Israeli cost of living among highest in developed world, report finds

Israeli cost of living among highest in developed world, report finds

While wages are up, Israel is still one of the most expensive countries to live in, annual Taub Center report finds

A new shopping mall in central Tel Aviv, on June 29, 2017. (Nati Shohat/Flash90)
A new shopping mall in central Tel Aviv, on June 29, 2017. (Nati Shohat/Flash90)

A year-end report released Wednesday found that the cost of living in Israel is among the highest of developed nations.

The Taub Center’s “State of the Nation Report 2017” showed that while employment was up and salaries had increased over the past 12 months, “price levels in Israel remain among the highest in the OECD.”

The report found that Israel’s price index was 23 percent higher than the average of countries in the Organization for Economic Cooperation and Development, a club of developed or developing countries, besting rich Western nations such as the US, France, Germany and Luxembourg.

Only Switzerland, Iceland, Norway, Denmark, Australia and New Zealand had higher price indices, according to the data.

Israel’s high cost of living and runaway real estate prices have been a major concern for several years, sparking large scale protests and promises of government reforms to bring down housing costs.

Tents on Rothschild Boulevard, March 2, 2015, reminiscent of the 2011 summer of social justice protests were part of an effort by activist Shay Cohen to bring the election discussion back to economic issues. (Melanie Lidman/Times of Israel)

“Housing prices continue to rise at a faster rate than rental prices, and there continues to be a decline in the return on owning an apartment,” the report found.

An increase in average wages led to an “impressive increase in consumption” as well as an improvement in the standard of living. Nevertheless, a large segment of the labor market still suffers from low productivity and low wages, the report found.

In the long term, the report warned, the rate of economic growth is expected to slow, due to a smaller percentage of working age population and a demographic increase in populations with relatively low employment rates and without the skills necessary for the modern workforce.

In the ultra-Orthodox community employment rates continued to rise. From 2008 to 2013 the number of ultra-Orthodox people working rose by nine percent, to 73% among women and 36% among men.

The report also found that the life expectancy for Arabs in Israel was the highest in the Arab-Muslim world, at 79 years. However, it trailed behind that of Jewish Israelis (82.7 years) and the OECD average (81.6 years).

Illustrative: Israeli-Arab students seen at the campus of Givat Ram at Hebrew University, on the first day of the new academic year, October 26, 2014. (Miriam Alster/Flash90)

Muslims in Israel also have a much higher infant mortality rate than Jews, with 7.5 deaths per 1,000 births, compared to 2.7 for Jews, 3.0 for Christians and 3.4 for Druze.

“Infant mortality specifically, and longevity in general, are related to the socioeconomic situation of the population. In these measures too, Arabs in Israel are better off than are those in other Arab-Muslim countries,” the report reads.

The government contributes 15% less to health care that the OECD average, the report said, leading to an increase on private expenditure on health, primarily through private insurance plans.

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