Coronavirus in Israel: The epidemic of inequality

Photo: Wikimedia, Ted Eytan

The differential impact on Israelis from diverse population groups

Like many of their counterparts in Europe and America, the top economic 1% in Israel not only was not adversely affected by the crisis, but came out ahead. According to the Bank Credit Suisse Wealth Report, in 2020, there were 157,286 millionaires in Israel – a negligible decrease of 0.1% since 2019. The average wealth of Israeli millionaires – reported at $3.33 million – remained stable.

Israel’s 1% received the most expeditious state protection and benefits. The Bank of Israel supported big corporations by purchasing NIS 15 billion worth of corporate bonds. This aid contributed to the fact that while the real economy shrunk, the Tel Aviv 90 Index increased by some 18% in value during the first year of the coronavirus pandemic.

The government exempted the wealthy from the burden of participation in financing the costs of the coronavirus crisis. Israel expended an estimated NIS 137.3m. on aid to businesses and citizens. As this sum was not budgeted, it increased the budgetary deficit and the national debt. The Benjamin Netanyahu-Benny Gantz coalition did not consider raising taxes, despite Bank of Israel declarations that tax increases were unavoidable.

If tax increases are not imposed on the wealthy, such increases will either fall to the lot of the middle class or, alternatively, result in the privatization or reduction of public services – moves that will hurt middle- and low-income families. It seems to me that the time is ripe for a wealth tax in Israel.

Like its ultra-rich, the country’s hi-tech sector was not adversely affected by the coronavirus pandemic. In fact, the hi-tech sector continued to grow. For example, the 13,500 hi-tech workers employed in the 10 largest technology companies listed on the stock exchange gained no less than $2.5m. in value.

Small businesses were the main losers in the coronavirus crisis, primarily service providers, many of whom had experienced upward mobility due to increased consumption. In 2020, private per capita consumption in Israel decreased by 11.1%, more than the average in OECD countries – 6.3%.

Dun and Bradstreet estimated that in the first half of 2020, 37,600 Israeli businesses shut down, among them 1,550 restaurants, bars and coffee shops; more than 1,000 construction and renovation firms; some 600 transportation companies and 450 clothing shops.

The chief economist of the Finance Ministry estimated in May 2020 that 54% of workers furloughed were employed in small businesses.

The highest proportion of Israeli citizens reporting food insecurity during the coronavirus pandemic was found among Arabs. In April 2020, 23.5% of Arabs reported that they or members of their family had reduced the amount of food or the number of meals during the previous week, compared with 14.1 % among persons in the general population of Israel aged 21 and over.

While the economic crisis accompanying the coronavirus pandemic had an adverse effect on renters – as well as on home owners with mortgage payments to meet – the benefits given by the government in the area of housing were directed not to them, but rather to persons purchasing housing units as investments. With the express purpose of stimulating business in the real estate sector by providing incentive to investors, the purchase tax for investors was reduced in July 2020, thus abrogating the increase made in 2015 to discourage real estate investments in favor of the purchase of own homes.

Health crisis

Israelis of low socioeconomic status became sick more than those of high socioeconomic status, among other things due to the higher incidence of health risk factors like high blood pressure and diabetes.

The coronavirus pandemic threatens everyone, but the threat is especially acute for people whose living conditions promote contagion. Housing density and household size are larger among haredi (ultra-Orthodox) Jews and Arabs than among others, resulting in greater susceptibility to infection from the virus.

Another factor influencing the rate of illness from the coronavirus is the sense of alienation of these same two population groups from the central government and its institutions, resulting in indifference or non-compliance with official instructions issued as to how to keep safe from contagion. Much more could have been done to allay fears and suspicions, including efforts to work earlier and more closely with community leaders.

The result: the death rate of Arab citizens aged 60 and older from the coronavirus was three times that of non-haredi Jews, and the death rate of haredi Jews four times that of non-haredi Jews.

The coronavirus pandemic affected the mental, as well as the physical health of citizens. During the first lockdown, about one-third (34%) of people aged 21 years and over suffered from tension and anxiety. That proportion rose to 42% when the lockdown was lifted in July 2020. In November 2020, the proportion decreased to 37% – still quite high. Those reporting the greatest suffering from tension and anxiety were women and Arab citizens.

Feelings of loneliness and depression were revealed by the Citizen Resilience Survey conducted by the Central Bureau of Statistics, which showed that in April 2020, 30% of interviewees aged 65 and over reported loneliness and 19% reported depression, compared with 24% and 16%, respectively in the general population. Here, too, more public mental health services could have been offered to counter tension, anxiety and depression.


// Originally published in the Jerusalem Post