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The media responded to the annual report on poverty, released this week, with disappointment. The expectation was for an incisive report, which would prove just how severe the situation had become and show how the cruel state continues to abuse its poor citizens and push them further down below the poverty line. But we received a different report, a much more moderate one. And so it was buried in the inside pages of the newspapers, because where there is no drama, there is no headline.

The new report on poverty reveals that in 2008 the situation did not worsen, but remained stable in relation to 2007. And furthermore, sectors of the population which had starred in previous reports - Arabs, children and new immigrants - actually improved their standing.

The truth is that maintaining stable levels of poverty is practically a miracle. Due to the dominance of two sectors - the ultra-Orthodox Jewish population and the Muslim Arab population (including the Bedouin) - we operate on a kind of automatic pilot that increases poverty annually.

Each additional child in the average ultra-Orthodox or Arab family immediately affects poverty statistics. And because these sectors increase in size faster than the average, the number of families living below the poverty line must naturally grow each year; if this does not happen, it's a great achievement.

A Bank of Israel study shows that if these two sectors are "neutralized" statistically, the poverty rate for the remainder of the population falls to 13 percent, a decent figure by Western standards.

The fact is, the problem can be increasingly seen among the ultra-Orthodox, and not among the Arabs. Many studies show that the number of children in Bedouin and Arab families is on the decline in the wake of cultural changes, an increase in the level of education, and awareness on the part of young Arab couples that, in modern reality, it's impossible to accommodate the needs of children in large families. We are seeing an increasing number of young Arab families with just two or three children.

The poverty report also reveals an increase in the number of wage-earners in the Arab sector. More and more Arabs are entering the work force, and if we add to this the reduction in the number of children, it is clear why poverty in the Arab sector is on the decline.

The situation is completely different among the ultra-Orthodox population. The report shows almost no reduction in the average number of children per family, which continues to stand at eight (compared to three or four in the 1950s). It must be understood that when it comes to such large families - who in the best-case scenario depend on one wage earner, and in many cases on a wage-earner who works only part-time - there is hardly any way to escape poverty. In order to maintain a family with eight children above the poverty line, one has to earn more than NIS 10,000 per month - and it's obvious that this is not the case in ultra-Orthodox families.

And so it's not enough to say that we have too many poor children. One must say, in all honesty, that the reason for this is that poor families have too many children. According to the statistics, 63 percent of families in which both parents do not work will live below the poverty line; when one parent works, 24 percent of the families live below that line; when both parents work, only 3.5 percent of families are poor. Basically, everything depends on work and on the size of one's family.

The economic history of Israel can be separated into two periods. During the first 30 years, working was the norm. People were ashamed not to work. They fought over a day's work, and would never ask for a single handout. But 30 years later, a fundamental change has taken place. We have moved from a culture of work to a culture of welfare. Successive governments gave in to political pressure and increased the size of welfare payments (for children and for a guaranteed minimum income) dramatically.

As a result, it has become less worthwhile to go out and work, and more worthwhile to establish a large family and live on welfare. But then came the second intifada, which caused great deficits in the budget and led to sharp welfare cuts, starting in 2003. The result was impressive growth and 500,000 people entering the job market.

The graph shown here teaches us that the first response to the cut in welfare payments was an increase in poverty - but that starting in 2005, poverty decreased due to a return to the work market.

And so the solution to the problem of poverty may be found in encouraging employment, encouraging education, and reducing the number of poor families. That's where efforts should be focused - not in increasing welfare.