New Israeli Data Pointing Toward An Erosion of The Middle Class
Economists are bracing for an early warning about what toll the world economic crisis may be taking on Israel’s population.
Popular wisdom is that Israel is weathering the current world financial storm, with the economy faring well given the circumstances. Last August, the Bank of Israel revised its forecasts of growth in 2009 to one of stability from a reduction of 1.5% in GDP. But this offers little comfort for many ordinary Israeli householders.
Figures set for release later in October by the government’s Central Bureau of Statistics show that even when the economy was at its very strongest, in 2007, more and more Israelis had difficulties putting food on the table.
That year, the country’s economy grew by 5.4% — faster than the United States, Europe, the United Kingdom and Japan. But the percentage of Israelis who went without food for economic reasons at some point during 2007 stood at 21%, up significantly from 14% in 2003.
“I am afraid that the figures for 2009 will not be better, but rather even worse,” said Yosef Katan, an expert on poverty in Israel from Tel Aviv University’s School of Social Work.
The report seems to constitute a vote of confidence for Adva, a nonpartisan policy center supported by numerous international funders, including Hadassah and UJA-Federation of New York, that released a report last December claiming that the economic growth Israel has enjoyed since 2003 “was accompanied by an increase in inequality.”
The universal measurement of inequality in a society is a complex mathematical calculation called the Gini coefficient. The lower the number- — between 0 and 100 — the more equal income distribution is in a society. Israel’s score in the latest UN-published table is 39.2. This is higher than all other western industrialized nations but for the United States at 40.8. Most European countries have scores in the high twenties or low thirties. Back in the 1950s, Israel boasted some of the lowest scores in the world.
The question that the CBS asked the public about forgoing food was open to interpretation: “In the last 12 months, did you forgo food due to financial difficulties?” Those who work with Israel’s socially disadvantaged say that this measures the scope of what they call “food insecurity.”
Shlomit Shulov-Barkan, deputy director of the Meir Panim soup kitchen network, told the Forward, “It’s not a plague of hunger, but it is an insecurity which comes from the fact that people aren’t certain they will have enough food at all, or for some, enough healthy food, as foods which are cheaper are those that are less healthy.”
While Katan wonders what figures for 2009 will show, Shulov-Barkan said she already has insight. Demand at her kitchens — annual budget $12.5 million — grew by 10% a year from 2000 to 2007. But she said that since 2007, when the CBS figures stopped and economists were left to speculate, demand has jumped by 15% a year.
Economists’ concerns are not limited to the nation’s nutrition. While medical care in Israel is partly state-funded, most services incur some level of fee. In 2007, among adults who needed medical attention, 17% said that they went without some treatment for economic reasons, according to CBS.
Katan said that the explanation for the figures — “very high for a country like Israel that pretends to be a modern developed country” — is simple: a series of welfare cuts since 2001, coupled with a growing population and government inactivity on socio-economic problems. “Although we hear from the government that it will work to reduce poverty, nothing serious is done in Israel,” he said.
Similar sentiments were voiced by State Comptroller Micha Lindenstrauss speaking at a conference at the Interdisciplinary Center in Herzliya in March: The government, he said, had failed in reducing poverty. Since then, the new Benjamin Netanyahu-led government has raised child allowances and introduced measures to protect jobs in light of the recession that Israel is currently experiencing. But according to John Gal, lecturer at the Paul Baerwald School of Social Work And Social Welfare at the Hebrew University of Jerusalem and co-editor of “Into the Promised Land: Issues Facing the Welfare State,” policymakers have long “taken poverty for granted,” and that is not changing.
The CBS figures for 2007 paint a far bleaker picture than those published by another government office, the National Insurance Institute, for the same period. The institute surveyed the ratio of families in poverty, which is defined as those living on less than one-half the national median income. It concluded that this figure stood at one in five, marking a stable rate since 2003. Its poverty line for 2007 was $556 per month for a one-family household, increasing per person: for example, $890 for two, $1179 for three, $1423 for four.
But while the NII report established only how many Israelis live on less than half the national median income, the CBS survey sought to discover what percentage of Israelis compromise on the basics of life due to economic constraints.
Senior officials in CBS are known to believe that the NII definition of poverty — Israel’s official definition — is too low. They have unofficially adopted a rival poverty criterion. Naturally, they are unable to publicly contest the NII rate, so they use the European Union’s frame of reference for poverty discussions. E.U. social statisticians identify those “at risk” of poverty, defined as those living on less than 60% of the national median income.
Thirty percent of the adult population fell into this bracket in 2007 — a rise of 4% since 2001, and around double the rate for the E.U. Since the most socially disadvantaged Israelis tend to come from large families, many of them Orthodox or Arab Israelis, it is not surprising that the fig- ure for children is much higher: In 2007, some 40% of Israeli children lived in households classed as “at risk” of poverty.
Some experts deem the CBS approach a crucial conceptual tool. It acknowledges that “people above the line of poverty are poor,” according to Katan. Activists hope the new statistics on “at risk” poverty will publicize a reality hidden from many Israelis. “When you live in Tel Aviv or Herzliya you don’t see it, but when you go up north or down south, it’s like another country,” Shulov-Barkan said.
Even those who criticize the CBS approach acknowledge that the bureau’s findings are important.
The CBS data point to “the collapse of the middle class,” said Yuval Elbashan, who is nevertheless a critic of CBS’s methodology. Elbashan, deputy director of Yedid, a national network of economic advice centers for Israeli citizens, questioned the import of CBS’s figures on people forgoing food and medicine. They reflect greater readiness by people to admit they go lacking rather than an actual increase in people going lacking, he claimed. Like the NII report, Elbashan maintained that poverty was “almost the same” as earlier, “not worse, not better.”
But Elbashan said: “When Israel was a traditional welfare state until 1984 or 1985, 15% to 20% of people considered themselves poor, 60% to 70% middle class and others the upper part of society. When you see more people ‘at risk’ of poverty, it means that people from the middle class are becoming similar in character — in living from day to day and not saving — to the poor.”
A stable middle class is key to the economic stability of the country, Elbashan stressed. He argued the data depicts a bigger problem for the government than that of poverty. “The government knows how to deal with poverty, but it doesn’t know how to deal with the problem of the middle class,” he said.
Contact Nathan Jeffay at [email protected]