Israel is most unequal country in developed world

June 5, 2013
Sarah Benton

The report from Ha’aretz is followed by comment from Richard Silverstein. Notes and links at foot.

Israel’s richest: Stef Wertheimer, left, Shari Arison, Idan Ofer and Arnon Milchan. Photos by Moti Kimchi, Nir Keidar, Bloomberg and Reuters.

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.

By Lior Dattel and Nadan Feldman, Ha’aretz
May 15, 2013

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.

Homeless in Tel Aviv

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.

Israel Poorest of OECD Countries, 5th Largest Income Gap

By Richard Silversteein, Tikun Olam
May 14, 2013

Today the Organization for Economic Cooperation and Development, which monitors economic well-being among 39 countries of the developed world, released its 2013 findings.

It found that Israel’s poverty rate of 20.9% was the highest of all member states. Israel’s nearest “competitor” was Mexico at 20.4%. Anyone who has visited Mexico understands how severe the problem is there. in Israel, it’s worse. Even Spain and Greece suffering from severe recession have far lower rates. The average poverty rate for all OECD countries is 11.1%. The OECD also found that Israel had the fifth largest income disparity.

Some other salient statistics: the child poverty rate average for all OECD nations is 13.3%. For Israel, it is 28.8%. Israel had the 4th largest rise in child poverty between 2007-2011.

I marvel at the comments of some here when they read these statistics, who claim that Israel’s economic numbers are depressed by Haredi men and Israeli Palestinian women who deliberately absent themselves from the country’s economic system. The problem with this approach is that the OECD statistical tables correctly blame a nation and not individual citizens if they are left out of the system. It is up to the nation to ensure economic benefits are available to all.

In other words, contrary to what the some would have us believe, people by and large don’t embrace poverty as their destiny. Nor may nations sentence entire segments of their population to such a fate without it being reflected in the OECD tables. Many other nations have found ways to spread economic benefits more equitably. In fact, Israel used to have such a system.

Notes and links
OECD Report

The OECD is reporting relative rather than absolute poverty, that is it is a measure of inequality rather than of wealth. Relative income poverty is a measure of what proportion of people fall below the national median income level. In the OECD, the average for all 34 countries was 11% – which is the figure in the UK. Generally, the lower the figure, the greater the degree of income equality. In this OECD survey, the Czech Republic, Iceland and Denmark had the lowest figures, and Turkey, Mexico and Israel the highest.

The report says that inequality throughout the OECD has been increasing since the 1980s but “has increased by more over the past three years to the end of 2010 than in the previous twelve”. This has been mitigated in some countries by the tax and benefits system, but not in Israel.
Growing risk of inequality and poverty as crisis hits the poor hardest  OECD Media release. May 15, 2013

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