Unemployment, and cuts in wages and National Insurance Institute (NII) allocations have caused the proportion of poor families in Israel to rise from 17.7% at the end of 2002 to 18.5% at the end of 2003, says NII director general Dr. Yigal Ben-Shalom. 340,000 families now live in poverty. Ben-Shalom gave the data to Minister of Labor and Social Welfare Zevulun Orlev yesterday. The NII poverty report for 2003 will be published in two to three months.
Preliminary estimates indicate that the number of Israelis living in poverty could reach a record of over 1.3 million, up from 1.21 million in 2002. A third of the poor are children.
Ben-Shalom warned that cuts in the child allowance and income support sharply lowered the poverty line. He said the average income of a poor family was 30% below the poverty line, defined as NIS 2,789 in monthly income for a family of two, in 2002 prices.
The NII survey depicts a bleak picture about the scale of poverty, inequality, and economic gaps between the upper and lower deciles. In international terms, Israel's welfare system is not generous at all; compared with the 30 members of the OECD, Israel would be in 19th place in terms of per capita financial support as a proportion of GDP.
"We can assume that income gaps will widen further, due to the cuts in allocations. Regrettably, not all population segments will enjoy the fruits of growth. Not only will allocations not be revised until 2006, but the more growth increases, the slower it will trickle down to the lower deciles," Ben-Shalom says.
The main results of the survey, by NII deputy director general of research and planning Leah Ahdut, are as follows:
- Old-age pensions will fall to only 11% of the average wage within ten years, compared with 16% in 2002.
- Disability pensions and income support payments have declined by over 30%.
- In the past two years, NII allocations have been cut by over NIS 5.5 billion. Total pension payments have fallen by 7.2% in real terms, and pensions as a proportion of GDP has fallen from 9.4% to 8.9%.
- Old-age pensions have lost 10% of their purchasing power in the past two years. Income support payments have fallen by 20%, and support for single-parent families by 28%. The child allowance for the first and second child has fallen by 20%.
- The number of unemployed receiving unemployment insurance has been cut by 30%, even though unemployment has risen. Only 23% of the unemployed are currently eligible for unemployment insurance, down from 40% in 2001. The value of unemployment insurance has eroded 23% in real terms.
- Postponing the retirement age, under the new pension arrangements, will save NIS 2 billion a year in old-age pensions.
Published by Globes [online] - www.globes.co.il - on May 11, 2004