First Woman to Head Bank of Israel Targets Economic Inequality

Karnit Flug Could Bolster Israel's Minorities

Haaretz

By Ben Sales

Published November 06, 2013.
  • Print
  • Share Share
  • Single Page

(JTA) Andromeda Hill is a beachfront complex of luxury apartments connected by tree-lined pathways that features such amenities as a spa and business center. Five minutes down the road is Ajami, a low-income neighborhood profiled in the 2009 film of the same name that remains one of this city’s poorer districts.

Such gaps in income have been of mounting concern to Israelis and are high on the agenda of Karnit Flug, the newly appointed governor of the Bank of Israel and the first woman to hold the post.

In two recent presentations, Flug has drawn attention to income inequality in Israel and its potentially adverse impact on social cohesion.

“Our ability to continue existing as a society that is both multifaceted and socially cohesive depends, among other things, on how employment develops in Arab society in the next few years,” Flug said at a government conference on Israel’s minorities last month. “If we know how to maximize the potential for increased growth and how to reduce the gaps, we will all – Jews and Arabs – be able to enjoy the fruits of this process.”

The Occupy protests that swept the world in 2011, decrying the exploitation of the “99 percent,” demonstrated that Israel is not alone among developed countries in facing large inequities in wealth distribution. But among the 34 countries in the Organization for Economic Cooperation and Development, Israel ranked 30th in terms of wealth inequality.

A 2011 report from the OECD found that in 2008, Israel’s top 10 percent of earners earned 13 times more than the bottom tenth. The report recommended “creating more and better jobs that offer good career prospects and a real chance for people to escape poverty.”

Flug agrees. Israel’s high income inequality, she says, is a function of low educational attainment and high unemployment among Israel’s poorest communities – Arabs and haredi Orthodox Jews. The explosion of Israel’s high-tech sector in the mid-1980s created many jobs for highly educated employees but left behind the poor and unskilled.

“Inequality in disposable income distribution rose until 2006 before stabilizing at a very high level,” Flug said last week in a presentation at the Taub Center for Social Policy Studies in Israel.

Growing the job market while maintaining a social safety net have been twin goals for Flug, who holds a doctorate in economics from Columbia University. After a four-year stint at the International Monetary Fund, Flug joined the Bank of Israel in 1988 and became its deputy governor in 2011, serving under the well-regarded Stanley Fischer, who departed earlier this year.


The Jewish Daily Forward welcomes reader comments in order to promote thoughtful discussion on issues of importance to the Jewish community. In the interest of maintaining a civil forum, The Jewish Daily Forwardrequires that all commenters be appropriately respectful toward our writers, other commenters and the subjects of the articles. Vigorous debate and reasoned critique are welcome; name-calling and personal invective are not. While we generally do not seek to edit or actively moderate comments, our spam filter prevents most links and certain key words from being posted and The Jewish Daily Forward reserves the right to remove comments for any reason.





Find us on Facebook!
  • At which grade level should classroom discussions include topics like the death of civilians kidnapping of young Israelis and sirens warning of incoming rockets?
  • Wanted: Met Council CEO.
  • “Look, on the one hand, I understand him,” says Rivka Ben-Pazi, a niece of Elchanan Hameiri, the boy that Henk Zanoli saved. “He had a family tragedy.” But on the other hand, she said, “I think he was wrong.” What do you think?
  • How about a side of Hitler with your spaghetti?
  • Why "Be fruitful and multiply" isn't as simple as it seems:
  • William Schabas may be the least of Israel's problems.
  • You've heard of the #IceBucketChallenge, but Forward publisher Sam Norich has something better: a #SoupBucketChallenge (complete with matzo balls!) Jon Stewart, Sarah Silverman & David Remnick, you have 24 hours!
  • Did Hamas just take credit for kidnapping the three Israeli teens?
  • "We know what it means to be in the headlines. We know what it feels like when the world sits idly by and watches the news from the luxury of their living room couches. We know the pain of silence. We know the agony of inaction."
  • When YA romance becomes "Hasidsploitation":
  • "I am wrapping up the summer with a beach vacation with my non-Jewish in-laws. They’re good people and real leftists who try to live the values they preach. This was a quality I admired, until the latest war in Gaza. Now they are adamant that American Jews need to take more responsibility for the deaths in Gaza. They are educated people who understand the political complexity, but I don’t think they get the emotional complexity of being an American Jew who is capable of criticizing Israel but still feels a deep connection to it. How can I get this across to them?"
  • “'I made a new friend,' my son told his grandfather later that day. 'I don’t know her name, but she was very nice. We met on the bus.' Welcome to Israel."
  • A Jewish female sword swallower. It's as cool as it sounds (and looks)!
  • Why did David Menachem Gordon join the IDF? In his own words: "The Israel Defense Forces is an army that fights for her nation’s survival and the absence of its warriors equals destruction from numerous regional foes. America is not quite under the threat of total annihilation… Simply put, I felt I was needed more in Israel than in the United States."
  • Leonard Fein's most enduring legacy may be his rejection of dualism: the idea that Jews must choose between assertiveness and compassion, between tribalism and universalism. Steven M. Cohen remembers a great Jewish progressive:
  • from-cache

Would you like to receive updates about new stories?




















We will not share your e-mail address or other personal information.

Already subscribed? Manage your subscription.