Some weeks ago, while writing about the drubbing Israel suffered in the National Brands Index, I got into an argument with one of my ‘Israel is peachy keen’ readers. He tried to sell me the bill of goods that it didn’t matter what the rest of the world thought of Israel since the country was an economic engine chugging along under full power. All was for the best in this best of all possible worlds.
The NY Times published a similar article today expounding on the continuing success of Israeli economic growth. But it’s important to note that tucked away in the second half of the story is the bad news. The economic miracle affects only the highly educated and skilled, the professionals, engineers and technical class who can benefit from the expanding industries like technology. But that leaves 20% of the population who have no such skills high and dry.
Israel’s 20% poverty rate may be compared to the U.S. rate of under 13%, Ireland’s 10% and France’s 6.5%. It ain’t a pretty picture.
I quote this section of the story so my readers will take home a more rounded, balanced portrait of the real Israeli economy:
The economic tide is not lifting every Israeli boat, however. Despite the economic growth, the number of Israelis living below the poverty level has been edging up, from 18 percent in 2002 to more than 20 percent last year, according to the government’s National Insurance Institute.
Critics say this is because Israelis who are struggling economically have seen their benefits fall sharply, while they remain unemployed. The unemployment rate is at its lowest level in a decade, but still relatively high at 8.4 percent.
Benjamin Netanyahu, who as finance minister pushed aggressive open-market policies from 2003 to 2005, was also widely criticized for cutting social programs in a country where couples often have many children and depend heavily on such subsidies.
“The basic problem is that economic growth has been very uneven,” said Shlomo Swirski, the academic director of Adva, a research institute that focuses on the poor.
Job growth, he said, has been concentrated in sectors that require a high level of education. Economic growth has been greatest in Tel Aviv and surrounding areas, the economic hub of the country, while the less developed Galilee in the north and Negev Desert in the south have seen much less progress, Mr. Swirski added.
“We’re looking at growth that is highly concentrated geographically, economically and socially,” he said.
Economists note that many of the poor come from two groups, Israeli Arabs and ultra-Orthodox Jews, that have large families and low participation rates in the work force. Among Israeli Arabs, few women have formal jobs. Among the ultra-Orthodox, many men do not work.
The Times article neglects to mention that one in three Israeli children lives in poverty. Another factor that reinforces the unevenness of the Israeli ‘economic miracle.’