The number of poor in Israel rose from 1.43 million to 1.53
million, according to the 2004 Poverty Report, published by
the National Insurance Institute (NII). Israel had 714,000
poor children and 394,000 poor families in 2004.
2004 was the third consecutive year in which the number of
children in poverty increased. Since 1998, poverty has grown
by 50 percent.
Poverty has increased among almost all population segments,
including working families. The proportion of poor elderly
people has risen from 22.3 percent to 25.1 percent, among
large families from 48.9 percent to 54.7 percent; among
single-parent families from 27.6 percent to 31.4 percent; and
among working families from 10.3 percent to 11.4 percent.
The standard of living in terms of disposable income rose by
3.6 percent in 2004. However, whereas income among the top
three deciles rose by 5-6 percent, the bottom decile's income
fell 9 percent, and the second lowest decile's income by 2
percent. The proportion of national income of the top three
deciles rose at the expense of the bottom four deciles.
Cracks in the Budget
Even though in the hours after the resignation of Netanyahu,
the Prime Minister and his office announced that everything
would continue as before, only two days after the bombshell
significant cracks are already appearing in the new
The Prime Minister announced that the cuts in the budget of
the Defense Ministry — NIS 1.5 billion in Netanyahu's
budget — would be reduced to NIS 650 million. Vice
Premier Shimon Peres also called for new spending.
Finance Ministry officials insisted that any new spending or
reduction in cuts must be offset from other parts of the
budget, and so far everyone is giving lip service to the
overall budgetary goals. However after three years of
budgetary cutbacks it remains to be seen if the framework
will hold without the firm hand of Netanyahu imposing
discipline. Judging by his performance as mayor of Jerusalem,
Olmert is not good at imposing budgetary discipline. He left
huge deficits to his successor, Rabbi Lupoliansky.
Rabbi Ravitz' Analysis
Despite the press conference accompanying the release of the
report, and despite the lack of any major breaking news, the
regular press barely mentioned the report on poverty.
Yated, however, was there.
"Poverty is one of the most difficult phenomena in the
country. It is not a social phenomenon affecting only the
margins of society but a phenomenon that harms broad segments
and plays a role on the whole society's image and values,"
said Welfare Deputy Minister MK Rabbi Avrohom Ravitz, opening
the press conference he held at the National Insurance
Institute (Bituach Leumi) building in Jerusalem on Monday to
present a 2004 report called "Dimensions of Poverty and
Income Gaps." Rabbi Ravitz praised National Insurance
Director Yigal Ben Shalom and the staff of the National
Insurance's Study and Planning Authority for their swift,
high-caliber work in preparing the report.
"During this period, just one week before the Disengagement
process, as everyone is busy with the Disengagement alone,
and just one day after Finance Minister Netanyahu's
resignation, the poverty report is being released," said
Rabbi Ravitz. "In my opinion these figures affect the Israeli
society more than the Disengagement. This is the time to
remind the [outgoing] Finance Minister that he has a
substantial share in the deepening of poverty along with the
entire government. The Disengagement is important but that
matter will end. Afterwards Israeli society will remain with
these shameful poverty figures. I hope after the
Disengagement the government will have the wisdom to raise
poverty to the top of its agenda.
"According to the plan, we are publishing the 2004 poverty
report before the budget talks. Our aim is to present the
policymakers with a picture of the social state as they sit
down to determine the government's priorities in order to set
goals for social reforms in addition to economic reforms. The
findings presented in the report raise genuine concerns and
clearly indicate the expansion of the dimensions of poverty
in Israeli society.
"Unfortunately the Israel of 2004 continues to entrench its
status as the leader in the dimensions of poverty among
Western nations. Not all of the citizens enjoyed the economic
growth of the past several years, not everybody found work
and not all workers benefited from the tax reductions.
Furthermore those who have not benefited suffered greatly
from the broad cut in allowances surrounding all branches of
National Insurance, especially Guaranteed Income benefits and
Rabbi Ravitz said further, "The Finance Ministry anticipated
an improvement in growth and employment during the 2004
fiscal year and reported this as well. Unfortunately the
poverty figures show that if there was growth and an
improvement in employment, those who gained were the top
deciles. The two bottom tenths did not benefit from the
growth and the tax-cutting, but were harmed by the reduction
in allowances. Billions of shekels were transferred from
Subsistence Allowances and Children's Allowances to the tax
reforms, which the stronger segments benefited from. As a
result, social inequality increased significantly."
Regarding the causes of poverty Rabbi Ravitz said, "Since
2001 the spending on Children's Allowances shrank by 3
billion shekels and by 2009 it will decrease by another
billion shekels. The results of the policy are directly
expressed in the dimensions of poverty among children."
The Deputy Minister ended his remarks with a call to the
Prime Minister and the incoming acting Finance Minister. "I
call on the Government of Israel to set social goals as in
other nations. Not just deficit goals and inflation goals but
a goal of reducing the dimensions of poverty, an employment
goal and similar goals."
MK Rabbi Moshe Gafni also responded to the report, saying
that the disturbing statistics did not come as a surprise to
anyone. "These figures are the fruits of a deliberate, cruel
policy to make the rich richer and increase poverty among the
He accused the Finance Minister and ministry officials of
"relating to citizens like a financial enterprise in which
the rich survive and the poor get cast out based on a policy
of ruthlessness. The constant cuts in education, health,
various services and allowances allow only people of means to
benefit from [these] services and the gap between the classes
will grow from year to year. . . . The end of the current
Finance Minister's time in office with a poverty report like
this epitomizes his policy and actions and their results."
The Finance Ministry also responded to the report noting that
the report indicates that two-thirds of the poor are from the
chareidi and Arab sectors, which "are characterized by large
families and a low rate of participation in [the job
The ministry spokesman also said the report relates to
figures for 2004, "which was a year of adjustment from a
culture of allowances to a culture of work . . . Already in
2005 we see there are those in this segment of the public who
have gone out to work, which will assist those who cannot
work. This year tens of thousands of elderly people who
received an annual increase of NIS 2,000 will leave the cycle
of poverty," he promised.
He claimed the Finance Ministry relied on a study of 137
countries that indicates that the more growth increased the
more the income of the bottom two-thirds increased. "In
addition to a transformation to a culture of work and
assistance to those unable to work, growth is the path to
leaving poverty behind."
The Finance Ministry lays the blame for the increase in
poverty on the economic recession and unemployment, which it
claims struck the weaker strata the hardest.
Rabbi Gafni: Education Ministry Cutting Chareidi
"The Education Ministry is astonishing. More money is always
added yet at the same time there are always cuts. Every cut
that applied to the general education system applied to
chareidi education more. For instance, in bussing there is a
4.8 percent cut in the general education system but in the
chareidi education system it comes to 8 percent," MK Rabbi
Moshe Gafni said.
Education Ministry Director General Mrs. R. Tirosh said,
"Every year the opening of the school year is difficult, but
this year more than ever. We have sabotage warnings by
teachers' organizations [threatening to launch] labor
disputes. The teachers are planning a focused effort to
thwart the opening of the school year in 35 towns where the
first phase of the Dovrat Report is to be implemented."
Representatives of the teachers' organizations presented the
problems contained in the Dovrat Report and complained about
the lack of cooperation with them on the part of the
Education Minister. "The Dovrat Reform is a cosmetic,
organizational reform alone, sleight of hand and throwing
sand in the eyes of the public and the teachers," said Ran
Erez, chairman of the Post-Primary Teachers' Association.