Israel: A Social Report 2014

Israel’s economy is actually showing impressive advances In the decade following the crisis caused by the second Palestinian Intifada, between 2004 and 2013, Israel’s GDP grew by approximately 45%. The global financial crisis of 2008 hit Israel less hard than it hit other countries. Israel was able to find new markets in India, China and Russia. Participation in the labor force rose while unemployment declined.
Yet the fruits of growth, instead of trickling down, as promised by politicians, trickled up, as if defying the laws of nature. Employers’ share of national income grew during the 2003–2012 period, from 11% to 15%, while workers’ share decreased from 66% to 62%. Employees’ real wages, whether median or average, hardly changed. The bargaining power of employees is on the wane, parallel with the weakening of labor unions and the growth of the phenomena of contracting out jobs. At the same time, the earnings of top corporate executives have sky־ rocketed. Publicly held financial assets, which as we know are concentrated mainly in the hands of the top one percent, have vastly increased. The resulting inequality places Israel amongst the countries of Eastern and Southern Europe — and at quite a distance from the West of the continent. The Israeli “West” is an island populated by the high tech industries and the financial institutions. That is, by a small sector of the Israeli population. Israeli leaders, their attention and resources focused on maintaining occupation of the Palestinian territories, are not doing very much to expand that island so as to accommodate additional Israelis. Israel is devoting fewer and fewer resources to civilian needs: as stated by the Bank of Israel, “public expenditure in general, and civilian expenditures in particular, are lower than the average for OECD countries . . . the size of public services, public investments in infrastructures and in government anti־poverty programs are lower than average levels in other OECD countries.” Tax policy favors the big corporations and the rich, thus foregoing resources that could enable the government to upgrade the standard of living of most Israelis.
Thus, most Israelis are firmly planted in Eastern and Southern Europe. Israel’s grip on “the West” is weak. A great collective effort is required to strengthen and widen that grip. Such an effort, in turn, can come only after Israeli leaders free themselves from two illusions: one, that economic growth, in and by itself, can bring about the necessary improvement; two, that Israel can keep on growing indefinitely without a political settlement of the Israeli -Palestinian conflict.

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Date of Publication
April 28, 2015
Adva Center
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