life rose by 2.4%, whereas without state payouts it would have dropped by 10%

Illustrative photo of a woman begging in Jerusalem. (Nati Shohat/Flash90)
Illustrative photo of a woman begging in Jerusalem. (Nati Shohat/Flash90)

Despite the pandemic and its widescale economic devastation, 2020 was a slightly better year than 2019, with a marginally lower poverty rate in Israel due to government intervention, a report said Wednesday.

The annual report by the National Insurance Institute showed that 1.92 million Israelis were regarded as poor in 2020 — 21 percent of the population, a slight decrease from 21.6% the previous year. These included 864,600 children and 158,700 senior citizens.

The report defined as poor any person earning less than half of the country’s median income, which in 2020 was NIS 2,811 ($903) per month. The poverty line rose by 2.4% over the previous year.

According to the report, the quality of life in Israel rose by 2.4% — a milder rise than previous years — but were it not for the government payouts and state aid, it would have sharply dropped by some 10%.

The Gini coefficient, which measures the level of income inequality, rose significantly — 4.2% — in 2020, the report found.

The pandemic had less of an impact on Israel’s top 10% of earners, and their income even rose in 2020. It also had a lesser effect on the bottom 10% earners, many of whom hadn’t been employed even before the coronavirus lockdowns pushed unemployment to record-high levels. It did, however, affect the rest of the workforce.

“The coronavirus pandemic and the response to it led to a severe economic crisis in 2020,” the report said.

“The harm to income affected most employed populations, but the populations especially harmed were the weaker parts of the workforce, whose salary had been low even before the crisis,” it said, adding that the government aid helped offset that.

The predictions for 2021 were grimmer, mainly due to the cancelation of the payouts.

However, the report was based — for the second straight year — solely on administrative National Insurance Institute data, since the Central Bureau of Statistics hasn’t yet provided its figures.

“What stands out the most in the poverty report is that when the state intervenes and has a welfare policy, it helps marginalized populations and rescues them from poverty,” commented Welfare Minister Meir Cohen, who entered that role in June 2021 and wasn’t a minister in 2020.

“If there’s something that causes me to lose sleep, it’s poverty and inequality, which is why the report clarifies to me that the steps that were taken were done for the benefit of the weaker populations,” he said.

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