Major Findings –

The Journey to Higher Education

The study points out that despite an increase in the rate of college students of Ethiopian origin, their representation in institutions of higher education is still lower than their representation in the general population, especially when it comes to advanced degrees. The route to higher education, it appears, is still a bumpy one.

Impediments to admission: The proportion of Ethiopian Israelis matriculating is close to that of the general Jewish population of Israel, but only 54% matriculate at a level high enough for admittance to institutes of higher learning, compared with 75% amongst Israeli Jews in general. Nearly all individuals interviewed had to improve their grades (either by retaking the matriculation exam or by enrolling in a pre-academic course of study) before they could be admitted to academia. Many mentioned the psychometric (college entrance) exam as a significant impediment, and indeed, the average grades of Ethiopian Israelis in the exam is lower by some 100 points than the average score of all those who take the entrance exams.

Choice of institution and major: More than four thousand Ethiopian Israeli students are enrolled in institutes of higher learning, constituting 1.4 % of all students. Relatively few pursue advanced degrees. In addition, they are under-represented at universities (vs colleges); only 24.1% of Ethiopian Israeli students are enrolled in universities, compared with 42.3% of all Jewish students. Regarding field of study, Ethiopian students are over-represented in social studies and administration, law, and auxiliary medical professions. In contrast, they are heavily under-represented in STEM professions, engineering and architecture.

First-generation academicians: All the interviewees in the study were the first generation in their families to receive a college degree; they described feelings of non-belonging and alienation, unfamiliarity with the academic system and significant differences between high school demands and academic demands. Many experienced covert or overt racism, low expectations and often loneliness, especially at universities (as opposed to colleges) and in situations in which they were the only persons from their ethnic background in a course of study. Their drop-out rate is relatively high — 25%, compared with 15% for Jewish students as a whole.

Economic hardship and its effect on studies: Most of the interviewees experienced ongoing economic hardship and needed to devote considerable time to work while studying, which often caused delays in completion of their degrees. Economic hardship also affected their choice of where to enroll; some chose the colleges that best enabled them to combine employment and study; however, that choice limited their possibilities of study and later employment.

Employment and integration difficulties: In 2020, only 0.6% of academicians in Israel were Ethiopian Israelis. The figure is low due to the small number of college graduates in the Ethiopian community, as well as to the difficulty of finding employment suitable to their expertise. Among those with bachelor’s degrees, only 18% worked in their fields, compared with 45% among the general population. Some interviewees expanded on how hard it was to translate their education into employment opportunities compatible with their education.

Academicians of Ethiopian origin are concentrated in economic sectors and occupations in which salaries are relatively low, in most cases lower than those of other minority groups. As such, they can be said to pay an “ethnic fine” – discrimination based on ethnic origin. There are many economic sectors in which hardly any Ethiopian Israelis are to be found, while their presence is significant in others — the public sector, health services, manufacturing and maintenance services.

Glass ceiling in the public sector: Despite the increase in representation of Ethiopian Israelis in the public services and local government, most occupy low-level positions and are under-represented in senior positions.

“Hyper visibility,” racism and stereotypes: High visibility intensifies differences in the workplace, as ethnic identity becomes the central factor regarding the worker, overshadowing skill, contribution and individual characteristics. The most salient phenomenon described by most of the interviewees was covert but consistent racism, reflected in lack of confidence in their professional abilities and in increased demands to prove their competence.

The culture of the Ethiopian community as an impediment, for example how hard it was to stand out and to market themselves “aggressively” as other Israelis do. Some defined theirs as “a culture of modesty” that limits one’s ability to dwell on their achievements and demand promotion.

The absence of employment networks and the types of connections needed for landing a job; the method of “friend brings friend” leaves Ethiopian Israelis out in the cold, especially in a situation in which very few Ethiopian Israelis occupy senior positions.

Affirmative action and organizational diversity: Despite awareness of the necessity of these employment strategies for increasing the presence of Ethiopian Israelis in senior positions and facilitating promotion, some mentioned that they might also act as a double-edged sword that reproduces labeling as a separate and inferior group.

The interviewees evinced determination to fight and not give up despite racism and discrimination. Strategies included refusing to work in hostile environments, even resigning to avoid them; viewing their own success as contributing to a change in the negative image of the community; directly confronting racist expressions, either with humor or aggression; or just ignoring or belittling unpleasant occurrences.

When asked what their recommendations were for young Ethiopian Israelis regarding education and employment, the main recommendations of most of the interviewees were “Get yourself a profession!” and “You will need to work twice as hard!”

RECOMMENDATIONS

Education

• Invest in improving the results of the matriculation exams of Ethiopian Israelis.
• Provide tutoring for college entrance exams.
• Direct prospective students to quality institutions and to professions for which there is demand.
• Expand economic assistance so that it includes living grants, especially for students enrolled at universities.

The Labor Market and the Public Sector

• Focus representation policy on promoting Ethiopian Israelis to senior positions in the public service and local government.
• Create clear lines of promotion and include Ethiopian Israelis in committees putting out tenders for senior positions.

Employers, Training and Employment Programs

• Raise the awareness of employers of the economic as well as the social advantages of diversity.
• Train personnel managers in diversity and inclusive work environments.
• Harness large and medium-sized employers to initiate diversity projects, with the involvement of the Ministry of Labor.
• Expand the “LaMerhak” career planning program for academicians, with an emphasis on students in colleges majoring in either the humanities or social studies.
• Promote the integration of Ethiopian Israelis into hi-tech industries and the education system.

The full research paper is available in Hebrew here (PDF).

הפוסט “You will need to work twice as hard”: From Higher Education to the Labor Market – The Trials and Tribulations of Ethiopian Israelis הופיע לראשונה ב-Adva Center.

An infographic presentation based on a study by the Adva Center in cooperation with the Friedrich Ebert Foundation on gender pay gaps in Israel.

הפוסט Why Is Women’s Pay Lower Than Men’s? Infographic Presentation הופיע לראשונה ב-Adva Center.

Over the last years, doubts about the merits of academic education were frequently raised, claiming that an academic degree is no longer relevant to the job market. The common perception connecting education with success, lost its holding and the Y Generation stayed away from the colleges and universities.

Consequently, a variety of career tracks bypassing higher education evolved in the labor market. Yet the data was clear: even before the pandemic unemployment rates among persons with academic degrees was significantly lower, and their wages were higher.

The economic crisis created by the corona, exposed the employment market’s duality and the value of high education. Namely, the vast majority of persons with academic education kept their jobs while persons with high-school education (or less) and low wages, especially in the services industry, were let go in high numbers.

Now young adults are changing the picture. Instead of taking on temporary, low-paid positions that offer no job security or quality career path, they turn to education. Enrolment rates for highly demanded professions, accounting, neuroscience, and engineering peaked. The “corona economy” succeeded where the state that tried for many years to encourage study of these subjects, failed.   

The increase in enrolment to social arts faculties such as philosophy and history – fields were almost obliterated by the practical perception of high education – is especially encouraging.  This due to the inherent value of education, the development of basic skills of reading, writing and analysis, digital literacy, active citizenship, and the ability to integrate in the job market. Moreover, education has a cross-generational impact: the degree of the parents’ education has a direct link to their children’s chances to succeed in school and in their future careers.

The budget allocated to face the corona crisis includes funding of vocational training programs that the government is struggling to implement after years of neglect of the field. Indeed, one would hope that the crisis will bring about improvements in this field as well. Nevertheless, it is no less important to allocate funds to increase accessibility to higher education by funding academic institutions so that they can cater to larger number of students, formation of a support mechanism of scholarship and subsidies so that all of the students admitted – including those of low socioeconomic backgrounds – will complete their degrees. There is also a need to finance matriculation courses and create affordable alternatives to the psychometric exam prep industry so that marginalized populations will have a better chance of being admitted. Similarly, vocational training programs must also receive funding to address the needs of those who are unable or uninterested in pursuing an academic degree.    

The Arrangements Law and Corona Budget allocated tremendous amounts to the transportation system´s infrastructure. Yet, the best investment for Israel at this point is a “New Deal” of investment in education and in its human capital. This is an investment which will yield benefits for years to come, and to future generations. 

// The article was published originally in The Marker (in Hebrew)

הפוסט Let Them Learn: It Is the Time for a “New Deal” in Higher Education הופיע לראשונה ב-Adva Center.

The report presents figures for some of the main aspects of inequality in Israel. As such, it also points to some desired socio-economic goals: inclusive economic development that involves all areas of the country and all segments of the population, expansion of the middle class, a significant decrease in poverty, a broadening of access to higher education, the development of a public housing option that is both universal and long-term, and public financing of all health services considered normative, eliminating the need for private health insurance for essential services.

Following are some of the main findings:

1. Household Income

Households have four sources of income: work, capital, social security and assistance transfers, and pensions.

The share of income from work grew between 2000 and 2017 on average in all of the first seven income deciles, and mainly in the two lowest: in the bottom decile it increased from 31.7% to 52.3% and in the second from the bottom decile – from 47.9% to 60.0%. This increase, although it reflects moderate pay increases – like the rise in the minimum wage and the work credit, along with other programs designed to encourage employment, it is mainly the result of an increase in the number of wage earners in these income deciles. Between 2000 and 2017, the number of wage earners in the bottom decile grew by 65%, and in the next to the bottom, by 56%; in the third decile by 54% and in the fourth by 43%.

In contrast, significant income from capital is reported mainly in the top income decile. In 2017, such income constituted 6.6% of the total income of households in the top decile, an increase over 2016 (5.5%), but a decrease in comparison with 2015, when it was 10.9%. A good proportion of such income derives from housing rents. In 2017, the top income decile took in 44% of total rents in Israel.

Regarding income from social security and other transfers, in 2017 these amounted to half of the income of households in the bottom decile, 37% of the next to bottom decile and about one-fourth of the income of households in the third decile. Over the last two decades, household income from transfers in the bottom two deciles decreased considerably, following large cuts made in the wake of the financial crisis brought on by the second intifadah. The main losers were the bottom six income deciles. In the bottom decile, for example, income from transfers decreased from 66.6% to 45.8% of total income, and for the second to the bottom income decile, from 50.4% to 37.2% of total income. Another factor contributing to the increase in the number of wage earners was the 2004 change in the age of entitlement to old age and work pensions, from 60 to 62 for women and from 65 to 67 for men.

Although the increase in the number of wage earners added to household income, the increment was not large enough to create a significant change in the income ladder. Many of the new wage earners got jobs with low wages or part-time work, in service sectors like sales, food service, care work, security work and the like. A high rate of poverty was found in industries like construction (22.5%) and transportation (12.2%)

In 2017, the average gross monthly income from all four sources of income for households headed by employed persons in the top income decile was NIS 60,484 — 12 times that of the average gross monthly income of households in the bottom decile – NIS 5,079.

Households in the top two income deciles received, together, 43.3% of the total household income of households headed by employed persons. The remaining eight deciles received, together, 56.7%. This proportion has hardly changed over the last decade.

2. Wages of Top Executives

In 2017, the compensation of CEOs and top executives in large corporations decreased in comparison with 2016. The most significant decrease was in the element of salary, while bonuses, stock options and “other” payments remained quite stable. Part of the decrease may stem from the law limiting the salaries of senior management in the financial sector that came into effect in October 2016.

Still, the compensation of managers of the large corporations was very high. CEOs in the 100 largest corporations traded on the Tel Aviv Stock Exchange received, on average, the annual sum of NIS 4.45 million, or NIS 371,000 per month – 36 times the average wage.

3. Gender Pay Gaps

Between 2000 and 2016, the proportion of women earning more than the average wage grew from 18.6% to 26.8%, while for men the increase was from 37.7% to 46%.

Despite this lessening of the gender gap, Israel still finds itself in an unflattering position amongst OECD countries. The OECD presents figures on gaps between the median wages of women and men: Israel is amongst the countries with the highest gaps, with a disparity of 21.6%.

4. Ethnic Pay Gaps

In 2017, second-generation Ashkenazi men received the highest pay, with an average monthly wage of NIS 16,961, while the monthly wage of second-generation Mizrahi men was NIS 13,291. In recent years the gap between the two was smaller, after years of slow convergence. At this point we cannot tell if what we are seeing is a change in the trend or an ephemeral change. In 2017, the average monthly pay of Arab citizens was significantly lower than that of most wage earners: NIS 7,723 for men and NIS 5,370 for women – about two-thirds the average wage of Jewish men and women. Another group receiving less than the average was first-generation Ethiopian Israeli men who arrived in Israel after 1990 – NIS 8,247 – 70% the average wage of men. At the bottom of the scale were first-generation Ethiopian Israeli women who arrived after 1990 and Arab women, whose average wage was NIS 5,568 and NIS 5,370, respectively.

5. Gini Index

The latest Gini index published by the National Insurance Institute is for 2017 – 0.352. This is a decrease of 1.6% in comparison with 2016 and is the lowest in two decades. Still, Israel remains with one of the highest degrees of inequality among OECD countries.

6. How Many Go to College?

Only 32.2% of persons who were 17 years old in 2009 were admitted to one of the institutes of higher learning in Israel by 2017 – about one in three.

In 2009, only 79.8% of 17 year olds were enrolled in high school in tracks leading to matriculation. The proportion of the age cohort matriculating was 46.1%; not all matriculation certificates were at the level of college admission. The result: those eligible were 39.4% of the age cohort. Only 32.2 % of the age cohort had entered college 8 years later.

7. Housing

In 2017, 28.3% of households did not own a home. Most of them rented in a largely unregulated market. The percentage of households residing in rented units rose from 24.3% in 1997 to 27.9% in 2017.

Private rental is basically an arrangement whereby low-income strata transfer capital to high-income strata. In 2017, the income from home rentals in Israel amounted to NIS 15.68 billion. Of that, NIS 6.85 billion went to the top income decile, NIS 2.63 billion to the ninth decile, and NIS 2.02 billion to the eighth decile. In other words, the three top income deciles received 73% of the total income from housing rental; the top decile alone received 44%.

8. Health

Private health insurance marketed both by health funds and insurance companies has become a huge business. Household outlays on these policies and on user fees for medications and treatments, grew from NIS 4.6 billion in 2000 (2017 prices) to NIS 13.9 billion in 2017. This could be conceived of as a tax added to the health tax collected by the National Insurance Institute: NIS 13.9 billion is equivalent to 60% of the health tax.

To sum up: Today’s labor market does not offer all Israelis a decent standard of living, due to a deep split between the small “start-up nation” and the large periphery. Israel needs to break down the barriers between the “start-up nation” and all the rest by investing much more in all sections of the country and all sectors of the population.

הפוסט Israel: A Social Report 2018 הופיע לראשונה ב-Adva Center.

Dr. Shlomo Swirski, co-author of the report, contends that “the economic miracle of which the government boasts is relevant mainly for a minority of Israelis, whose achievements raise the general average. A real miracle will occur if and when Israel jettisons its policy of budget austerity and limited responsibility in favor of a balanced economic growth that benefits the general public. Dependence on the private sector with hi-tech at its head as the engine that will pull the whole economy forward has no basis in reality. The research and development centers that multi-nationals established here are interested mainly in “milking” the ability of Israelis; the present supply of educated manpower is sufficient for them and they have no incentive to expand the limits of the “start-up nation” located in Tel Aviv and its environs.”

Economic Growth
The Israeli economy did experience growth; however that growth was based to a great extent on an increase in private consumption – car imports, for example – which it can be assumed reflected the demands of the upper income deciles and led to their upgrading their own standard of living. The other side of the coin is the expansion of employment serving, usually at low wages, the increasing consumption of the upper income deciles, like saleswomen, waitresses, security officers, and the like.

“Let Them Go Out and Work” – and They Did
As Minister of Finance, Binyamin Netanyahu was responsible for widespread cuts in social security, under the slogan, “Let them go out and work.” The cuts, together with various programs designed to encourage employment, did indeed push many people into the job market. Between 2000 and 2016, the number of bread winners in households in the bottom income decile grew by 58%, in the second lowest, by 73%, in the third, by 45% and in the fourth, by 35%.

From the perspective of the new bread winners, there is much to be said for being in the job market, as living from work is considered more respectable than living from social security payments. However, the addition of more bread winners, even if it did increase household income, did not lead to a significant change in the distribution of income. Many of the new bread winners found workplaces hiring on a part-time basis paying low wages. In some instances this was done at a high social cost, for example, for men and women working at exhausting jobs in which they experience burnout.

The top income decile earned 12 times the bottom income decile; the top centile – 23 times the bottom income decile
Since 2012, the gross income of households in all income deciles grew by between 10% and 17%. At the same time, income gaps remained high: in 2016, the average gross monthly income of households in the top income decile was NIS 58,846, 12 times the average income of households in the bottom decile – NIS 4,898.

Discussions of income inequality usually focus on gaps between the different income deciles, but the gaps within the top income decile itself are especially high. In 2016, the average monthly income of the top centile of households – NIS 113,621 – was 2.2 times the average income of the nine other centiles in the top income decile, and 23 times the average income of the bottom income decile. In other words, households in the top centile are worlds away from the economy of the remaining 99% of households in Israel.

Tell me How Much You Earn and I’ll Tell You Where You Came From
The recent improvement in salaries is more notable among women than among men. Between 2000 and 2015, the percentage of women earning more than the average wage increased from 18.6% to 25.9%, while for men the increase was from 37.7% to 43.9%.

In 2016, the top of the income ladder was occupied by first generation Ashkenazi men who had arrived in Israel by 1989, with an average monthly wage of NIS 17,640; next were second generation Ashkenazi men, with NIS 15,099; followed by second generation Mizrahi men, with NIS 14,406; first generation Mizrahi men who had arrived by 1989, with NIS 12,761; Ashkenazi men who arrived after 1990, with NIS 12,005; and first generation Ashkenazi women who had arrived by 1989, with NIS 11,037.

A significant reduction occurred in the gap between second generation Ashkenazi and Mizrahi men. In 2016, the average salary of second generation Ashkenazi men was NIS 15,099, 55% above the overall average, compared with the average salary of Mizrahi men, which was NIS 14,406 – 48% above the overall average. Second generation Ashkenazi women earned an average of NIS 9,017, 93% of the overall average, compared with NIS 8,640 – 89% of the overall average, for their Mizrahi counterparts.

The average salary of Arab citizens of Israel was very low, compared to the overall average: in 2016 the average salary of Arab women was 51% that of the overall average and the average salary of Arab men was 76% of the overall average.

The average salary of Ethiopian Israeli men was similar: In 2016, the average salary of men was NIS 7,233 – 74% of the overall average.

Ethiopian Israeli and Arab women were at the bottom of the salary scale, with averages of NIS 5,376 and NIS 6,004, respectively.

A College Education Does not Always Promise Escape from Poverty
In 2015, Arab households living in poverty headed by persons with at least 16 years of schooling constituted 7.3% of all Arab households living in poverty, up from 2.6% in 2000. Jewish households living in poverty headed by persons with at least 16 years of schooling constituted 23.7% of Jewish households living in poverty, up from  14.5% in 2000.

And There are Some Who Forego Even Food
The economic situation of some Israelis is so dire that they are forced to forego the most basic of human needs: food. The proportion foregoing food grows with declining income: in 2013, 38.5% of persons of 20 or older in the lowest income bracket (households earning on average up to 2,000 per person) reported foregoing food.

Income Gaps are Higher after Retirement
In 2016, 25% of Israeli households headed by persons aged 25-54, most of them in the lower income deciles, were not saving for retirement. That same year, the average income from pensions of the top income decile of households headed by persons aged 68 and above was NIS 14,822. That was 25 times higher than the income of households in the third decile – NIS 562.

Only One-Third of the Cohort Goes to College
Looking at the cohort that graduated from high school in 2008, we find that only 79.2% of the age cohort was enrolled in the last year of high school leading to matriculation. That year only 44.4% of the age cohort passed their exams. Among those who passed, some had diplomas that did not entitle them to admission to institutions of higher learning. The result: only 32.4% of persons who were 17 years old in 2008 entered a university or an academic college by 2016 – 8 years after they graduated from high school.

The education gaps among different socio-economic groups are far from closing. Among students from localities in socio-economic clusters 1-4, the proportion going on to academic studies, which was quite low in 2000 – 22.1% — remained low 8 years later, in 2008 – 23.6%. During the same time, students living in localities in socio-economic clusters 8-10 went on to college at greater rates – increasing from 45.3% in 2000 to 53.1% in 2008 – an improvement of 17%. The four middle socio-economic clusters showed an improvement of 14%.

Most Israelis Cannot Purchase an Apartment in High-Demand Areas
For 60% of Israelis, purchasing an apartment in areas of high demand without significant capital of their own results in a lowering of their standard of living, due to high monthly mortgage payments.

Purchasing apartments as an investment is the prerogative of the affluent. In 2016, 29.1% of households in the top quintile owned at least two apartments – compared with 1.6% of households in the bottom quintile, 2.5% in the second quintile and 6.8% in the third quintile.

Health Has Become a Financial Matter
Private health insurance has become a huge financial bonanza: household expenditure on private health insurance (of both the health funds and insurance companies) and users’ fees for medications and treatments amounted to NIS 4.6 billion (2016 prices) in 2000; in 2016 the amount more than doubled to NIS 13 billion. One could argue that this is a tax just like the health tax paid to the National Insurance Institute (in 2016 the National Insurance Institute collected NIS 21.9 billion). However, in contrast to the health tax, which provides universal care, the tax paid by purchasers of private health insurance benefits only those who can pay more.

The Government Fails to Balance Market Forces
In 2015, civilian expenditures amounted to 30% of GNP. As everyone knows, Israel’s defense expenditure is high, compared to that of other western countries. Still, the low civilian expenditure can be attributed more to the policy of fiscal austerity than to high defense expenditures, which have declined in recent years as a percentage of GDP.

Civilian expenditures include, among others, monies designed to assist households and individuals in times of distress, like old age and disability pensions, services for infants, the elderly and the disabled, and tax benefits. In 2016, civilian expenditures in Israel amounted to 16.1% of GDP, compared with the average of 21% in OECD countries.

הפוסט Israel: A Social Report – 2017 – An Economic Miracle for the Few הופיע לראשונה ב-Adva Center.

Over the past 2-3 years we have seen a rise in wages which is, inter alia, the result of wage agreements the government signed with the teachers’ unions (“Ofek Hadash” and “Oz LaTmura”) and with public sector employees —  and of an increase in the minimum wage.

Yet, wage disparities are significant. In 2015 the gross monthly income of a household headed by a salaried employee was NIS 4,644 in the lowest decile and  NIS 58,293 in the top decile. The top two deciles (9 and 10) were responsible for some 43.9% of total household income, while the other 8 deciles shared the remaining 56.1%. It is important to note that there are huge gaps within the top decile between the uppermost one percent and the rest.

The problem is rooted in the fact that Israeli governments reduced their capacity for action and primarily their budgetary capacities. The result is the shrinking and narrowing of the social services the state provides: education, health, welfare and social security. In 2014, the total state expenditure (including local government) of 41.2% of the GDP placed Israel alongside the eastern European countries and nations with a tradition of low government expenses such as Canada and New Zealand (which spend less than Israel on security).

Furthermore, Israeli governments are concerned primarily with political and security problems, mainly the Palestinian conflict, expressed in frequent outbursts of violence. Israeli governments do not invest in the development of long-term plans to increase success rates in the matriculation exams, to enlarge the student population or to include the entire Israeli population in the “start-up nation”.

Additional key findings:

1. Employment and wages: The CEO of a large corporation earns 91 times the minimum wage.

• The fruits of economic growth continue to “trickle upwards” more than they trickle downwards. This is clearly reflected in the salary bills of senior executives, which increased in 2015 compared with 2014. The most significant increase was in stock options while wages, management fees and bonuses remained more or less the same.
• The CEOs of the top 100 corporations traded on the Tel Aviv Stock Exchange (The TA-100 Index) cost their firms an average annual sum of NIS 5.1M, or NIS 425K per month.
• The average annual salary bill of the 5 most senior executives of these corporations was NIS 4M, or NIS 337K per month.
• The gaps between the remuneration of senior executives and other employees continue to be significant: The average pay of CEOs was 44 times the average wage (NIS 9,592 of Israeli employees) and 91 times the minimum wage (NIS 4,650).
• Inequality in pay exists between genders: women are over-represented in the lower echelons of the salary scale: in 2014, 30.9% of women earned less than the minimum wage, compared to only 16.8% of men.
• Inequality in pay exists also between other population groups, as follows (2015 data):
• Native Israelis of Ashkenazi origin earned about 31% more than the average;
• Native Israelis of Mizrahi origin earned about 14% more than the average;
• Native Israelis from FSU countries earned about average (1% more);
• Arab employees earned about two-thirds of the average;
• Immigrants from Ethiopia and native Israelis of Ethiopian origin earned about half of the average wage.

In November 2016, the average unemployment rate was low – 4.6% – but:

The national rate conceals significant differences among localities and population groups: An analysis by locality shows that Arab localities top the unemployment list, and that the Bedouin localities in the Negev are at the very peak. In the largest Bedouin locality of Rahat the rate of job seekers was 14.4%. Similar rates were found in some of the large Arab localities in the North, including Maghar (14.8%), Sahnin (14.7%), and Umm el Fahem (14.6%). In the majority of Jewish localities, the unemployment rate was lower than 5%, yet, in development towns like Mitzpe Ramon, Dimona and Yeruham, unemployment rates were 9.5%, 9.3% and 8.6% respectively.

2. Education: Twice as many students in affluent localities compared with the periphery

The highest paying professions usually require a college education.

• In 2015, only 29.3% of young adults who were 17 years old in 2007 had begun studying in a higher education institution.  Twice as many young Jewish adults were enrolled compared with the number of young Arab adults.
• In the 2014-15 academic year, 14% of 20-29-year-olds were enrolled in universities and academic colleges. There were significant differences among localities: 21.5% from strong localities vs. 12.6% from Jewish development towns and 9.1% from Arab localities.
• The low rates of college students are the result of the low percentage of high school graduates eligible for a matriculation certificate. In 2013, for the first time, that figure exceeded 50%, and in 2015 it reached 56%. Nevertheless, 44% of 17-year-olds did not matriculate.
• 40.7% of Jewish teens who graduated high school in 2007 and enrolled in academic studies before 2015 were graduates of the academic track. This is compared with 32.8% graduates of the vocational track.
• 77% of high schools in development towns are owned by vocational networks. Any existing vocational high schools in strong localities are usually located in the less affluent neighborhoods.

3. Health: Jews live 3 years more than Arabs

The social gaps also impact health conditions. The level of health is a reflection of the quality of life, and, in general, of socio-economic status: the quality of nutrition, the environment, housing, the level of awareness of health hazards, and the accessibility of public transportation, employment, and health services. Differences in the general quality of life are translated into 2 main indicators used worldwide to mark gaps in health conditions: infant mortality and life expectancy.

• The rate of infant mortality in Israel in 2014 was 3.1 (15^th place in the OECD). Infant mortality has declined sharply since the 1970s among both Jews and Arabs. Yet, nowadays (2010-14) the rate of infant mortality among Arabs (6.4) is 2.6 times the rate among Jews.
• Life expectancy is relatively high in Israel: In 2014, the average life expectancy of men was 80.3 years (ranked 6^th in the OECD). The average life expectancy of women was 84.1. Even though this figure is higher than that of men, it only placed Israel in the 12th place in the OECD. In addition, while life expectancy is on the rise, it is higher for Jewish men (80.9) than for Arab men (76.9). The life expectancy of Jewish women (84.5) is higher than that of Arab women (81.1).

הפוסט Social Report 2016: Wages are Rising but Fail to Match the Increase in Economic Growth הופיע לראשונה ב-Adva Center.

Long-range figures from the National Insurance Institute show that for some 25 years, and especially since the end of the second intifadah, the increase in GDP per capita in Israel has not been accompanied by a corresponding increase in real wages; in 2014, the gap between the two was larger than ever.

Below are some of the main findings of the new report:

1) Rather than trickling downwards, the fruits of economic growth have been trickling upwards, against the laws of nature.

• The share of employers in the national income increased from 14% to 17% over the last decade (2014-2014), and the share of workers decreased, from 61% to 57%.
• The salaries of senior executives increased over time: the cost of the salary of directors-general of the 100 largest corporations traded on the Tel Aviv Stock Exchange in 2014 averaged NIS 5.01 million per year, or NIS 417 thousand per month. The average annual cost of the salaries of the five highest earners in these companies amounted to NIS 3.64 million, or NIS 303 thousand per month. These figures are lower than they were in 2013, but they are still beyond the wildest dreams of the vast majority of Israelis.
• In 2014, the average cost of the salaries of the five highest earners in the top Tel Aviv corporations was 32 times the average wage (NIS 9,373 – Israeli workers only) and 70 times the minimum wage (NIS 4,300).
• 3% of Israeli wage earners received (in 2013) the minimum wage or less.
• 1% of Israeli wage earners received salaries characterized by the OECD as low – less than two-thirds of the median wage. This is a high percentage relative to other OECD countries.
• In the lower echelons of the wage scale, women are over-represented: in 2013, 32.5% of women’s wages were at the level of the minimum wage or below, compared with 18.1% of men’s wages.
• Over-representation in the lower echelons is also characteristic of Arab workers: in 2014, their average wage was 29% below the national average. The average wage of Mizrahi workers was 12% above the national average, and that of Ashkenazi workers 38% above the national average.

2) In October 2015 the average unemployment rate was low – 5.3%. However,

• The national average fails to reveal the differences among localities and ethnic groups. An analysis by locality shows that Arab localities top the unemployment list, and that the Bedouin localities in the Negev are at the very peak. The largest Bedouin locality, Rahat, had an unemployment rate of 31.4% in March 2015. Similar rates were to be found among some of the Arab localities in the North – Umm el Fahem (29.8%),  Arrabe (28/8%),  Sahnin (25/3%), Tamra (23/7%) and Maghar  (23.4%). In most of the Jewish localities, the unemployment rate was below 5%, but much higher rates were to be found in development towns like Dimona (15.1%) and Yeruham (13.8%).
• The high road to a better socio-economic future goes through education. The highest paying professions require a college education.
• But in 2014, only 29.1% of young people who were 17 years old in 2006 had begun studying in an institute of higher learning recognized by the Council on Higher Education, and the rate of Jews was twice that of Arabs. If we add those who enrolled in either the Open University or teachers’ colleges, we arrive at about one-third of the age cohort.
• In the 2013/2014 academic year, 13.8% of young people between the ages of 20 and 29 were enrolled in universities and academic colleges. The breakdown by locality reveals a high degree of inequality: 22.2% of young people from affluent localities, 12.6% from Jewish development towns, and 8.4% from Arab localities.
• The main reason for the low percentage of young people going on to college is the low percentage succeeding in the matriculation exams. In 2013, that percentage — 53.4% — exceeded 50% for the first time, but it experienced a slight decrease in 2014.
• Graduates of high school academic tracks attend college at higher rates than graduates of vocational tracks – 42.2% compared with 33.1%. Most of the schools belonging to the large vocational networks – 71% — are located in Jewish development towns and Arab localities. Those found in affluent localities are usually located in their southern neighborhoods.

3) All of the above figures are reflected in health statistics. Health status is connected to quality of life and in general, to class differences – quality of nutrition, quality of the environment and of housing,  level of awareness of health hazards, public transportation, employment, accessibility of health services and more. Differences in the general quality of life can be seen in two major indicators of health used throughout the world: infant mortality and life expectancy.

• In 2013, average infant mortality in Israel was 3.1 for every 1,000 live births. This figure placed Israel in 14th place among OECD nations. Infant mortality has declined sharply since the 1970s among both Jews and Arabs. Still, the most recent figures (2010-2014) indicate that infant mortality among Arabs in Israel (6.4) is 2.6 times that among Jews (2.6).
• A similar situation prevails with regard to life expectancy. In 2013, the average life expectancy at birth of men in Israel – 80.3 years – placed it third among OECD nations. The average life expectancy of women in Israel – 83.9, despite its being higher than that of men, placed it in 11th place among OECD nations. While life expectancy is on the rise, it is higher for Jewish men (81.1) than for Arab men (76.8), and the life expectancy of Jewish women (84.5) is higher than that of Arab women (81.2).

4) When it comes to dealing with social issues, the government of Israel looks to economic growth as the panacea, but as we have seen, the fruits of growth trickle up more than down. Reducing inequality requires strong state intervention. The problem is that successive governments have reduced their own abilities to act, especially their budgetary capabilities. The result is a waning of the social services provided by the state: education, health, welfare and social security services. Government expenditures (including transfers to local authorities) amounted to 41.2% of GDP in 2014, placing Israel close to Eastern European countries and others with a tradition of low government spending like New Zealand and Canada (whose defense expenditures are lower than Israel’s).

Not only that: Israeli governments are concerned primarily with security problems, first and foremost with the Palestinian conflict, expressed as it is in frequent violent confrontations. As such, Israel’s governments are not disposed to develop long-term plans to increase success rates in the matriculation exams, to buttress the student population or to broaden the limits of “the start-up nation” beyond “the state of Tel Aviv.”

הפוסט Israel: Social Report 2015 – No Change in Inequality Trends in Sight הופיע לראשונה ב-Adva Center.

Israel is not realizing its potential for economic growth, among others due to the absence of a political settlement with the Palestinians. The two intifadahs were very damaging to the Israeli economy, but more limited confrontations have become more frequent: the campaigns Days of Penitence (2004), Rainbow (2004), First Rain (2005) Summer Rains (2006), Hot Winter (2008) Cast Lead (2009-2009), Pillar of Defense (2012) and Protective Edge (2014). The direct economic implications of each of these confrontations was limited – the Bank of Israel estimates that the Protective Edge campaign reduced GDP by no more than 0.3% — but the accumulated effect of all the confrontations results in long-term harm to the social groups and geographic areas directly affected and creates an atmosphere of macro-economic instability.

Another obstacle in the way of raising the standard of living for all Israelis is that during the last decade at least, instead of trickling down, as the political leadership claims they do, the fruits of economic growth trickle up, defying nature. The share of employers in the national income grew over the last decade from 11% to 15%, at the expense of employees, whose share decreased from 66% to 62%. The only salaries that increased significantly were those of senior managers: the cost of their salaries doubled between 2000 and 2010. In 2013, the cost of the salaries of the general managers of the 100 largest corporations on the Tel Aviv Stock Market was on average NIS 6.158 million per year, or NIS 513,000 per month.

3. Wealth, too, increased: between 2003 and 2013, the financial assets held by the public grew by about 80%, from NIS 1,704 billion to NIS 3,048 billion (in 2013 prices). In the absence of breakdowns by different social strata, one can only estimate on the basis of what is known in other countries that most of the gains are in the hands of the top decile and top percentile.
4. In contrast, many Israelis receive salaries described as low by OECD standards: up to two-thirds of the median wage. In 2012, 22.1% of Israelis were at this wage level, placing Israel nearly at the bottom of the OECD ladder: third last.
5. Women’s average monthly salary was 62.2% of men’s average monthly salary in 2003; in 2013 it was somewhat higher: 68.1%. In contrast, the gender gap in hourly pay remained stable at 15.5%.
6. The average wage of Ashkenazi salaried workers decreased in 2013, from 42% above the overall average wage to 32%. The average wage of Mizrahi salaried workers remained the same at 11% above the overall average wage. The average wage of Arab salaried workers was much lower: since 2008 it has remained at between 67% and 68% of the overall average wage.
7. The national unemployment rate is low: less than 6%. However, this rate reflects mainly the Jewish localities in the center of the country. When one leaves the center, the percentage of job seekers increases considerably, mainly in Arab localities and in some of the Jewish development towns: Rahat (33.3%), Umm el-Fahem (30.8%), Arrabe (27.8%) Sakhnin (24.8%), Tamra (23.9%), Maghar (23.9%), Yeruham (16.4%), and Dimona (15.4%).
8. The government of Israel does not strive to balance the uneven results of economic growth. Government expenditure (including the expenditures of local authorities), which in 2013 amounted to 41.3% of GDP, placed Israel at one with the countries of Eastern Europe as well as those with a tradition of low government spending, like New Zealand and Canada (whose defense expenditures are much lower than Israel’s). Moreover, government social security and social assistance expenditures stood at no more than 15.8% of GDP, close to the very bottom of the ladder of such expenditures in OECD countries.
9. In a recent public debate over whether or not Israel should strive to increase the number of youngsters enrolled in vocational high schools, Development Minister Silvan Shalom challenged Prime Minister Binyamin Netanyahu “Why don’t you send your own son [to a vocational high school] to become a welder.” He was referring to a situation that has been around for a long time – one in which vocational high schools are typically found in low-income communities. An examination of the location of the vocational schools of the two largest networks in Israel, Ort and Amal, revealed that out of 159 such schools, 113 (71%) were located in communities with low socio-economic status: 35 in Arab localities, 43 in Jewish development towns and 35 in localities at the bottom half of the socio-economic ladder. In most affluent localities, if there are vocational high schools, they are located in the poor neighborhoods.
10. Government spending on health is low by OECD standards. As a result of inadequate health budgets, Israeli households are spending more and more on private medical insurance that allows those who can pay more to receive treatment first. Doctors who once spent the whole day serving the public health system now disappear in the afternoons to serve the private system that is growing alongside the public one.

הפוסט Israel: A Social Report 2014 הופיע לראשונה ב-Adva Center.

A Social Report – 2013 finds Israel at the top of the graphs of inequality

and poverty among developed nations, at a time when inequality has come to be

recognized throughout the world as a social and economic threat. However, this

recognition has yet to be realized in Israel: here the government opts to deal

with it – or to be exact, not to deal with it – by setting up committees to

effect limited changes, like the Trajtenburg Committee, the Committee on the

Concentration of the Economy, or the War against Poverty Committee.

However,

inequality is a macro-economic and macro-social issue that needs to be dealt

with at the highest level. What is

needed is not increasing this or that social security or social assistance

payment by so many shekels or decreasing prices by a few percentages, but

rather a concentrated effort on two fronts:

A.

Creating balanced economic growth that will create jobs that pay a

living wage. Side by side with the “start-up

nation” that provides a generous remuneration to its citizens – who

constitute approximately 10 percent of employed persons – and to an even

greater extent the directors-general of the large corporations and the top one

percent that benefit from large incomes from capital, there is the other side of

the nation, constituting three-quarters of employed persons, who earn less than

the average wage and 30 percent of employed persons who earn the minimum wage

or less. While the political leadership take pride in the law unemployment rate

– 5.8 percent — we find that in Arab localities job seekers comprise 15-30

percent of the work force and that in Jewish development towns job seekers

comprise 10-15 percent of the work force.

B.

Creating an array of social services that balance the unbalanced

effects of economic growth.

Firstly, the general educational level needs to be upgraded: in an era in which

employment with a decent wage requires higher education, less than 50 percent

of Israeli youth earn matriculation (bagrut) certificates and only 28.8 percent

of high school graduates enroll in universities and colleges with 8 years of

graduation. Another example: the Israeli social security system receives a

relatively low level of funding – 15.8

percent of GDP, compared with 20-30 percent GDP in most western European countries.

The long-term

effort to promote and empower the private sector by reducing budgetary

allocations for social services was accompanied by a retrenchment of social

services, services on which Israelis on the margins of economic development

depend if they are to take part in future economic and scientific developments.

Salaries and Household Income

·

In 2012, the annual salary bill of directors-general of the 100 largest

corporations on the Tel Aviv Stock Exchange was, on average, NIS 4.519 million,

or NIS 376.6 thousands monthly.

·

The annual salary bill of the five highest earners in these

corporations was an average of NIS 3.421 million, or NIS 285 thousands monthly.

·

In 2012, the cost of the average salary of a director-general at the

largest corporations was 42 times the average wage (NIS 9.018) and 87 times the

minimum wage (NIS 4,300).

·

The State Revenues Authority publishes figures on income from capital

received by self-employed persons. Unfortunately, the latest figures are for

2008: that year, the total income of self-employed Israelis from capital was

NIS 18.3 billion. The top one percent received 74 percent of the total: NIS

13.5 billion.

·

Israel’s Gini coefficient is among the highest in OECD countries: In

2010 Israel was fifth highest among 35 countries, with a coefficient of 0.376.

Since the middle of the 1980s, inequality as measured by the Gini coefficient

increased in OECD countries by an average of 5.3 percent. In Israel, it

increased by 15.3 percent.

·

In 2012 women’s average monthly wage was 66 percent of men’s,

and women’s average hourly wage was 84.9 percent of men’s.

·

In 2012, the average monthly wage of employed urban Ashkenazi

workers (Israeli-born to fathers born in Europe or America) was 42 percent

above the average monthly wage of all employed urban workers. The wages of employed

urban Mizrahi workers (Israeli-born to fathers born in Asia or

Africa) was 9 percent above the overall average. The wages of employed Arab

urban workers was 34 percent below the overall average.

·

In 2012 households in the top quintile saved an average of NIS 1,168

per month for retirement, compared with NIS 64 per month for households in the

bottom quintile.

Education

·

The education system has yet to see 50 percent of the age cohort

graduate high school with matriculation diplomas. In 2012, the success rate was

49.8 percent. Similar results were achieved at the beginning of the decade,

followed by decreases.

·

Among young people graduating high school in 2004, only 34.6 percent

had enrolled in universities and academic colleges (not including the Open

University and teachers’ colleges) by 2012. The enrollees included:

o

38 percent of women, compared with 30.8 percent of men;

o

43.8 percent of Jewish graduates of academic high schools, compared

with 30.3 percent of Jews from technological tracks;

o

37.8% of Jewish high school graduates, compared with 10% of Arab high

school graduates.

Accessibility to Health

Services

·

In 2012, the monthly outlay of households in the top income decile for

supplemental and private health insurance policies was NIS 499, that of the

sixth decile NIS 243 and that of the second decile NIS 111.

·

In 2011, the gap between full funding and actual funding of the basket

of health services provided by the health funds under the National Health

Insurance Law continued to grow. The actual cost was NIS 32.67 billion, while

cost of full funding would have been NIS 48.83 billion.

הפוסט Israel: A Social Report – 2013 הופיע לראשונה ב-Adva Center.

הפוסט Israel: A Social Report 2012 הופיע לראשונה ב-Adva Center.