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A month ago, the National Insurance Institute issued its poverty report for 2002 which said that one out of five Israelis - 1.23 million people - is poor. The data for 2003 is worse, according to the NII. This week, the "Alternative Poverty Report," produced by an NPO known as "Latet" (To give) and based on data from 100 voluntary organizations in Israel, was issued. These organizations will hand out 700 tons of food to some 30,000 families this year, a 46 percent increase over last year.

A recently-published study on the extent of poverty in Israel that was conducted by the central bank shows that since 1988, the number of families living below the poverty line has tripled. The study says the majority of the most poor are ultra-Orthodox and Arabs and that the recession, firings, the growth in unemployment from 8.8 percent in 2000 to 10.7 percent now, and the decline in wages by 9 percent over the last three years while the allotments from the NII were cut all combined to greatly increase the proportion of the poor in the population - making Israel an unflattering second place in the world for poverty in developed countries, right after Russia. "If this goes on, we'll reach a situation where people will feel they've been left behind and start marching on the homes of Savyon and Herzliya Pituah," warned Didi Arazi, the high tech entrepreneur, in a speech to the Sderot Conference last week. The situation has not always been like this. In the 1950s and 1960s, Israel was one of the most egalitarian countries in the world, but since the Yom Kippur War, the gap between rich and poor has grown and poverty has spread.

There are two populations that are characterized by extensive poverty: ultra-Orthodox and Arabs. Bnei Brak is the poorest city in Israel - every second child in the city is poor. Some 39 percent of the children in Jerusalem are classified as poor. A large proportion of the ultra-Orthodox choose to be poor, because 80 percent of the adult men in the community choose not to work but to live off the allotments and spend their days in yeshivas and kollels. The younger generation of Shas and United Torah Judaism does not have much chance to get out of the cycle of poverty, because they do not learn mathematics, science, history and English. The Arabs, on the other hand, have been forced out of the job market by the import of foreign workers for construction, agriculture and services.

Benjamin Netanyahu is promising quick growth and soon, growth that will raise the standard of living, but his plan could fall into the trap of inequality - only the wealthy will enjoy the benefits of the growth while the poor will get poorer. If that happens, Israel will be ahead of Russia on the list of developed countries with poverty, which could crumble society and even endanger the existence of the state.

Therefore, the plan for growth must include the element of equality and be aimed at reducing the dimensions of poverty. Studies show that increasing NII allotments is not the correct answer. In the last 30 years, those allotments have been greatly increased (up until 2001) but nonetheless, poverty grew because the allotments encouraged people to remain outside the labor force. Therefore, the short-term solution to encourage the job market is educational and vocational training inside companies in the business sector. Another condition for success is the continued reduction in the number of foreign workers, despite the pressure from the contractors and the farmers.

The long-term solution is in the infrastructure: the physical one - trains and roads that shorten the distance to the center of the country - and the educational one. The investment in education is the most correct way to fight poverty because the gaps in education result in gaps in income. There's no need to increase the education budget, which is already one of the highest in the West, but to change its internal allocations, shutting down unnecessary departments and district offices and sending the billions thus freed to improving the quality of education in the weak populations of distant towns and the poor neighborhoods. Only then, when the money is invested in the right places, will growth become the right kind of growth - one that increases equality, fights poverty, and saves Israeli society.