The unbearable price of security

And old Israeli woman picking up vegetables dropped on the ground in the Mahane Yehuda Market in Jerusalem as it closes for Shabbat, September 19, 2014. Photo by Noam Revkin Fenton/Flash90

The Cost of Living in Israel: It’s as bad as you thought

By Robert Swift, The Media Line
January 18, 2016

[Jerusalem] – A common complaint among Israelis is that the cost of living in their country is high, higher even than in European or north-American states that might serve as a comparison to Israel. The Start-Up-Nation it might be, with a high-tech economy that largely escaped the effects of the 2008 crash, but for many young families, Israel is an expensive place to call home.

On the one hand Israel’s “standard of living as per capita is in the middle range, better than the poor countries of the OECD like Turkey, Mexico, Greece, (or) Portugal,” Rafi Melnick, a professor of economics at the Inter Disciplinary Centre, Herzliya, said, referring to the Organization for Economic Co-operation and Development. On the other hand levels of poverty are worse in Israel than in most other countries in the Western economies club, Melnick told The Media Line.

Made up of 34 countries the OECD is an organization which aims to foster international trade, open market economies and democracy. Most of the club members are developed economies with high Human Development Indices, a statistic used to rate standards of living between countries.

It is an organization that Israel joined in 2010, allowing Israelis to accurately compare their economy to other Western nations’ markets, a comparison that doesn’t reflect well on the country, some believe.

“The ratio between how much people earn and how much they have to spend to live is worse than in other countries,” Noam Shani, a new father who works in the tourism industry, told The Media Line. This is a feeling shared by many Israelis and also backed up by the statistics.

“Because of restrictions on the food market and the price of housing, the cost of living in Israel is high compared to that of the OECD countries,” Melnick confirmed. This is something especially felt by working class Israelis who are often undercut in terms of wages by the country’s foreign workers, many of whom are in fact Palestinians who come to work each day from the West Bank, the economist explained.

An Israeli man searches for objects of worth in a rubbish skip in the centre of Jerusalem October 23, 2014. Photo by Nati Shohat/FLASH90.

High levels of poverty among the Arab and the ultra-Orthodox communities, where only one member of the family might actually go out to work, also undermines Israel’s economic standing in comparison to its OECD partners, Melnick added.

But middle class Israelis are not unaffected by the cost of living in the Holy Land. Gal Mor is a business owner who lived in Berlin for several years. The price of basic necessities is, he said, markedly higher in Israel than in Germany, the father of three told The Media Line.

Food and housing are often cited as disproportionately high by Israelis, something Mor also commented on. “Another cost is transportation in a roundabout way, because public transportation (in Israel) doesn’t work so well. It doesn’t work on weekends, it’s not frequent or reliable enough… you can’t really count on it,” Mor said. When we lived in Berlin it was possible to get by using just public transport, while in Israel an average family with several children and both parents working needs two cars, Mor explained. This is an additional expense in a country where cars, their insurance and gas, are notoriously expensive.

Added to this is the fact that wages are often lower in Israel that in other countries where the cost of goods is comparable. “That’s the ultimate thing that has an impact – you earn less, your buying capacity is already lower,” Mor said.

Others point to the price of housing as the number one burden. “Rent is high and the cost of real estate is high… and the government has done nothing to change that,” Noam Shani argued. Like many middle class Israelis, Shani said he received help from family members that made it possible to navigate the country’s expensive housing market. In this regard he said he was lucky, “I know for a fact that there are a lot of people that don’t get that (help) and these people are in big trouble.”

The question as to ‘why’ the cost of living is so high is less easily answered than ‘how.’

A possible explanation is that the government is so frequently distracted by other issues that it doesn’t focus on the economy to the degree that a European administration would, Rafi Melnick suggested. The lack of practical action to reduce the increase in housing costs over the last eight years is one example, the academic noted, saying “It really reflects the fact that the government is busy taking care of other things, not the standard of living.”

But this seems to be what Israelis want. Despite their complaints, voters consistently fail to prioritize the economy when voting. “If you analyze the elections since, well, forever, for most Israelis questions of security dominate their voting decision,” Melnick concluded.

Added to this is the fact that wages are often lower in Israel that in other countries where the cost of goods is comparable. “That’s the ultimate thing that has an impact – you earn less, your buying capacity is already lower,” Mor said.

Others point to the price of housing as the number one burden. “Rent is high and the cost of real estate is high… and the government has done nothing to change that,” Noam Shani argued. Like many middle class Israelis, Shani said he received help from family members that made it possible to navigate the country’s expensive housing market. In this regard he said he was lucky, “I know for a fact that there are a lot of people that don’t get that (help) and these people are in big trouble.”

Joseph Retsch’s tiny apartment with no running water on Jaffa Street in downtown Haifa, one of the poorest areas in Israel. Photo by Ido Beker

The question as to ‘why’ the cost of living is so high is less easily answered than ‘how.’

A possible explanation is that the government is so frequently distracted by other issues that it doesn’t focus on the economy to the degree that a European administration would, Rafi Melnick suggested. The lack of practical action to reduce the increase in housing costs over the last eight years is one example, the academic noted, saying “It really reflects the fact that the government is busy taking care of other things, not the standard of living.”

But this seems to be what Israelis want. Despite their complaints, voters consistently fail to prioritize the economy when voting. “If you analyze the elections since, well, forever, for most Israelis questions of security dominate their voting decision,” Melnick concluded.

One of many homeless Jews – not counting Arabs – in Jerusalem. Photo by Marc Israel Sellem, JPost.

A third of Israelis below poverty line, NGO report claims

Political row after aid group Latet survey finds that 2.5 million can’t make ends meet, far higher than official poverty figures

By Avi Lewis, Times of Israel
December 22, 2014

Less than a week after the National Insurance Institute published statistics saying that 1.65 million Israelis lived under the poverty line in 2013, umbrella aid group Latet released its own report Monday, claiming nearly a million more Israelis — totaling a third of the country — are living in poverty.

Latet also reported a significantly higher poverty rate among Israel’s children, upping the government figure of 756,900 children living below the poverty line in 2013, or 28 percent, to 932,000, or 35%.

The report sparked a bitter political row, with former president Shimon Peres slamming the government, and Likud MKs hitting back.

Official government poverty figures are based on income, while Latet’s figures are based on surveys of the Israeli public.

The study asked 629 adults about the cost of living, food security, housing, health and education. It then categorized as “poor” those who reported lacking full access to at least three of these categories, and as “severely poor” those who reported “severe” lacks.

Latet’s findings (Hebrew link) were based on surveys conducted by the group as well as by three independent research institutes over the second half of 2014. The group also polled 102 welfare activists and aid organization heads about housing affordability, education, health, food security and the ability to meet the cost of living.

According to findings, 31.6% of Israelis live in poverty as of 2014, including 13.8% who live in “extreme poverty.” Another 16.7% of Israelis experience shortages of adequate food, and 5.9% don’t have enough money to purchase urgent medical supplies.

Of the children recorded on welfare lists, 36% were forced to work in order to financially assist their families, 22% went to school without a packed lunch on a daily or weekly basis, while 32% had to move to boarding school because of economic hardships — a 22% increase from last year.

The study’s margin of error was 4.5%.

By utilizing an alternative poverty index that includes subjective impressions of cost of living and basic survival needs, Latet’s dispatch gives “a more accurate understanding” of hardship in Israel, according to officials at the organization.

The National Insurance Institute defines poverty in “a one-dimensional manner” by relying on only one parameter — disposable income — an insufficient measure for 2014, the report said.

“Nobody cares about the poor, certainly not the government,” Eran Weintraub, CEO of Latet, said.

“Combating poverty is a war of necessity as important as that against [terror organizations] Hamas and Hezbollah, because every third child living in destitution on a daily basis is also an existential threat to our society,” Weintraub said.

“With the impending [March 2015] elections, we need to ask ourselves: what is what is more important, defence and security … or financial and social security?” he added.

Following the report’s publication, former president Peres criticized the government, saying “you can’t feed hungry children and elderly people with proclamations to the media.”

“This report is fierce indictment against ourselves,” Peres said. “The parties must make treating the needy a priority in the elections.”

The Likud party responded saying that Prime Minister Benjamin Netanyahu’s government “raising the minimum wage to NIS 4,300 in 2011 was action. Not declarations.” It proceeded to catalog a number of Netanyahu administration accomplishments, and said that “the sole declarations are the baseless vilification of Netanyahu and Likud by leftists.”

Former finance minister Yair Lapid’s Yesh Atid party in response castigated Netanyahu, claiming that during his term he funnelled money away from social services to settlements in the West Bank.

“Netanyahu prefers to transfer hundreds of millions of shekels to isolated settlements in a gesture to the Likud Central Committee and continues to ignore the plight of Israeli society,” a statement released by the party read.

“The poverty figures are a poor report for the prime minister. Netanyahu wants a visitor centre in the Shomron [Samaria region] instead of medication for the elderly, hot meals for schools and funds for children to buy textbooks,” the party said.

Other political figures also used the data to take a jab at Netanyahu, including MK Itzik Shmuli (Labour Party) who accused Netanyahu of “eating pistachio flavoured ice cream every night” while more people sink into poverty.

Shmuli’s remark referred to an April 2013 uproar over Netanyahu’s annual taxpayer-funded ice cream budget of NIS 10,000 ($2,550), ostensibly spent on his favourite pistachio and vanilla flavors at a Jerusalem ice cream parlor.

“We thought that poverty rate was only ‘bad.’ Now it turns out that the situation is ‘catastrophic,’” Shmuli told Yedioth Ahronoth on Monday.

Rankings by Country of Average Monthly Disposable Salary (After Tax) (Salaries And Financing)

[As the OECD figures are user-unfriendly for our purpose we have used the table produced by Numbeo which claims to have the world’s largest database of user contributed data about cities and countries worldwide.]