Netanyahu Boasts About Israel's Growing Economy, but Poverty Report Paints a Very Grim Picture

National Insurance Institute's report shows an incline in poverty among children and the elderly as well as an increase in social inequality and gender wage gaps

A homeless person in Tel Aviv this past week, December 2019.
Tomer Appelbaum

Prime Minister Benjamin Netanyahu praised the “achievements and positive trends” of an annual poverty report issued on Tuesday, although the document showed a rise in poverty among children and the elderly.

In addition, the report, published by the National Insurance Institute describes an increase in social inequality and a growing gap between the economic situations of men and women.

The 86-page report also criticizes the “weakness of the government’s policy in addressing poverty” and says the tools being applied to the problem are “too few and too hesitant.”

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Journalists were given just three hours to review the report before its publication, unlike previous years where the the media had at least a day's lead time to see the findings prior to publication. Nor was any press conference held as in previous years. 

“The National Insurance Institute believes that the poverty trends in 2019 will be positively impacted by the moves the government has been promoting in the last few years,” an introductory statement to the press relates. 

Netanyahu, who is also welfare minister, is quoted as saluting the “achievements and positive trends reflected in the report” and pledging “to keep working to fix the weaknesses.”  

In the report, Daniel Gottlieb of the institute's research department, cites government measures like raising the minimum wage and government-backed savings progams for children as measures that will help improve the poverty rate, but adds that nonetheless, “the situation remains bleak, compared to the situation internationally.” 

“The efforts in Israel are dwarfed in comparison to the standard efforts in other countries” to fight poverty, Gottlieb says.

Gottlieb writes that Israel was able to reduce the poverty rate by 0.2 percent while the average for OECD countries was three to five times higher. He also notes that since Israel joined the OECD, the poverty situation “has not substantially improved, and has remained among the highest,” and that the poverty rate among children has gotten worse. 

The statement is headlined: “Decrease in the number of impoverished families in 2018,” and goes on to say that the rate had declined from 18.4 percent to 18 percent.

But the attached report says that this improvement may derive from “sampling difficulties and absent representation” of East Jerusalem residents, a term for Palestinians, and that in fact there was an increase in the poverty rate among all families. 

“This technical deviation is apparently the main reason for the decline in the overall incidence of poverty, as in the general population with the exception of East Jerusalem, the poverty incidence among families increased slightly in 2018 compared to 2017, from 17.4 percent to 17.5 percent, and the poverty rate for individuals and children rose by even higher rates. From 19.4 percent to 20.4 percent for individuals and from 27.1 percent to 29.1 percent for children,” the report says. 

The accompanying says that the report "shows positive trends in comparison to 2017.” But the report says the findings “indicate a socioeconomic situation of standing in place. Data from the Central Bureau of Statistics shows that, from 2009-2013, the poverty rate for children, individuals and families was notably reduced, but since then poverty has remained high, both historically and in comparison to international trends.”

The report shows that the individual poverty rate remained unchanged from 2017 to 2018, and the poverty rate for children rose from 29.6 percent to 30 percent – making Israel one of the two countries with the worst child poverty rate in the OECD.

It also found that until 2017, poverty among the elderly was significantly lower than for the rest of the population, but in 2018, the poverty rate for families headed by an elderly person rose from 21.8 percent to 23.4 percent, and the poverty depth index for the elderly rose from 27.7 percent to 32 percent. 

Meir Shpigler, the National Insurance Institute's director-general, was quoted in the statement as criticizing the government’s lack of action.

“While some of the figures are encouraging, we still have a lot of work to do," Shpigler says. “The NII supports linking senior citizen stipends to the average wage and not to the consumer price index as is currently the case. The change is necessary mainly due to increasing life expectancy, to do our duty as a society to ensure that a million senior citizens can live in dignity.”

The report also documents increasing gaps in poverty between men and women. It says the poverty rate among women rose by 0.2 percent from 2017 to 2018, while the rate among men dropped by 0.8 percent. 

It shows an increase in the Gini inequality index, after several years of a nearly continuous decrease. In Israel, this index is 10 percent higher than in the other developed countries. In 2017, it was only 5 percent higher. The NII says the situation of the bottom quintile and top quintile improved, while the situation worsened for the other three quintiles – the middle classes.

The institute says that “a large and strong middle class contributes to economic growth, political stability and increased faith in government institutions and in society in general,” and therefore the worsening trends for the middle class are a troubling sign.  

According to the report, the individual poverty rate based solely on financial income, before any state intervention, is 22 percent. Israel is among the 10 OECD countries with the lowest poverty rate, where the average poverty rate before government intervention stands at 28 percent.

However, the poverty rate in Israel after taxation and allowance payments is 16.8 percent, higher than the OECD average of 11.5 percent. In this category, Israel ranks fourth from last, after the U.S., South Korea and Turkey. Israel also ranks in the top two places for the child poverty rate among OECD countries, the report says. 

In comparison to other developed countries, the impact of anti-poverty policies in Israel is low. “We shouldn’t take solace in the low ‘economic poverty’ rate [prior to state intervention]. This is a familiar phenomenon in countries where the public feels it cannot rely on significant government aid in order to overcome socioeconomic hardship. Many require assistance given the numerous difficulties that people face in their attempt to successfully integrate in daily life.”

The report says the government isn’t doing enough to reduce poverty. “For example, the work stipend is too small and selective, particularly compared to similar stipends in other countries, as young people cannot receive it if they don’t have children,” it says.