Israel is poorer and its standard of living is declining. The corona crisis caused a 7% increase in the poverty rate and a significant decrease in the standard of living in 2020 by 4.4%, according to an estimate made by the National Insurance Institute for the coronation year 2020. The last time the standard of living decreased in Israel was in 2008, but the decline was moderate. However, the decline in living standards in the corona year was actually much higher, at 23%. This, without the direct impact of Social Security payments and grants.
The standard of living has dropped, 2 million poor
(Photo: Nadav Abs)
The data show that in the year of the severe corona crisis, the Gini index for inequality also worsened and recorded an increase of 7.8% between 2019 and 2020. Recall that already in 2018, the index in Israel was relatively high in most OECD countries. The main reason: Many of those who dropped out of the labor market were male and female workers at the lowest wage. Meaning: The gaps between rich and poor in Israel increased in the corona year by a very significant rate.
The number of poor people in Israel reached 1,980,309 in 2020, out of about 9.2 million residents of Israel. Of the poor 907,279 are children.
But as mentioned, an extraordinary phenomenon occurred in 2020 and caused extraordinary data. As in the rest of the world, the poverty line is defined in Israel according to the standard of living of the population. Usually the standard of living increases with time. However, in 2020 the standard of living, as expressed in the median income adjusted for family size, has fallen sharply. As a result, the poverty line, which has been rising for most of the years, fell by a considerable rate of 4.4% this time. Thus, there may be a situation in which a public living in poverty before the corona crisis was not defined as poor in 2020, while its income may have even decreased and its sense of poverty must have increased.
Finance Minister Israel Katz in an interview with the Ynet studio
(Photo: Alex Gamburg, Meshi Ben Ami)
Therefore, those whose income was below but close to the poverty line in 2019, and whose income decreased, but by less than 4.4%, will not be defined as poor even though their economic situation actually deteriorated in the corona year. It should be noted that the standard of living in Israel has risen on average since 2012 by 3.4% per year. So in fact the standard of living in 2020 has fallen from what was expected at a very high rate of 8%. The poverty line in 2020 was NIS 2,403 per capita, compared with NIS 2,514 in 2019 and NIS 2,467 in 2018.
For this strange reason, due to the changes in income distribution and the decline in the poverty line, and in view of the significant government intervention in 2020 – the incidence of poverty of families, persons and children was artificially reduced in 2020 by 0.8% -0.9%.
The number of poor Jews amounted to 1,277,477 persons, of whom 560,882 were children. The number of poor ultra-Orthodox has exceeded half a million – 500,396. The ultra-Orthodox are particularly poor due to the low labor force of men. The number of poor ultra-Orthodox children reached 296,167. Among the Arabs there were 702,832 poor and the number of poor Arab children reached 346,397 children. The main reason here: a minority of Arab women working.
208% of families in Israel are poor. 21.6% of the people are poor and 30.0% of the children in Israel, almost a third, are poor. A particularly sad figure.
The number of poor people in families with children is 1,488,116. Families with 1-3 children have 744,261 poor people, families with 4 children 743,854 people and families with 5 children or more have 511,117 poor people.
And no less serious: in Israel there are 155,279 poor elderly people – according to the definitions used in the world, women from the age of 60 and men from the age of 65. At retirement age – 62 for women and 67 for men – there are 135,172 poor people in Israel. That is, that most of the poor seniors are of retirement age. Reminder: The old-age pension recently increased by only NIS 6 two years ago. In 2020, 10.7% of the elderly in Israel were poor.
Social Security data shows that aid provided by the state during the 2020 corona crisis has reduced the impact on living standards. Precisely in the lower decile, per capita disposable income not only did not decrease, as it did in the other deciles, but also increased.
In 2020, child benefits and unemployment benefits increased their effectiveness in rescuing poverty up to 10 times more than before. Unemployment benefits rescued 23.6% of families from poverty, compared to 2% in 2019. The child benefit rescued about 8% of families from poverty, compared to 2.6% in 2019, mainly due to the grants paid by the government to families.
The report shows that family economic income decreased by an average of 11% in 2020, to NIS 13,627, compared to NIS 15,274 in 2019. However, disposable income decreased by only 2.6%, from NIS 13,856 in 2019 to NIS 13,501. In 2020.
The income of young people, when the head of the household is up to the age of 44, decreased by 11-12%. The income of those who are of retirement age, 62 for women and 67 for men, has decreased only at low rates compared to the entire population, when it comes to disposable income – less than half a percent.
The income of excluded families from the labor market, which is usually characterized by a very high level of poverty, increased by about 6%, thanks to grants, such as for families with children on Passover and the grant per citizen last summer.
Eli Cohen, CEO of Pethon Lev: “For years we have been claiming that poverty is a scourge of a state that is only expanding to new audiences. According to the report – a 23% drop in living standards means that the lower part of the middle dimension has deteriorated into poverty, while what curbs the catastrophe are government payments. In the near future government payments will stop while the decline in living standards will remain. A new generation of poverty is created here. Corona who were ‘born’ into the cycle of poverty with no choice. Behind every number, figure and statistic in the report is a person, family and business that collapsed – with many dreams and big debts. The State of Israel must stop counting data and start working – there is no plan to eradicate poverty. Without promise or purpose on the part of the government. “
Adv. Roi Cohen, President of Lahav: “The writing was on the wall. The National Insurance report on the dimensions of poverty in Israeli society is a certificate of poverty caught with the pants down in the Corona crisis regarding the social safety net for the self-employed. In light of the report, “That the government will take responsibility for the data and that Prime Minister Benjamin Netanyahu will enter a press conference and publicly apologize to tens of thousands of self-employed families that he and his government have slipped below the poverty line and it will take many more years to get out of this bleak reality.”
Eran Weintraub, CEO of Let: “The situation on the ground is chaotic, the worst we have known in decades. We expect the economic crisis to peak in the coming months. Government assistance cannot offset distress, with hundreds of thousands losing their jobs, poor veterans degenerating into unbearable realities due to loss of livelihood and prolonged stay at home, tens of thousands of middle-class families seeking first aid in their lives, and hundreds of thousands of needy elderly suffering from unbearable cold and life. Disrespectful.
“Measuring poverty by the income parameter alone does not reflect a complete picture of poverty, as due to the decline in the standard of living of the general population, the poverty line has also plummeted and families previously defined as poor can now be considered poor – although their status has not changed and their needs have only increased. It is also crucial for a multidimensional poverty index, which examines the degree of shortage in the basic areas of life: health, housing, education, or food security and dealing with the cost of living. “
Michal Cohen, CEO of the Rashi Foundation, which works to reduce social disparities: “We are in a socio-economic emergency. Pfizer’s vaccine is unfortunately not effective against the economic corona. Entire parts of the middle class collapsed. The government must revolutionize the world of vocational training. Some of the professions are no longer relevant to the new world and an entire generation is lost here. “Whoever enters this crisis is weakened – even weaker.”