Standard of living in Israel fell 22.7% in 2020

child poverty

The impact was mainly felt by the middle class. Thanks to government aid, the situation of the lowest income group actually improved.

After a three-month delay, the National Insurance Institute published its official poverty report today. The report shows that the standard of living of families in Israel, as measured by median income, fell by 22.7% in 2020. The main victims during the period of the coronavirus were, however, the middle class (deciles 4-7). The situation of the lowest 10% actually improved, thanks to government aid.

The figures in the current National Insurance Institute report are not based on Central Bureau of Statistics data as they have been for the past twenty years, which makes comparison difficult. The National Insurance Institute said that this was because of a delay by the Central Bureau of Statistics in delivering its expenditure survey, which forms the basis for calculating poverty statistics. Therefore, in order to assess what had happened in the past year, the National Insurance Institute used simulations and other data in its possession in producing its report.

For all the aid granted in the coronavirus period, the standard of living as measured by disposable income fell by 4.4% in 2020. In previous years, the standard of living by this measure has risen by 3-4%. The last time a decline of this order was recorded was in 2001. The decline in the standard of living resulted in a lowering of the poverty line, which is defined in relation to this measure.

That, together with the aid given in 2020 led to a decline in the incidence of poverty according to disposable income among families, individuals and children of between 0.5% and 1% in comparison with 2019. The depth of poverty also declined, by 1.5%. Nevertheless, the rate of poverty among the self-employed rose. The Gini inequality index was almost unchanged from 2019, after a rise of 0.5% between 2018 and 2019.

As mentioned, the 4.4% drop in the standard of living as measured by disposable income entailed a drop in the poverty line in 2020, to monthly income of NIS 2,403. This means that some people who were defined as poor in the past are not so defined in the current report, even though their income has not risen, and may even have fallen.

Therefore, alongside the relative measure of poverty, the report contains poverty figures based on an absolute measure, namely the poverty line of 2019. On this basis, the incidence of poverty among families and individuals rose by 0.5%. Given the force of the economic crisis engendered by the coronavirus pandemic, the rise in incidence of poverty according to this calculation is also surprisingly moderate, further illustrating the importance of the measures introduced last year to cushion the social and economic impact of the pandemic.

The National Insurance Institute concludes its report by saying that the economic consequences of the coronavirus pandemic will continue beyond 2020, and that containing the social and economic damage will depend on the readiness of policymakers to provide a substantial social safety net until the crisis is over. Alongside this, active steps are required to assist people in returning to the labor market, the report says.

Published by Globes, Israel business news - en.globes.co.il - on January 21, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

child poverty
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