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.

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.

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. 

Alex Levac