If the Israeli economy were performing dismally, the finance minister and the prime minister would deservedly be criticized. Therefore, fairness obligates us to praise Yuval Steinitz and Benjamin Netanyahu, respectively, over the extremely impressive results for the last quarter of 2010.
Growth during this quarter was an exceptional 7.8 percent in annual terms. That figure brings to mind fast-growing economies like China and India, and is far higher than the growth rates in Europe and the United States.
This rapid growth was evident in every field: public expenditures, private consumption, exports, and especially investments. The standard of living also shot up: Per capita consumption rose by 2.5 percent in the fourth quarter.
Steinitz welcomed the data, asserting that they are the fruit of the government’s economic policy, a strong private sector, the Bank of Israel’s circumspect policy and the avoidance of labor disputes. But a careful analysis reveals that the main reason for this achievement was the strength of the private sector, which figured out how to maintain export growth despite the weakness of the dollar by finding new markets in the Far East and new niches in Europe and America.
Alongside the rise in the standard of living, however, we have witnessed great public anger over price hikes that make it impossible for many families to get through the month. It turns out that the rise in the standard of living has not trickled down to every layer of society.
We live in a global economy that offer handsome rewards to those with education. The highest wage-earners benefit from cheap imports and also from low prices in professions dominated by foreign workers.
Yet that is precisely what hurts those who earn the least.
They lack education, which is why their salaries are low.
Competition from imports results in dismissals and lower wages in traditional industries, which are the ones most vulnerable to foreign competition. The import of foreign workers further depresses blue-collar wages in Israel.
In other words, social gaps are steadily widening against the background of this rapid growth. And the result is growing discontent over the fact that the rich are getting richer and the poor are getting poorer.
Therefore, Steinitz and Netanyahu cannot rest on their laurels from the last quarter. They have a huge task before them: to narrow these gaps.
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