Israel is now rated second in the Western world, after the
United States, in terms of social gaps in income, property,
capital, education and spending.
Many countries have experienced a widening of social gaps but
this trend is more pronounced in Israel than elsewhere.
Israel had one of the best equality figures in the 1960s.
This is what emerges from a report presented this week by a
special Knesset committee that studied the phenomenon in
Israel.
"For 20 years, Israeli governments have had blatantly anti-
social policies. The result is horrendous findings that
should shake anyone with a conscience," said MK Ran Cohen
(Meretz) who headed the committee. He called for a national
plan to reduce the gaps that would include all aspects of the
problem, including wages, education and taxation.
The findings were collated from reports of the Central Bureau
of Statistics, the National Insurance Institute, witnesses
who appeared before the committee and academic studies. They
found that the number of poor children in Israel rose by 50
percent over the past 14 years and the number of poor
families went up by almost 30 percent.
Some NIS 800 billion in private capital is in the hands of
the upper 10 percent of the population while 90 percent of
the population divides the remaining capital: some NIS 340
billion.
The committee's members see as causes the low growth rate in
gross domestic product per capita, the low percentage of men
who participate in the labor force relative to other
countries, and in high birth rates, particularly among
families that do not participate in the labor force.
These gaps widened despite the fact that social welfare
budgets almost doubled over the past 20 years - from 28
percent of the state budget to 54 percent.
According to the CBS, the gross income per family in the top
decile is more than 12 times higher than in the bottom
decile: NIS 39,130 as compared with NIS 3,225. According to
the NII, the gap is even wider: 20 times between top and
bottom.
As far as income from dividends and interest on capital, 81
percent of the income is in the hands of 10 percent of the
households while the other 90 percent share the remainder.
In member states of the Organization for Economic Cooperation
and Development (OECD) "only" 77 percent of capital is in the
hands of the top decile. In Israel, most of the capital is in
non-taxable savings programs or stocks, while in the OECD,
these gains are taxable by about 50 percent.
One of the major phenomena identified by the report as a
problem is the low percentage of men in the work force: 86
percent here as compared with 94 percent in the OECD
countries.
The report pointed to the fact that chareidi men to not
participate in the work force as one of the causes of
poverty. It said that only some 20 percent of chareidi men
are in the labor force now, as compared with 33 percent eight
years ago. In 1980, the rate was 50 percent according to the
report. The report claims that today there are some 290,000
chareidim. In chareidi families in which neither parent
works, the poverty rate is 83 percent compared with a rate of
34 percent in families where the mother works.
The dearth of working men in other sectors was explained by
factors such as low levels of education among men, preference
for foreign workers, and military service.
While the phenomenon of widening gaps is widespread in
developing countries, in Israel the problem is aggravated by
factors including slow economic growth, the low participation
rate of men in the work force, high birthrates among groups
with a high poverty level, high taxes on salaries and few
taxes on capital.
According to the committee, the low wages paid to foreign
workers have pushed down salaries paid to low-income workers.
Foreign workers are therefore a factor in the widening gap
between rich and poor.
The report also notes the impact of the Public Housing Law in
1998 which has thus far turned 17,000 of the nation's poorest
families into property owners. Cohen was the author of the
law.
The redistribution of state capital is also recommended in
the report, including distributing stock options in state
companies to all citizens and granting ownership to property
held by the Israel Lands Administration.
