Not the competition we want to win (again)

My colleagues at JDC's macroeconomic research institute, the Taub Center for Social Policy Studies in Israel, are doing some fascinating research on how Israel's society and economy look.

One graph in particular fascinated me. Even after you exclude Arab-Israelis and the Ultra-Orthodox, poverty rates in Israel are still among the highest in the developed world. Almost a quarter of Israelis live under the poverty line.

In fact ... compared to all the other developed countries there's only one that beats Israel. The US.

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What will become of us?

Some 40% of Israel's children live under the poverty line according to market incomes (before welfare and taxes). Only Poland, in all the developed world, has a higher child-poverty rate.

After the welfare and tax systems are taken into account, disposable income poverty in Israel among children is the highest in the West. It actually increased by 61% from 1992-2011.

We may be a Start-Up Nation. But many of our kids won't be in it.

My colleagues at JDC's macroeconomic research institute, the Taub Center for Social Policy Studies in Israel, have done some fascinating research on this subject ... take a look at this chart for an example:

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Poor Mermaids

We were in Bat-Yam* the other day learning about issues of poverty. My colleague Jack Habib from Myers-JDC-Brookdale gave a fascinating overview about poverty in Israel.

Bat-Yam has a massively disproportionate level of poverty. So it was an appropriate location to discuss poverty rates and what they mean.

Israel has the highest poverty rate in the West - 25% (1.8m). 36% of all children (860,000) live under the poverty level.

But here's the really fascinating bit: poverty rates differ among different population groups. So 54% of Haredim (Ultra-Orthodox) and 54% of Arab-Israelis are poor. But 39% of Ethiopian-Israelis and 19% of the elderly are classed that way. Among non-Haredi Jews, only 12% are under the poverty line.

So .... the continued growth of Haredim and Arab-Israelis as a percentage of the population, by definition, is going to increase poverty rates in Israel unless we change their employment rates and earnings capacity. It's going to be a national priority. And a Zionist one.

*"Mermaid", or "Daughter of the Sea," or "Daughter of Jerusalem." Depends on which local you believe.

The most fascinating statistic I’ve heard this month

I had a meeting the other week in Israel with Roi Assaf, Head of the Social Department in The Authority for Economic Development of the Minorities Sector, which sits in Prime Minister Netanyahu’s Office.

He gave a fascinating presentation on “Governmental Policy towards Economic Development of the Arab Sector.”

One quote, in particular, really struck me … because, in addition to low standards of living and difficult conditions on individual and community  levels, high rates of poverty mean high costs to the country in state welfare services,  lost productivity, lost tax revenue, and low consumer activity. 

So low employment and high poverty have a macro-level impact, not just on the individuals concerned but on the strength and economic vitality of Israel as a whole. 

And then Roi said:
"Arab citizens, despite constituting more than 20% of the population, contribute only 8% to Israel's GDP, at an estimated loss of over NIS 30 billion each year."

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The Poverty Level

My colleagues at the Myers-JDC-Brookdale Research Institute have some fascinating information on what poverty actually looks like across different sectors in Israel.

Here's what I think is really striking:

First, although only 14% of Jewish households are under the poverty line .... well over half of non-Jewish households are under it.

And second, poverty and employment are very tightly correlated. More on this later....

The poverty line is defined as 50% of the after-tax median income, adjusted to household size. 
The monthly poverty line for a couple last year was 4,001 NIS or 1,118 USD. The monthly poverty rate for a couple with two children was 6,401 NIS or 1,788 USD.


If you want more information and sources on these findings, message me, or contact my colleagues at Myers-JDC-Brookdale. If you want to receive this blog on a regular basis by email (about twice a week, depending on what else I'm up to), sign up in the top-right box where it says "follow" ...

Haredi Poverty and Employment

My colleagues at Myers-JDC-Brookdale have done some fascinating research into Haredi (Ultra-Orthodox) families in Israel, and the connection to poverty.

These are some of the really interesting bits (ok, it's all interesting)

 In 2011, 54% of Haredi families were poor.

 The high rate of poverty is very strongly related to low rates of employment.

 Poverty rates are also related to low earnings. There's a significant gap in monthly earnings:
Haredi men: 6,600 NIS vs. 11,500 NIS for all men
Haredi women: 5,200 NIS vs. 7,300 NIS for all women

 Therefore, education and training are critical to narrowing these wage gaps.

 The large numbers of children to support is a further factor contributing to the high rates of poverty

Look at this chart for the difference ....

If you want more information and sources on these findings, message me, or contact my colleagues at Myers-JDC-Brookdale. If you want to receive this blog on a regular basis by email (about twice a week, depending on what else I'm up to), sign up in the top-right box where it says "follow" ...

It's Getting Worse

Poverty rates in Israel are getting worse, according to my colleagues at the JDC-Myers-Brookdale Institute.

In 2011, there were 442,200 poor families in Israel (20% of all families), encompassing 1,838,600 persons (25% of all persons), of whom 860,900 were children (36% of all children).
50% of the poor families are working poor.

What this means is that there's been an increase from ten years ago, when there were 318,900 poor families in Israel (18% of all families), encompassing 1,169,000 persons (19% of all persons), of whom 530,700 were children (25% of all children).

The most dramatic increase was in the rate of children living in poor families, which rose from 25% in 2001 to 36% in 2011.

The rate of poverty among families in Israel is the second highest among OECD countries and is almost double that of the OECD average.

There are also regions that are particularly poor. The rate of poverty among persons is highest in the Jerusalem district (46%) and the Northern district (37%), but is much lower in the Southern district (26%) and the Central district (13%).

If we don't solve this, the peace process won't matter anyway.
This is also an existential threat to the future.


If you want more information and sources on these findings, message me, or contact my colleagues at Myers-JDC-Brookdale. If you want to receive this blog on a regular basis by email (about twice a week, depending on what else I'm up to), sign up in the top-right box where it says "follow" ...

A national problem

One of the most fascinating meetings I’ve had in a long time took place yesterday.

I was hosting a leadership mission from the Associated (the Baltimore Jewish federation) here at the Joint’s offices in Jerusalem. 

We had a series of panels on fascinating topics – Haredi (Ultra-Orthodox) Israelis and their integration into “mainstream” economic life; European Jewry’s challenges; legal and illegal migration to Israel, and more. But one topic fascinated me because of the array of talent in the panel discussing the issue: economic development in the Israeli-Arab sector.

The panel included four people who, I think, are at the forefront of what we talk about when we talk about change and talent dealing with this subject:

Avivit Hai, the Program Associate in Israel for the Inter Agency Task Force on Israeli Arab Issues and one of the most articulate speakers on Arab-Israeli issues I’ve met;

Roi Assaf, the Head of the Social Development Department, in the Authority for the Economic and social Development of the Arab, Druze and Circassian Sectors, which sits in the Prime Minister's Office;

Dr Sigal Selach, my terrific colleague and Director of the JDC-TEVET Employment Initiative; and

The inspiring and wonderful Safa Garb,  JDC- TEVET Division Director, Arab Society and Infrastructure.

What I found fascinating about the discussion – and there’s more I’ll write about this at some point – was the depth of knowledge and capacity that all four displayed. 

Roi’s words were particularly poignant: “Arab poverty [in Israel] isn’t an Arab problem – it’s a national problem. Twenty per cent of our population contributes only eight per cent of our GDP.” Imagine what we could achieve if they had the capacity and ability to do more.

The Prime Minister’s Office has some really striking statistics: 78% of Jewish men and 76% of Jewish women (ages 18-66) are employed … but only 69% of Arab men and 27% of Arab women are! Just think about the difference between over three-quarters and one-quarter. That’s a massive statement about the challenges we’re facing.

We have a first-world country with some third-world labor patterns. And it’s not sustainable.

Israel has highest poverty rate in the developed world, OECD report shows

Israel is the most impoverished of the 34 member countries, with a poverty rate of 

20.9%, according to a report released by the Organization for Economic Cooperation

and Development.

Haaretz, May 13th 2013

By Lior Dattel and Nadan Feldman | 11:25 15.05.13 | 40

Israel is the most impoverished of the 34 economically developed countries, with a poverty
rate of 20.9%, according to a report released by the Organization for Economic Cooperation
and Development on Wednesday.

Israel's poor population has grown more than in any other OECD nation, making it the country
with the highest rate of poverty, having exceeding Mexico, whose poverty rate stands at 20.4%.
Israel also continues to be one of the countries with the largest income inequalities, ranking fifth,
with the U.S., Mexico, Chile and Turkey having larger income gaps. Between 2007 and 2011, 
Israel experienced almost no changes in its social gaps – which saw a tiny decline of 0.1%. Between 2007 
and 2010, poverty among children and young people in Israel grew at the fourth largest rate from among
 the OECD countries – although among senior citizens, it declined.

As opposed to the trend in most countries, where salaries among both the richest and poorest
has decreased, Israel has seen a slight increase in both. In Spain and Greece, which are suffering
from recession, poverty rates are lower, at 15.4% and 14.3% respectively. The OECD report also
points to an increase in inequality throughout the world, due to the global economic crisis. In
almost all OECD countries incomes are in decline, while inequality is on the rise.

The relative income poverty rate in Israel – defined by the OECD as the share of people having
less income than half the national median income – is larger than in countries such as Turkey,
Mexico, Chile, Spain and Poland. As of 2010 it was over 20 percent. According to the OECD
report, it has rocketed from 14 percent in 1995 to nearly 21 percent in 2013.

There has also been a significant increase in poverty rates in Turkey, Japan, Australia, New
Zealand, Sweden and Germany, albeit at lower rates. In Sweden, the poverty rate shot up from
four percent in 1995 to almost 10 percent in 2010. Italy is the only country that has shown a
significant decline in the poverty rate – from 15 percent in 1995 to 12.5 percent in 2010. The
poverty rate in the United States remained almost unchanged, at 17 percent.

The director of the National Insurance Institute, Prof. Shlomo Mor-Yosef, recently said that
planned cuts in child benefits are expected to cause an increase in the number poor of families,
children in particular.
"The planned cuts in child allowance will increase the number of families living below the poverty
line. An additional 30-40,000 children will be under the poverty line, which currently stands at
NIS4,000 per month for a couple," he said.
The global financial crisis has affected everyone badly, but not equally. The bottom deciles
have suffered a sharper decrease in income than those with a high income. OECD data shows
that between 2007 and 2010, most countries saw a decline in the income of the bottom deciles.
In nearly every case, this decline was sharper than that in the top deciles.

Israel, which has one of the highest levels of inequality among the OECD countries, has actually
seen a small increase in income for opposite ends of the spectrum. The income of the top decile
has risen by around one percent – slightly more than the income of the bottom decile. However,
according to a Bank of Israel report, the lowest decile's share of income distribution is now lower
than it was at the end of the 1990s.

In the U.S., the poor have been harder hit than the rich. The lowest decile has seen an income
decrease of around four percent in comparison with less than one percent among the top decile.
In France under former President Nicolas Sarkozy, the rich enjoyed a two percent rise in income,
while the poor suffered a decrease of around one percent. In Poland both the top and bottom
deciles enjoyed almost identical increases in income, of around three-four percent.

The report warned that as long as the world financial crisis and the jobs crisis persists, developed
countries face a growing risk of rise in inequality.
The OECD findings are similar to figures released last month by the Bank of Israel in its annual
report, according to which Israel's 2011 social gaps were among the highest in the world.