Israel’s Poverty Crisis
By Aaron Baron
When describing Israel, common phrases like “the holy land,” “the land of milk and honey,” or “the start-up nation” quickly come to mind. There is, however, one descriptor that is often left out when discussing Israel: poverty-stricken.
From an outside perspective, the label above paints a seemingly ridiculous picture. How can Israel, with its thriving economy, elite military, and world-class innovation, possibly be considered poor? This article aims to dive into the causes of Israel’s crisis, the most impoverished sectors of its society, and potential solutions to the nation’s concerning income inequality.
Numbers Don’t Lie
If you are still skeptical, here are a few quick figures to better illustrate Israel’s poverty hardships:
- Of Israel’s 9.3 million inhabitants, roughly 2 million Israelis live below the domestic poverty line — currently set at a disposable median monthly income of NIS 6,000 ($1,852).
- Since the height of Israel’s first wave of COVID-19 in April 2020, the average monthly wages for Israeli workers has fallen from NIS 12,595 ($3,928) to NIS 11,300 ($3,524).
- Surveyed families experiencing economic distress reported spending an average of NIS 7,550 ($2,331) each month on necessities, while their income totaled just 5,104 ($1,576).
- 43.9% of Israeli Jewish children and 49.3% of Arab Israeli children are living below the nation’s poverty line.
- Israel’s measured living standards are the lowest they have been since the 2008 economic crisis.
- Despite making up only 13% of the population, ultra-Orthodox Israelis make up 39.2% of Jewish Israelis living in poverty.
- Of the 38 countries in the Organisation for Economic Co-operation and Development (OECD) examined in 2018, Israel had the fourth highest poverty rate.
What’s Causing Israel’s Poverty Crisis?
The rising poverty rate in Israel can be attributed to a number of factors. Most importantly, varying workforce participation rates among specific sectors of Israeli society contribute heavily to the growing poverty rate. For example, unemployment is rampant across the ultra-Orthodox Jewish community in Israel; as of 2019, the unemployment rates among ultra-Orthodox men and women were 47% and 23%, respectively. Many ultra-Orthodox men refuse to enter the workforce because it is considered a distraction from biblical studies. Consequently, roughly half of ultra-Orthodox women are the sole providers for their families, which frequently include 7 or more children. Ultra-Orthodox women being the primary breadwinners for their families is not the issue at hand; in fact, the reversal of typical gender roles can be seen as a positive for a community that has been accused of waging “a war on women.” Rather, the high unemployment rates among ultra-Orthodox men are sinking their large families into poverty. In 2017, the average annual income of nonreligious families was nearly NIS 7,000 ($2,161) more than ultra-Orthodox families.
Beyond the ultra-Orthodox community, Arab Israelis are also disproportionately unrepresented and underutilized in the labor force. Despite the number of working Arab Israeli women substantially rising over the last decade, their employment rates stand at a mere 40%. Avi Weiss, President of the Taub Center for Social Policy Studies in Israel, speculates that poverty in the Arab Israeli community is a result of stagnant education levels for Arab Israeli men, leading to a lack of viable employment opportunities. Arab Israelis have yet to truly break into lucrative industries which require high education levels, with Arab Israelis making up only 2% of Israel’s high-paying tech sector. Moreover, 50% of Arab Israeli men work in occupations that are characterized by low wages like manufacturing, construction, and agriculture. The physical intensity of these jobs lead to major declines in employment after the age of 50.
Israel’s weak regulatory system and limited implementation of labor laws are other significant reasons for Israel’s growing poverty rate. The Israeli government’s lax enforcement of minimum wage laws has contributed significantly to the nation’s income inequality. The rate of non-compliance with the national minimum wage — NIS 5,300 ($1,644) per month — among employers has risen to 11%. In other words, nearly 1 in 9 Israeli employers are paying their workers less than minimum wage.
Solutions
The Israeli government has spent years trying to reduce the poverty rate. In 2013, a national committee was formed to address the issue. The committee — composed of 60 academics, business leaders, and philanthropists — suggested that Israel fight its “war on poverty” by increasing welfare, raising minimum wage, and expanding child tax credits. Despite support from then-Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid, the program’s steep estimated budget of NIS 10 billion ($3.1B) hindered any real advancement towards ending poverty.
A potentially better (and less expensive) course of action would be to implement policy that reinforces employment in flexible labor markets for low-skilled workers. Economists have suggested raising employment bonuses, providing day care centers for employee’s children, and making public transportation more affordable.
To further integrate the ultra-Orthodox and Israeli Arab communities into the workforce, the government must focus on teaching vocational skills to individuals who do not enter higher education. These groups are the two most poorly educated in Israel. By expanding their marketable skills, more ultra-Orthodox Jews and Israeli Arabs will expand into Israel’s lucrative and high-paying industries. These decisions are crucial in the battle to erase high unemployment in the ultra-Orthodox and Israeli Arab communities.
The new government, headed by Naftali Bennett, has yet to introduce a detailed plan on how they will counter the poverty crisis, yet their officials have already been mocked by impoverished communities. In July 2021, Finance Minister Avigdor Liberman faced backlash from the ultra-Orthodox community after claiming that they cannot be “dependent on handouts.” Despite his harsh sentiments, Liberman intends to use (potentially unfavorable) policies to push impoverished communities past the poverty line . Only time will tell if Liberman succeeds.
