Israel has the highest relative rate of poverty in the OECD, except for Mexico, and ranked fifth in after-tax inequality (after transfer and tax payments), according to the OECD's "Income Inequality Update", published today. The figures are for 2011; Israel is in the same position as in 2007, before the economic crisis.
In 2011, Israel's poverty rate (relative threshold) was 20.9%, up from 19.9% in 2007. The average OECD poverty rate (relative threshold) was 11.5%, half of Israel's rate, 0.3% percentage points higher than in 2007, only a third of the growth in Israel's poverty rate over the same period.
Israel's Gini Coefficient rose to 0.377 in 2011 from 0.371 in 2007; i.e. inequality increased. The OECD's average Gini Coefficient was 0.308 in 2011, 20% less than in Israel, after remaining unchanged in 2007-11.
There is, however, some good news. The Gini Coefficient in market income (before transfer payments and taxes), fell in Israel in 2007-11, although it rose sharply in some other OECD countries. As a result, Israel's position on this indicator improved markedly and it fell from 5th to 16th place (around the table's midpoint).
Prof. Michel Stravchinsky of the Hebrew University of Jerusalem told "Globes" this week that the reason for the increase in market income is the massive entry of the poor, including haredim (ultra-orthodox) and Arabs, into the workforce. Israel's Gini Coefficient on market income fell by 3% to 0.481 in 2011 from 0.496 in 2007.
The disposable income of Israel's bottom 10% rose by 1.5% in 2007-11, bucking the 1.6% decline in other OECD countries. The disposable income of Israel's top 10% rose by 0.8%, similar to the average gain in the OECD.
Disposable income of young Israelis (aged 0-17) fell by 0.7% in 2007-11, compared with the average fall of 1% in the OECD. Elderly Israeli (over 65) saw a 3% increase in their income, well above the average OECD gain of less than 1%.
The OECD says that there was a transfer of poverty from the elderly to the young. In the mid-1980s, the poverty rate among the young (18-25) was 21% higher than the general poverty rate; in 2011, the the poverty rate among the young was 60% higher than the general poverty rate. Conversely, the poverty rate among the elderly (over 66) was 26% higher than the general poverty rate in the mid-1980s, but 27% less than the general poverty rate in 2011.
Published by Globes [online], Israel business news - www.globes-online.com - on June 19, 2014
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