Israel’s Economy Today
Suzanne Selengut, UJC Israel

Israel has developed into a fledgling economic power, posting impressive gains in gross domestic product (GDP) and achieving dizzying growth on the Tel Aviv stock exchange. Yet at the same time, hundreds of thousands of Israelis face serious financial hardship due to a massive gap between rich and poor, an income gap that is twice as large as that of the United States. This gap is likely to widen as the global economic hardship continues.

From 2002 – 2004, then finance minister Benjamin Netanyahu instituted drastic cuts in welfare services, spurring criticism in the welfare and social services sector. However, according to some observers, the effects of a restructured and liberalized economy have meant that as the current global financial crisis takes effect, Israel's economy has remained somewhat resilient. Still, despite a relatively stable banking system, it is not immune to the progressively worsening economic crisis.

As of May 2009, Israel is officially in a recession

• GDP fell 3.6 percent in the first three months of this year, following a 0.5 percent drop in the last three months of 2008.
• Israeli export of goods fell by 6.4percent in November 2008 to January 2009; imports of raw materials fell 11.3percent; and trade and services proceeds fell 8.4 percent
• Tourist entries in January 2009 were down 30percent compared to the previous year.
• Some 35,000 people joined the unemployment lines in the first three months of 2009 and the unemployment rate reached its highest level in almost two years – 7.6 percent
• The Central Bureau of Statistics said that it expected the unemployment rate to reach almost 10percent by the end of 2009.
• More than 80,000 people have lost their jobs since the global economic crisis began last summer.
• An estimated 130,000 Israelis are expected to be dismissed from their jobs between June 2009 and the end of the year, according to the Israel Employment Service.

Poverty and Hunger

Of the 2.1 million households in Israel, one of every four Israelis –1.6 million people – lives below the poverty line. Close to half of them are working in full or part-time jobs and are still unable to provide the basics for their families. This Passover, charity organizations say they saw a 40 percent increase in the number of people asking for help. In Jerusalem nearly 1,000 people a day come to four soup kitchens at which hot meals are served.

• One-third of Israeli children, some 777,400 in number, live in poverty-stricken families, according to the National Insurance Institute (February 2009). Israel ranks among Western countries with the greatest percentage of poor children.
• The number of working families under the poverty line continues to rise, from 45.7 percent in 2007 to 66.4 percent in 2008.
• In 2005, the poverty line for a single person was about $445 per month; for a family of five, it was $1,337. A minimum-wage earner in Israel brings in approximately $883 per month; taxes can reduce that number almost to the poverty line.
• Over 70 percent of the minimum wage earners in Israel are women.
• 75 percent of poor families cannot afford medicine and 70 percent are dependant on food donations.
• 80 percent of Israelis living on support provided by aid groups are below the hunger line.

One of the saddest and most telling statistics is this: 44 percent of those polled by Latet, a food aid organization, stated they cannot imagine breaking out of the cycle of poverty, and believe that their children will also grow up to be poor.

Vulnerable Populations

Israel's poorer sectors are particularly vulnerable to job loss, and this problem tends to be exacerbated in towns on the periphery, as well as among certain sectors of the population such as new immigrants and Arab Israelis. Building a new life in Israel is especially challenging for immigrants from the developing world, such as Ethiopia and Bukhara.

Immigrants

While a small percentage of highly skilled immigrant professionals may find positions utilizing their education and experience, many more from rural parts of the former Soviet Union and Ethiopia have only a rudimentary Western education and lack basic job skills for survival in an industrialized country.

Ethiopian Jews, now about 100,000 people, are among the poorest economic groups in Israel. The majority of Ethiopian families, 72percent, live under the poverty line. 70percent left Ethiopia functionally illiterate in their native Amharic and many remain so in Hebrew as well. Unemployment among Ethiopian men in Israel ranges from 27percent to 66percent, and fewer than 25percent of Ethiopian women are employed. Beyond acculturation and language difficulties, many immigrant women have no previous work experience outside the home and are unaccustomed to Israeli social norms.

Elderly

One fourth of Israel’s elderly live in poverty, with barely enough food, heating fuel, and warm clothing to survive. Some are seriously ill, and cannot afford the simplest of medications. Some 40 percent of Holocaust survivors in Israel are living below the poverty line. There are nearly 400,000 Holocaust survivors in Israel, the nation with the largest population of survivors anywhere.

The problem is particularly acute for about 170,000 who moved to Israel from the former Soviet Union over the past decade. They are entitled neither to the monthly pensions sent other survivors by the governments of Germany, Austria and Switzerland, nor the pensions supplied by Israeli and international Jewish organizations.

Special Needs

Persons with disabilities in Israel earn about 34percent less than the national average  – a disparity second only to South Korea, according to a survey by the Commission for Equal Rights of Persons with Disabilities (Cerpd). One quarter of Israel’s population, 1.36 million people, are disabled.

Haredim (Ultra-Orthodox)

A significant but often forgotten vulnerable population are the ultra Orthodox or haredim. Forty percent of haredim in Israel live on government support. Tradition dictates that men study Torah full-time, while woman are mothers to large families as well as breadwinners. The employment rate in Jerusalem’s haredi-Religious community has increased by 70 percent since 2004, according to a Manufacturers Association of Israel (MAI) report. Although women still constitute the majority of employed haredim, the report also found an increase in employment among the men in various industries.

Arab Israelis

One-third of all poor families in Israel are Israeli Arab, according to Mossawa, the Advocacy Center for Arab Palestinian Citizens of Israel. The group said it estimates that 60 percent of all Arab children in Israel live below the poverty line. The percentage of poor families in the Arab sector in 2004 stood at 49.9 percent, up from the 2003 mark of 48.4 percent. In 2006, Arab women's participation in the workforce was a mere 19 percent, significantly below both that of Arab men (59.7 percent) and of Jewish women (56 percent). This fact significantly reduces many families' chances of breaking out of the vicious circle of poverty.

What can be done?

Various programs work to help welfare-dependent working-age Israelis overcome the cultural, behavioral and other barriers that keep them from finding and maintaining decent jobs. Here are just a few of the programs that encourage self-respect and a community-based approach.

• The Jewish Agency’s  Small Business Loans provide grants that will help small-to-mid-size businesses get back on their feet, especially after war or other hardship.
• JDC’s TEVET employment initiative with the Government of Israel runs the Eshet Chayil program, which orients immigrant women to the Israeli workplace, helping them acquire job readiness, and teaching them to harness the power of networking.
• JDC’s STRIVE program affords participants the opportunity to train with a personal coach, participate in workshops, and begin vocational training.
• JDC-ESHEL’s Ethiopian crafts project for the elderly takes advantages of skills and crafts native to Ethiopia and turns them into an employment opportunity for those elderly new immigrants who are unable to find work on the open market. 

With Annual Campaign dollars and our collaboration with our overseas partners, we can be part of the solution, helping to meet the increased needs of Israel’s most vulnerable populations during these challenging times.