Adva Center's annual report, Israel, A Social Report, came out today. Most of the figures presented in it are for 2009, a year of global financial crisis. Whenever possible, figures are also presented for the whole decade.
The report shows that although the Israeli economy suffered less damage than other countries from the global crisis, resuming economic growth faster than other economies, internal inequality continued to increase.
Following are the main figures:
Inequality in Salaries and in Household Income
· In 2009, the gross average monthly income of 8 of the 10 income deciles declined, while the income of the bottom 4 deciles experienced a sharper decrease than the top 2 declines.
· During the years 2000-2009, the share of the bottom 4 income deciles in the total income declined, from 17.0% to 16.3%, while the share of the top decile grew, from 28.0% to 28.5%.
· In 2009, women's average monthly salary was NIS 6,280 – 66% of men's average monthly salary. This represents an increase over 2008, when the proportion was 63.1%. However, the improvement stems from the fact that men's salaries declined while women's salaries remained stable. Women's average hourly wage was NIS 42.6 – 84.5% of men's hourly wage; here, too, the improvement stems from the decline in men's wages.
· In 2009, Israel's middle class continued to shrink: the proportion of middle class households in Israel declined from 27.1% in 2008 to 26.6% in 2009. At the same time, the share of Israel's middle class in the total income declined from 20.7% to 20.5%. Since 1988, the middle class has shrunk from 33.0% of all households to 26.6%. Its share in the total income decreased from 27.9% to 20.5%. The middle class is defined as those households earning between 75% and 125% of median household income.
· In 2009, the average monthly salary of urban salaried Ashkenazim (Israeli-born persons to fathers born in Europe or America) increased relative to the average monthly salary of all urban salaried employees by three percentage points, from 38% above the average in 2008 to 41% above the average in 2009. The average monthly salaries of Mizrahim (Israeli born persons whose fathers were born in Asia or Africa) also increased by three percentage points, to 3% above the national average. In contrast, the average monthly salary of Arab urban employees remained as it was in 2008 – 67% of the average – the same salary level as in 2000.
· In 2009, the average annual salary bill of a senior executive in a company on the "Tel Aviv 25" (The 25 largest companies on the Tel Aviv stock exchange) declined by 6% to NIS 9.13 million, or NIS 761,000 a month – 94 times the national average wage.
Inequality in Education
· In 2009, the success rate of 17-year-olds in the matriculation examinations increased from 44.4% to 46.1% (including the winter exams). Still, 54% of young people failed to receive matriculation certificates.
· Disaggregating the figure by type of locality, we find a high degree of inequality: In affluent localities, the success rate was 66.0% (in 2008: 67.2%); in development towns, it was 47.3% (representing a steady decline from 54.2% in 2004); in Arab localities (excluding East Jerusalem) it was 34.4% (down from 42.2% in 2004).
· In 2008, the percentage of students among the 20-29 age cohort in affluent Jewish localities studying for a bachelor's degree in Israeli universities was 10.1% - a figure double that in Arab localities – 4.8%. In Jewish development towns, the percentage was 6.0%.
Inequality in Access to Health Services
· In 2009, household expenditures on supplemental health insurance (sold by health funds) and commercial health insurance continued to grow. The average monthly expenditure of households on health insurance in the top decile grew from NIS 352 in 2008 to NIS 387 in 2009, and the average expenditure of households in the sixth decile grew from NIS 165 to NIS 181. The average expenditure of households in the bottom decile decreased somewhat, from NIS 85 to NIS 82.
· In 2009, the gap between the full indexing of the cost of the basket of health services provided by health funds under the National Health Insurance Law and the actual cost widened. Full indexing of the cost would have brought the cost in 2009 to NIS 41.5 billion, while the actual cost was NIS 28.1 billion.
Inequality in Retirement Income
· In 2009, households in the top quintile reported retirement savings averaging NIS 972 per month, while households in the bottom quintile reported savings averaging NIS 35 per month.
Israel's political leaders boast about the short and limited damage suffered by the Israeli economy as a result of the global financial crisis. At the same time, the figures presented in Israel, A Social Report point to the growth of inequality, both during the wave of economic growth that preceded the global financial crisis and after the advent of the crisis. The authors of this report contend that economic growth led by the private sector is not sufficient: Israeli society is in need of a social policy designed to reduce the high degree of inequality, to compensate for the harm done by the budget cuts made during the last decade, and to ensure that future growth extends to all sectors of society and does not remain limited to a small group.
The report also mentions that Israel's ability to sustain economic growth over a long period of time is adversely affected by the absence of a political settlement with the Palestinians. During the past decade, when the per capita GDP in East Asia and Eastern Europe grew impressively – for example by 9.6% in China and 4.1% in Poland, Israel's per capita GDP grew by an average no more than 1.6%. The slow average pace of growth is due to the fact that during the period of the second Intifadah, Israel's per capita GDP not only failed to increase, but rather declined. While the rich countries of the West also experienced low average growth rates, their per capita GDP was much higher to begin with: If Israel is to resemble these countries, it needs to grow at a faster pace than they do. Such growth requires long-term economic stability.