{"id":16385,"date":"2025-01-30T10:29:56","date_gmt":"2025-01-30T08:29:56","guid":{"rendered":"https:\/\/adva.org\/?p=16385"},"modified":"2025-03-11T14:45:47","modified_gmt":"2025-03-11T12:45:47","slug":"cost-of-living","status":"publish","type":"post","link":"https:\/\/adva.org\/en\/cost-of-living\/","title":{"rendered":"Everybody is Talking About the Cost of Living in Israel but Nobody is Doing Anything About It"},"content":{"rendered":"

<\/p>\n

Much has been said about the inordinately high cost of living in Israel, which in recent years has been going up and up: social and economic research institutes, politicians, journalists and of course media pundits all have a lot to say. A review of their analyses reveals three basic approaches. One is exemplified by an article published by the Israel Democracy Institute entitled, \u201cThe Cost of Living in Israel: What the Numbers Say.\u201d[1]<\/a> We will call this the \u201coptimistic\u201dapproach, as it emphasizes the improvement in Israelis\u2019 standard of living\u00a0 in recent years and contends that the situation is not really so grave: \u201cUnlike the conception popular in public discourse, price rises in Israel have been \u00a0relatively moderate relative to the OECD average, and the average increase in the income of households \u2013 at all income levels \u2013has been higher than the price increases, resulting in a real rise in the purchasing power and standard of living of the Israeli population.\u201d[2]<\/a> The measurement of salaries adopted here was the average salary for a paid full-time position. The same article stresses that the gaps that once existed in the standard of living between Israel and the developed nations of the OECD have actually decreased. At the same time, the authors include an important reservation but one that is neither emphasized nor elaborated:\u00a0 when it comes to several areas of consumption,\u00a0 price levels in Israel remain (inordinately?) high.<\/p>\n

A different approach is exemplified in an essay entitled \u201cThe Cost of Living in Israel: Low Salaries or High Prices?\u201d written at the research institute of the Histadrut (federation of labor unions) \u2013 Forum Arlozoroff.[3]<\/a><\/p>\n

Firstly, in contrast with the \u201coptimistic\u201d approach, this essay finds that the cost of living in Israel is indeed high; moreover, the phenomenon is attributed to low salaries rather than high prices. It should be noted that the indicator of pay utilized is the average hourly<\/strong> wage rather than the average (monthly) one. The reasoning behind this choice is that \u201cthe hourly wage provides a measurement of how many hours a person needs to work in order to purchase a certain amount of consumer goods.\u201d[4]<\/a> We add that a significant proportion of employed persons do not have full-time jobs (Some 25% in Israel according to a manpower survey for the month of October 2023).[5]<\/a> The main contention of this article is that despite Israel\u2019s \u201cimpressive\u201d economic growth over the past two decades, the purchasing power of salaries has eroded in international comparison; not only that: the purchasing power in Israel at present is lower than it was at the turn of the century. Regarding household expenditures, two categories\u00a0 — housing, electricity and water<\/em>; and food and<\/em> beverages <\/em>— have become much more expensive in Israel, compared with the OECD average. In contrast to the previous approach, this one does not view food and housing expenses as exceptional and certainly not as peripheral, but rather as the main expenses of Israeli households, as together they constitute more than 50% of the difference between what we Israelis spend and what households in the developed nations of the OECD spend. I venture to add that most Israelis would agree that these expenditures are far from marginal.<\/p>\n

Yet another approach is that familiar to readers of The<\/em> Marker<\/em>, the financial and business magazine of the newspaper Haaretz<\/em>,\u00a0 whose focus is on prices and not on income \u2013 specifically, the prices of food and beverages. This approach coincides with the perceptions of numerous Israelis, who see with their own eyes how food purchases become more expensive from month to month — and even week to week. The contention of The<\/em> Marker<\/em> is that what we see is an increase in the cost of living, and it stems mainly from SIMPLE GREED on the part of the supermarket chains\u00a0 (more than others) and the companies that produce foods and beverages. These parts of the food chain have been raising their prices above and beyond increases in raw materials and the costs of production. Furthermore, the present government has done nothing whatsoever to prevent wildcat increases in the costs of essential items.<\/p>\n

The three different approaches to the cost of living in Israel point to a number of directions to be taken. The \u201coptimistic\u201d approach seeks the solution in reducing concentration (of supermarkets, for example) and in increasing competition; \u00a0the low income approach seeks the panacea in increasing the educational level of Israelis and their productivity and, of course, in raising salary levels; the high food prices approach looks to competition, competition and yet more competition (in food production, food marketing and food importation). That said, there is no sign of any governmental body taking any action that might contribute to one or more of the solutions proposed. In the absence of significant government intervention or serious opposition of the Histadrut and\/or consumer organizations aimed at placing the welfare of the population front and center, \u00a0numerous families will continue to cope with the high cost of living and low salaries that severely limit their options.<\/p>\n

References:<\/strong><\/div>\n
[1]<\/a> Flug, Karnit, Nadav Porat Hirsch and Roe K.Portal. September 2023. (Hebrew)<\/div>\n
[2]<\/a> Ibid. p. 59.<\/div>\n
[3]<\/a> Lan, Edan. August 2023. (Hebrew)<\/div>\n
[4]<\/a> Ibid. p. 18.<\/div>\n
[5]<\/a> Israel Central Bureau of Statistics.<\/div>\n

<\/p>","protected":false},"excerpt":{"rendered":"

Three different approaches to the cost of living in Israel point to a number of directions to be taken. 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