SOCIAL INEQUALITY IN ISRAEL

Didier Bertin 17/03/2016 - English version 26/04/2016

 

The e-newspaper “The Times of Israel” recently published new statistics on averaged wages in Israel. I would like to remind that the concept of averaged wages is not significant from a macro-economic standpoint and that the median wage figures are much more meaningful.

1-Average and median figure

Simple example

Population:5

1

1

1

1

1

Wages

1 000

1 500

2 000

2 500

1 000 000

In this case the averaged wage  is 201 400 which means nothing while the median wage is 2000 which is really significant because it indicates that there are as much people who earn less than 2,000 over 2000. This gives a real view of the situation of most of the population.

According to the Israeli Central Bureau of Statistics the averaged wage in 2012 was NIS 9.149 while the median salary was NIS 6,541 which is much lower.

2-Income distribution Index - GINI index

This index should be interpreted as follows: 0 means that all people of a country have an equal income while 100% means one single individual receive all the income of the country and the others receive nothing (Gini is the name of the Economist having created the model).

The CIA Factbook lists the GINI index of 144 countries out of 230 considered by the CIA; as a matter of fact some countries like the Gulf countries or Saudi Arabia, which are tribal or family possessions more than the nations, do not publish this index since few individuals monopolize the country wealth.

In democratic and developed country indexes are between 24% and 32%:

Examples:

Denmark and Sweden 24.9; Belgium 25.9; Norway 26.8; Germany 27.0; Switzerland 27.9; France 30.1; Australia 30.3; Italy 31.2%; Canada 32.1% United Kingdom 32.4.

The Gini index of the European Union is 30.8%.

Israel poses a problem of inequality with an index of 42.8% and reaches the 95th between Chad and Kenya of 144 among the most unequal countries listed by the CIA. Israel is even more unequal than Russia (42%).

The American paradox cannot justify such a level; the US has in fact an index of 45% but with a GDP of USD 18,000 billion in 2015 or USD 56 300 per person (USD 34 300 for Israel) can withstand high inequality and provide a decent level of income per capita; however this situation is to be improved in the USA.

Some community characteristics and inequalities between men and women partly explain the situation in Israel. The simple averaged wage of men and women of the Jewish community in 2012 was approximately in the range of NIS 9 200 for 42 hours of work. A Jewish woman earned 68% of the salary of a Jewish man in 2012.

In the Arab community representing 25% of the population the averaged wage of men and women was roughly about of NIS 5700 in 2012 due probably to qualification discrepancies. In addition the ultra-Orthodox Jewish population has a weak contribution to the GDP.

Other important factors that exacerbate inequalities are high consumer prices, real estate price huge increase and reduced social subsidies to the population to compensate inequality.

Conclusion

This inequality situation is in total opposition to the Zionist ethic for which Israel must remain a haven for all Jewish citizens in and out of Israel who all provide the security of the country whatever is their job. The development of a particularly cleaving hotel structure dedicated to wealthy visitors also symbolizes the loss of the concept of hospitality for Jews and others included in the Zionism.