Israel's Poverty Rate Dropped in 2012, Report Says

Rate among individuals and families declined, but rose for elderly and dual-income families.

Fewer Israelis had incomes under the poverty line last year than in 2011, although some categories, including the elderly and two-income families saw their rates rise, the National Insurance Institute reported Tuesday.

The NII said the poverty rate measured by individuals fell to 23.5% of the population in 2012, dropping from 24.8% the year before. According to the report, the poverty rate among families fell half a percentage point to 19.4% in 2012 from 2011, while the rate of child poverty dropped to 33.7% from 35.6%. In contrast, the rate of poverty among people aged 65 and over increased to 22.7% from 19.5%. The poverty rate among families with two or more breadwinners increased slightly in 2012 to 5% of the population from 4.6%, but was two-and-half times the 2% rate at the beginning of the decade. The poverty rate among families with a single breadwinner remained nearly unchanged at 13.7%.

“There are indications that in 2012 there was a certain improvement in the poverty situation and inequality generally, particularly among the young and in smaller families,” read the report, citing relatively strong economic growth and low inflation, with the exception of soaring home prices.

However, the NII cautioned against comparing the 2012 figures with those of previous years due to changes in the Central Bureau of Statistics database. According to the report, there were 1.75 million poor people living under the poverty line, set at 2,256 shekels per person per month in 2012, including 817,200 were children belonging to 439,500 families. The NII, which disburses child allowances and other forms of welfare, estimated that 36% of all Israeli families were kept above the poverty line last year due to allowances and negative income tax.

The figures come amid a debate about the government’s role in combatting poverty in Israel, which the Organization for Economic Cooperation and Development says is among the highest in the group’s member countries. The government has cut back allowances and taken measures to coax more people into the workforce, particularly among the ultra-Orthodox Jews and Israeli Arabs, whose labor force participation rates are low.

But Prof. Michel Strawczynski of the Economics and Society Program at Jerusalem’s Van Leer Institute, said the strategy was failing to deliver. “The fact that groups of Haredim and Arabs are entering the workforce in larger numbers in recent years hasn’t help them to escape the circle of poverty. That is demonstrated by the fact that even among dual-income families poverty rose in 2012,” he said.

Labor Party Chairman Isaac Herzog attacked the government’s current budget, which cuts child allowances while raising taxes, saying the effect would be seen in next year’s NII poverty report. He said the government lacked a plan to fight the war on poverty.

“Poverty is a strategic threat to the State of Israel,” said Herzog. “Under the current government thousands of additional families belonging to the middle class fell below the poverty line, including those with two working parents.”

Olivier Fitoussi