Report: Israel's middle class is shrinking

Israel's middle class shrank substantially in the 1990s and now encompasses only a quarter of the nation's households, according to a report published Monday by the Adva Center for Information on Equality and Social Justice in Israel.

The report, based on household income data collected by the Central Bureau of Statistics, found drops of between 15-19 percent in the number of middle-class households and a 20-25 percent drop in the middle class's share of the national income pie.

Researchers looked at CBS figures between 1988 - the last year before the mass immigration from the former Soviet Union - and 2002. Only data on employee income was included, because of doubts concerning the validity of data on the self-employed, partly because of discrepancies between the CBS income survey and income tax authority figures.

The middle class was defined according to two widely used methods: households with gross income between 75-125 percent of the average income, and households with income between 75-125 percent of the median income.

According to the first method, the middle class shrank by 19 percent - from 32.9 percent of all households in 1988 to 26.6 percent in 2002. Most of the households leaving the middle class dropped into lower income brackets.

The second method showed a decrease of 15 percent in the number of middle-class households, from 33 percent to 28.1 percent, with households moving into both high- and low-income sectors.

"The fate of the middle class is important," wrote the report's authors, Dr. Shlomo Svirsky and Etty Konor-Attias. "This is the class that is perceived by most people as the `normal status' in ordinary times."

The report shows there is a growing gap between the haves and have-nots. "The middle class is getting worn down between an upper class whose share of the income pie keeps growing and a lower class that grows annually, but which holds only a small slice of the pie," the authors noted.