'Poverty Decreased Last Year as More Israelis Entered Workforce'

Trend occurred despite cut in child allowances; number of Arab poor fell, but rose among ultra-Orthodox, says National Insurance Institute.

Haim Bior
Haim Bior
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Woman at NII office, which dispenses state assistance, in Bedouin town Rahat, one of country's poorest locales..
Woman at NII office, which dispenses state assistance, in Bedouin town Rahat, one of country's poorest locales..Credit: Alberto Denkberg
Haim Bior
Haim Bior

Poverty levels in Israel fell last year, thanks in part to economic growth and increasing employment levels, which were accompanied by an increase in salaries after calculating for inflation, according to the National Insurance Institute’s report on poverty and social gaps for 2013.

The poverty line in Israel is defined for individuals as a monthly income under 2,989 shekels ($765) – half the median wage – and for couples as less than 4,783 shekels a month. For a five-member family, the poverty level is set at 9,000 shekels or less a month.

The report found that there were 432,600 poor families in Israel as of 2013, or 1,658,000 people in total. This is an improvement from 2012, when 439,500 households and 1,754,000 people were considered to be living in poverty.

The most recent study found that those living in poverty included 756,900 children, down from 817,200 in 2012.

Researchers said the poverty statistics improved last year due to improved employment data among low-income workers. In total, 2.7% more people were employed last year than in Israel of 2012, while salaries increased 1.1%. However, the increase in salaries was canceled out by the decrease in child stipends, which directly affect poverty levels.

Rises in employment levels were particularly sharp last year among groups that are underrepresented in the labor market.

Real salaries – meaning after adjusting for inflation – increased over the past few years among poor workers as well as workers as a whole, by close to 2.5%.

The NII report was drafted based on a household expense survey conducted by the Central Bureau of Statistics.

However, it also found that poverty rates worsened for ultra-Orthodox households. Some 72.9% of them were considered poor as of last year, up from 66.1% the previous year. However, the NII noted that this figure may not be precise, due to the difficulty in categorizing people as ultra-Orthodox based on the data available.

“The decrease in the extent of poverty occurred alongside, and despite, the cut in child allowances carried out in August 2013,” states the NII report.

Government intervention in the form of stipends and tax policy was responsible for raising 34% of families above the poverty line, along with 23% of individuals and 13% of children.

Poverty among Arab households decreased to 47.4& in 2013, down from 54.3% in 2012. This sector tends to have larger families, and the decrease in poverty occurred despite the cut in child stipends, notes the NII report. Instead, the increased employment rate among Arab women, who are generally less likely to be employed, brought about the improved status in the sector.

Poverty rates declined slightly among the elderly, to 22.1% of all households, down from 22.7% in the previous year.

Poverty among working households decreased to 12.5%, down from 13.8% Among households with only one working member, some 24.1% fell beneath the poverty line, versus 24.9% in 2012. However, the poverty rate among households with two working members actually increased slightly – from 5.5% in 2012 to 5.7% in 2013. This apparently is because many people just entering the workforce are poor and are starting out with low wages.

The number of families with two wage earners increased by 10%, as the number of households with only one wage earner decreased accordingly. Much of the shift was among ultra-Othodox and Arab families. Among these sectors, the percentage of poor families with two working members increased to 24% and 21%, respectively.

Very few non-Haredi Jewish families with two wage earners are below the poverty line – 2.8% as of 2013.

NII chairman Shlomo Mor Yosef noted that poverty figures have been improving in Israel since 2009, and that wage inequality decreased last year, improving Israel’s standing on an international level. However, Israel is still below the OECD average in these regards

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