Dei'ah veDibur - Information & Insight

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25 Teves 5766 - January 25, 2006 | Mordecai Plaut, director Published Weekly










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Over 1.5 Million Israelis Live Below the Poverty Line

by G. Kleiman

A total of 1.58 million people live below the poverty line in Israel, including 25,000 children who joined the ranks of the poor this year according to a report released by the National Insurance Institute on Monday this week. Over one-third of all children in the country lived in poor families in 2004, while the number of elderly poor decreased due to the increase in Old-Age Allotments. Currently the poverty line has been set at NIS 3,700 (about $800) per month for a family of two.

The National Insurance (Bituach Leumi) report, presented at a press conference by Deputy Welfare Minister MK Rabbi Avrohom Ravitz and National Insurance Director-General Yigal Ben- Shalom, shows 34 percent (783,000) of all children in Israel are poor—a 50 percent increase since 1998. The report also reveals that 41 percent of poor families include at least one wage earner (rising from 40.3 percent), refuting the Finance Ministry's claim the reductions in allotments would encourage more people to enter the job market.

During the past year 46,000 Israelis joined the poverty ranks, and the total number of poor families rose to 403,000. The poverty rate in the general population rose from 18.8 percent in 2000 and 23.6 percent in 2004, to its current level of 24.1 percent.

Despite the alarming figures, National Insurance officials say last year the rise in poverty decelerated compared to the two previous years. The Director-General believes that changes in government policy can still save segments of the population that have not yet fallen into decline. "I have no doubt that at this point we need to at least invest in curtailing, if not stopping, the cutback in allotments," he said. "We must invest in more education and welfare projects for children. Otherwise we will lose these children."

According to the Genie Index, a measure of social equality, the social gap in Israel has grown by another 1 percent. The upper tenth's portion of available income (after paying taxes and receiving allowances) continued to rise from 26.6 percent in 2004 to 27 percent in 2005, while the bottom tenth's portion rose from 1.7 percent to 1.9 percent. The upper tenth has nearly 30 percent of all income although it represents only 10 percent of the population.

"The erosion of the majority of allotments that the National Insurance Institute pays," reads the report, "particularly Children's Allowances, and the additional reduction in income tax which benefits primarily the high-income earners, led to a further reduction in the contribution of transfer payments and direct taxes to the reduction of inequality in income distribution." This contribution decreased from 31.5 percent in 2002 to 26.6 percent in 2004/5. In 2005, benefits brought only 17 percent of children above the poverty level, as opposed to 25 percent of children in 2002.

In 2005, NII benefits other than those to seniors declined in real terms by 2.5 percent, for a total decline since 2002 of 15 percent. The NII proposed that the cutting of child allowances, which was to have stopped in 2009, be stopped this year, and that benefits paid for each child be held steady at NIS 170.

The substantial growth in poverty comes despite the fact that the poverty line has remained almost unchanged in recent years. Today the poverty line is defined as NIS 1,804 ($390) per person in monthly available income or NIS 5,411 ($1,175) for a family of five. In 2000 the poverty line was NIS 1,753 per person.

The main factors for the sharp rise in the number of Israelis whose income falls below the poverty line is that National Insurance allotments and other support funding are insufficient to push them above the poverty line. This is the effect of various transfer payment cutbacks made during the Sharon government and the period during which Binyamin Netanyahu served as Finance Minister all of which was touted as the "new economic program."

Protesters representing the Union of Social Workers demonstrated outside the Welfare Ministry in Jerusalem while the report was being presented. "Every year the report is published and nothing is done about it," said Chairman Itzik Perry. "I would like to ask National Insurance to do something very simple: stop publishing it to avoid creating the delusion we are a smoothly functioning, enlightened social welfare nation that gathers data—since nothing is done with it anyway."

Commenting on the report—the worst ever—Rabbi Ravitz said, "Every few months a reporter or politician recalls that there is poverty in Israel and places it on the public agenda. After a media-fest of one or two days, or maybe three at best, including pictures of empty refrigerators, people in soup kitchens and a few demagogic statements from every direction, the story fades and the poor are forgotten and return to their places on the fringe of Israeli society.

"I view this phenomenon as exploitation of the poor for personal and partisan aims and to draw ratings. In most cases those who talk about this issue have no real intention of delving into the problem of poverty or of offering genuine solutions.

"Not only are people impoverished in Israel, but unfortunately the public dialogue is impoverished and superficial as well. This low level of social dialogue is the level at which the Finance Ministry and those who call themselves `economists' would like to see the issue remain. This way they can continue to determine the economic policy without any interference and really without any serious discussion.

"The Welfare Ministry and the National Insurance Institute never forget the poor. Here we do not do one-time festivals; here there is no reason for festivities since we see the weak segments of society face-to-face on a daily basis. Unfortunately we feel shackled and unable to assist the way we would like to assist the people who come knocking on our doors. We analyze the situation and try to offer solutions, but the economics people have more power than we do. The numbers continue to cause concern and should make every individual who fears for the social fabric in Israel feel concerned."

Starting last year, National Insurance began publishing statistics biannually rather than annually to make the data as up-to-date as possible. This time the figures apply to the second half of 2004 and the first half of 2005. According to the report, the number of poor families rose from 394,000 in the previous report to 403,000, or one in five.

In reaction to the figures the Finance Ministry remarked, "The Government of Israel is aware of the problem of social gaps. The Director-General of the Finance Ministry has been instructed to head a team that will formulate a fundamental plan to confront the problem. The seven-year, NIS 14-billion [$3-billion] plan will focus on long-range tools and means, including creating jobs, providing services to poor sectors, investing in education, increasing the rate of participation in the workforce and creating tools to remove obstructions preventing people from going to work and encouraging employment.

"The primary growth and the impact of the changes the government introduced, focused on the second half of the year. This is a positive trend, but the signs will only become visible a bit later when the growth permeates every segment of the population and the positive indicators and the government's programs have an effect on the reduction of poverty to a greater extent."

Acting Prime Minister and Finance Minister Ehud Olmert said, "This is a difficult problem and it has been bothering me and troubling me for a long time. The report applies to the year starting in July of 2004 and ending in June 2005. My time in office at the Finance Ministry began after the period covered in the report. The figures are worrisome and cannot be taken for granted. It was clear to me from the start we would need to confront the issue of gaps and poverty in a more comprehensive manner. I believe the next report will present a different picture."

MK Rabbi Meir Porush said, "The economic policy, which presents growth statistics in the economy, has effectively left half a million citizens to lives of poverty in soup kitchens. Only certain segments benefit from the growth and they have widened the gap between themselves and the weak segments. The citizens of Israel must adopt the recommendations of President Moshe Katzav, who called on the public not to vote in the elections for a party that does not place poverty at the top of its concerns. But the citizens of the nation should also punish the parties responsible for creating the poverty rate—the largest among the world's developed countries."

According to MK Rabbi Moshe Gafni, this week's report "could bring the State of Israel to the bursting point and to a social civil war. The heads of Kadima and the Likud who led this ruinous policy are directly responsible for the destructive results, which become worse from year to year. If at the beginning of this path which is extremely anti-social and neo-capitalist, they hid behind the difficult economic state of the country now, after the number of terrorist attacks has decreased, boruch Hashem, tourism has grown, and world markets (which have a direct impact on the Israeli economy) have recovered, they continue without any changes to this policy [with its threat of] imminent disaster. Unfortunately, history has proven that social gaps which reach such alarming dimensions and are clearly lacking in justice and equality in the distribution of resources in the society lead to outcomes, chas vesholom, whose end cannot be foreseen."

Shas Chairman MK Eli Yishai said, "The government has transformed poverty into a deadly bacteria that paralyzes the immune system. The government chose to eliminate the poor rather than poverty."


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