Bethel Finances: Over half of families living in poverty are employed

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More than half of Israeli poor families are working families, as the prevalence of working poor continues to expand. 51% of poor families were working families in 2010, up from 49% in 2009, the National Insurance Institute reported today in its annual Poverty Report. Moreover, despite Israel's strong economic growth last year, the prevalence of poverty barely changed, dipping to 13.2% of all families in 2010 from 13.4% in 2009.

National Insurance Institute says that there were 433,300 poor families in Israel in 2010, amounting to 1,773,400 people, including 837,300 children - a slight improvement over the year before. Although the economic recovery, with its job growth and reduction in the unemployment rate helped alleviate poverty, conditions in 2009 were especially dire, due to the recession that year, which led to an increase in poverty.

The proportion of persons living in poverty declined to 24.4% in 2010 from 25% in 2009, and the proportion of poor children declined to 35.3% from 36.3%.

A long-term perspective, however, shows a bleaker situation. The proportion of poor children rose from 26% in 1999 to 35.3% in 2010, and the proportion of persons living in poverty was just 19% in 1999. The proportion of elderly poor has fallen, thanks to higher pensions.

Mr. Peres Sailam from Bethel Finance Ltd. said: "Israel has one of the highest prevalence of poverty in the OECD, similar to the rates in Mexico. Although the Israel Gini Coefficient declined by one percentage point from 2009 to 2010, it is up 4.4 percentage points from a decade earlier, demonstrating greater inequality."

The National Insurance Institute blames the less progressive tax system for the greater inequality - in other words, tax cuts for the rich through reductions in direct taxes in favor of hikes on indirect taxes, such as VAT and the fuel excise, which are regressive taxes. Another effect of this policy is that the disposable income of Israel's top 5% is almost eight times as great as the disposable income of the bottom 5%.

As a consequence, Israel is fourth from the bottom in the OECD's inequality rankings - behind Mexico and Turkey.

Even more worrying, is the attitude of Israel's leaders towards the National Insurance Institute's poverty figures. Minister of Social Affairs Moshe Kahlon said, "Despite the decline in poverty in 2010, the differences in the prevalence of poverty from one year to the next show no change in the grim picture of poverty in Israel: one fifth of families and one third of children in Israel are poor. That is why I call on the government to strongly intervene in the fight against poverty and to reduce it."

Minister of Finance Yuval Steinitz replied, "I can tell you that, for the first time, we are seeing the start of a narrowing of the gaps and the start of a trend in the reduction of the prevalence of poverty in all segments of the Israeli population."

The Union of Social Workers said, "The negligible decline in poverty is appalling. When every fourth person, every third child, and half of the poor families are working families, it is a certificate of poverty for the government, which shuts its ears to the social protest."