Winnipeg Jewish Review Article: "Prof Shalev Of Hebrew U: Israel Has Widest Income Disparity Of OECD Countries, Worse Than Mexico"

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"Although Israel has recently been accepted into the Organization of Economic Cooperation and Development, it is the poorest member with the widest social gaps, says Professor Michael Shalev of the  Hebrew University of Jerusalem.

Michael ShalevIsrael has the highest income disparity among its citizens in OECD countries, even worse than Mexico, " said Shalev, explaining that every fifth Israeli is twice as poor as the average person in OECD member states. [Most of the poor come from Arab and ultra-orthodox communities, where poverty rises to 50 percent and 60 percent, respectively].

Shalev spoke at  the  Caboto Centre of October 25 at an event sponsored by the Winnipeg Chapter of the Canadian Friends of the Hebrew university. Shalev was introduced by Faith Kaplan, President of the Winnipeg Chapter (who is also a popular columnist for the Winnipeg Jewish Review).  In an exclusive interview after the event, Kaplan noted that she herself, like Shalev, was also an expert on income disparity-- as it relates to the amount of disposable income she has after her trips to Israel as opposed to before them.

Although Israel and the United States are the two countries in the Western world that have the highest degree of income inequality, according to Shalev, Americans are less troubled by this compared to Israelis who have a "longing for an egalitarian past.” This is the case notwithstanding, 'that Israel has been as unequal as the United States as far back as 1979."

Shalev, who lived in New Zealand before making aliya,  indicated that since in general Israelis are required to make sacrifices (ie being drafted into the army), "many feel it is unseemly that there is a such a gap between rich and poor."

According to Shalev, there has been an “Americanization” of Israeli society—which is driven by consumerism and materialism, and a society where the wealthier segments, want to show off their wealth, more so than they did years ago.

Shalev, who has been to all of the largest social protests that have recently erupted in Israel, noted that the trend in Israel of the rich getting rich,(with wealth being accumulated in the hands of several tycoon families) has been a motivating factor in the recent protests. At the same time as the rich are getting richer, "the poor have gotten poorer and the status of the middle class has declined a bit.'

Using a variety of charts and graphs in a power point presentation, Shalev explained that the ultra-Orthodox (Charedim) are the poorest group among Israeli Jews, due to the fact that the "men study the scriptures" without working and Charedi families have the largest birth rate, even larger than Israeli Arabs.

According to Shalev there are approximately 1.6 Israeli Arabs, among a total population of 7.7 million (one of five Israelis are Israeli Arabs) , and there are approximately 480,000 Charedi Jews.

However, 50% of children in Israel starting elementary school in Israel are Charedim or Arabs,” Shalev observed, a fact which is ultimately going to change the face of Israel.

According to Shalev, even after the Israeli government re-distributes income through the imposition of taxes and benefits, only 19.2% of the Charedim are lifted out of poverty.

The Charedim are in "a poverty trap", Shalev said, noting that many secular middle class Israelis want the government to eliminate the minimal subsidies that the Charedim do receive while they study Torah, to motivate them to get into the work force.[This is something many protestors in the recent social protests complained about, including the fact that most Charedim do not serve in the army]

Shalev explained that one of the reasons that Israeli Arabs are in a poverty trap is because relatively few of the Israeli Arab women are in the work force.

While some say that this is due to the traditional nature of Arab society which encourages women to stay at home, Shalev disagrees, saying that in his view 'Israel Arab women do not work because of lack of opportunities… Where they have had opportunities, Israeli Arab women work."

For example, when they have been given an opportunity to work as teachers in Arab villages and also in textile factories, Shalev noted that Arab women they have gone to work. He therefore believes that if there was "greater investment in infrastructure and job training in the Arab sector," more women would work.

Even without considering Charedim and Israeli Arabs, there would still be a very high poverty rate in Israel.

On a positive note, Shalev did say that the gap between women's salaries and men's salaries in Israel " has been closing a little".

As for the social protests that have swept Israel since the summer, Shalev noted, in an interview after the event, that while over 80% of the Israeli public supported those protests, 'they did so for different reasons.

In an interview, Shalev said that on the whole, 'the protests have been identified more with the left", as many in the right have not joined them because they do not want the Netanyahu government to be toppled by them. While the results of the protests 'are yet to be determined, Shalev suggested that it may be that the protesters will be unsuccessful in keeping 'the momentum going.

As well, he noted that the protests may in fact have helped to weaken Kadima, since if anything they appear to have breathed life into the Labour party as a social-democratic party.

Following the protests, the Netanyahu government appointed the Trachtenberg commission to make recommendations for reform, but then it refused to endorse those recommendations, Shalev explained.

"The Trachtenberg commission opened an office in Tel-Aviv only to find out that the government wasn't going to pay for it."

Unlike societies such as Canada, Israelis have generally voted not based on social economic issues but on the political issue vis- a -vis the Palestinians, and it remains to be seen if they will vote over economic and social issues next election.

"Politics [In Israel] are dominated by hawk vs. dove divides", he said.

Shalev noted that the middle class in Israel has been feeling worse off, since "the children of the middle class are not succeeding in attaining what their parents attained,” especially in regard to affordable housing, which is out of their reach.

Shalev also spoke about the policies of then Finance Minister Bibi Netanyahu in 2001, which he said made inequality worse.

Netanyahu’s tax cuts, which overall benefited the most affluent members of Israeli society, resulted in a dramatic decrease in transfer payments to less affluent members of society. At the same time, the government drastically reduced its role as an employer selling off entire industries it used to own.

The Histadrut (Israel’s general organization of labour unions), which use dot be all powerful “used to account for between one fifth and one quarter of Israel’s economy,” he noted. But, the “outsourcing of public services” to the private sector, has meant that ‘cost cutting’ is the bottom line. As an example, he cited a social worker who used to work for the government but now works for a private company.

The government used to be a more benevolent employer, and employees no longer have job security like they used to. The low-wage labour market  has mushroomed.

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