President Reuven Rivlin used a conference Monday on the Israeli economy’s 70th year, sponsored by TheMarker, to call for the merging of the country’s two distinct economies, as he put it, into one.
He said 70 years after the founding of the state, Israel has a prosperous high-tech economy and a less prosperous older economy. He said the two must be joined into a single “strong and stable” economy in the years ahead.
Rivlin said the first big challenge facing Israel was to address yawning social gaps and ensure social mobility.
“A familiar but painful statistic is the one of social gaps in Israel that are the largest among countries belonging to the OECD,” he said. “The Israeli poverty rate and the big differentials between the level of social services that different groups get, like the quality of education and local government, are things that should be keeping us up at night.”
Figures by the Organization for Economic Cooperation and Development, the club including most of the world’s wealthiest nations, show that the rate of poverty for Israeli Arabs was 53.3% in 2015 and 48.7% for Haredim, versus 13.5% for the rest of Israel. Standardized international PISA exams showed an average score of 391 for Israeli Arabs to 495 on average for non-Haredi Israelis.
Addressing the problem is made more difficult by the atomization that has occurred in Israel among the Arab, ultra-Orthodox, national religious and secular sectors that has made the first two groups suspicious of official institutions.
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Rivlin said the second challenge was coming to the aid of what he called “the median man.”
“The median man or woman is not in the lowest [income] deciles, yet he still belongs to the second economy, to an Israel where productivity and wages are low. He has to deal with the high cost of living, especially for housing and food. ... He cannot necessarily afford private lessons and tutoring for his children, and [ensuring] that there is a horizon and a future waiting for him and his children,” Rivlin maintained.
The president lauded the economy’s successes in the last 70 years and its leading place in the global economy in spending on research and development and tech sectors like cybersecurity, the life sciences and agriculture.
“However, my feeling is that in the years of the Israeli economy’s great leap, we have forgotten the Israeli man and the Israeli woman in the middle. We neglected them,” Rivlin said. “Therefore, it is difficult for us and it will continue to be difficult for us to pull the lower deciles upward toward this middle, for the simple reason that this middle is not attractive.”