Financial Times: Israelis' Seek to Erase 'Mark of Disgrace'

by Tobias Buck, Financial Times

Friday, February 08, 2008

Chani has painted flowers on the damp walls of the tiny room shared by her five children, but the effort has done little to brighten up the family’s dark, cramped basement flat in one of Jerusalem’s ultra-orthodox Jewish neighbourhoods. It is a cold day, but she can only afford to turn on the flat’s sole electrical heater at night; the lights will be switched off as soon as her visitors leave.


The 37-year old and her husband have no steady work, and government allowances for their children have shrivelled to only 1,100 shekels ($307, €207 £156) a month. A charity provides food parcels, blankets and clothes. Chani gets some chicken every week for the Sabbath, and twice a year, on the holidays of Passover and Sukkot, the family receives meat as a special treat.


"The children are constantly making requests, even for normal things. They cannot understand why their parents can’t afford them,” she says.


Chani and her family are among more than a million Israelis who live in the shadow of the country’s impressive high-tech boom. The Israeli economy is in its fifth year of rapid growth, fuelled by rising foreign investment, strong domestic consumption and surging exports. Gross domestic product per head is fast closing in on the European Union average.


Yet as much as the government basks in Israel’s admirable economic performance, policymakers are increasingly worried about the state’s inability to curb the rise in poverty and inequality. According to the latest data by Israel’s National Insurance Institute, one in five Israeli families is officially classified as poor, meaning they have less than half the median income. Because large families are among the worst affected, levels of child poverty are even higher: more than one third of Israeli children are poor, a steep rise compared to 10 years ago, when the economy was much weaker but only 22 per cent of children were living in poverty.


The ultra-orthodox population and Israel’s Arab minority, both of which tend to have a large number of children, are the two groups that suffer especially hard. Ultra-orthodox Jews also face difficulties because many men devote their lives to religious study, leaving little time for paid work.


The decline in their economic fortunes started in 2001, when the country entered a severe recession that forced the government to slash welfare spending. The market-orientated reforms are today widely credited with laying the foundations for the economic boom of recent years. But they also took away the safety net that Israel’s poor had relied on.


Yad Eliezer is one of the charities that has sprung up to answer the growing need. It gives aid to 75,000 people every year, handing out food parcels, blankets and clothes, tutoring troubled children and even subsidising weddings. “The poverty is growing and growing, and the worst part is that you cannot help everyone,” says Milcah Benziman, Yad Eliezer’s social services director.


The widening gulf between rich and poor marks a striking departure for Israel, a country founded on socialist principles and which retains a strong egalitarian ethos that is increasingly at odds with social reality. And while many Israelis have seen real improvements in their economic fortunes, surveys show they are deeply unhappy about the growing divide.


According to a poll published last month, 19 per cent of Israelis say that “narrowing the gaps in society” is the most important issue for the government. Only two other issues, stopping rocket attacks on Israeli cities and education, came higher. Perhaps most remarkably, tackling poverty and inequality was seen as more important than reaching a peace agreement with the Palestinians.


The public’s indignation is shared by the government’s economic advisers, who also warn about the broader impact on the country’s welfare. A report last year by the National Economic Council described the widespread poverty as “a mark of disgrace on the state of Israel today” and warned that the lack of education and skills among poorer Israelis presented a “threat to the continued prosperity of the economy”.


For the time being, however, the government of Ehud Olmert has more pressing things on its mind. Having narrowly survived a coalition crisis last month, Mr. Olmert’s focus is now on keeping together his fractious government and pressing ahead with peace talks with the Palestinian leadership, which are supposed to lead to an agreement by the end of 2008.


Yet when Israel returns to the polls, possibly as early as this year if Mr Olmert’s coalition continues to erode, the country’s leaders may well find that it is poverty, not peace, that is foremost on voters’ minds.


Copyright The Financial Times Limited 2009