Yael Eckstein - Salary Inequality And Poverty In Israel During Wartime

Mobilizing a nation for war has many unintended consequences beyond the psychological and emotional toll the difficult effort takes on Israel’s population. Reserve soldiers called into active duty and transportation of soldiers and supplies at short notice will cost hundreds of millions of dollars. Rebuilding and repairing the devastated border communities will also result in significant financial strain on the country. Preliminary Israeli estimates suggest that the war in Gaza would cost the state budget 200 billion shekels ($51 billion).

Even without these recent unforeseen calamities and the human and economic costs involved, Israel has struggled with salary inequality and poverty compared to many Western nations.

Israel has a higher-than-average poverty rate compared to other developed nations. An estimated two million Israelis live in poverty, almost half of them children. Since 1983, the International Fellowship of Christians and Jews (IFCJ) has been aiding families, youth, the elderly, minorities, and Holocaust survivors facing the deprivations of poverty. IFCJ President and CEO Yael Eckstein said the organization raised over $200 million in 2021 alone and is the largest humanitarian aid provider in the country. From hot meals to medications, home visits, and emergency funds, IFCJ answers the most fundamental needs of the communities it serves.

The Importance of a Good Foundation

Families with young children are hit hard by salary inequality and poverty . One study showed that a family's income during the first thousand days of a child's life strongly influences academic achievement. This is a critical situation that threatens cyclical poverty, as those born into poverty are less likely than peers with similar education, family size, or even gender to achieve the academic success needed to rise out of poverty.

Israel's Children Are Disproportionately Likely to Be Born into Poverty

The poverty line is 50% or 60% of median income. Israel's share of individuals below that line is disproportionately high, particularly for children. It is higher than most high-income countries, including the U.S., South Korea, and Greece. At the same time, 22% of Israel's children live below the poverty line, compared to 17% of the overall population.

Poverty Is Everyone's Problem

Government intervention raised many of Israel's families out of poverty during COVID, yet the poverty rate rebounded to pre-pandemic levels by 2021. While the share of Haredi Jews and Arabs living in poverty is nearly double their share in the general population, almost 55% of families living in poverty are non-Haredi Jews.

Haredi and Arab Families with Young Children Are More Likely to Live in Poverty

Despite non-Haredi Jews making up the majority of Israel's impoverished families, almost 80% of impoverished families with children under four years old are Haredi or Arab. Under 21% of those families are non-Haredi Jews. That compares to almost 37% for Haredi Jews and just under 42% for Arabs.

Income Inequality Is Slowly Improving

Israel experienced significant income inequality improvements in the 2010s. While the Gini index for net disposable income in both the U.S. and Israel sat around 0.37 in 2010, it rose to just under 0.4 by 2019 in the U.S., while Israel's Gini index fell to around 0.34. However, the relatively small effect of taxes and transfer payments in Israel has left it well behind OECD countries, which enjoy a Gini index of around 0.31.

Health and Education Spending Is Up While Social Security Falls

Israel's total health, education, social welfare, and social security spending fell from NIS 304 billion in 2020 to NIS 297 billion in 2021. While this is still 59% of government expenditure and about 19% of GDP, there has been a shift from social welfare and social security spending toward health and education. In 2021, social security spending fell by NIS 10 billion, and social welfare spending fell by NIS 2 billion. In contrast, health spending rose by NIS 2 billion.

Unemployment Spending Returned to Pre-Pandemic Levels

Israel expanded unemployment eligibility and coverage during the pandemic, quintupling unemployment spending to NIS 23.5 billion. Unemployment expenditures fell by about 20% in 2021, but by 2022 had dropped sharply to only NIS 3.2 billion. Israel spent less on unemployment benefits in 2022 than it did during pre-pandemic.

Long-Term Care Insurance Expanding in Scope and Scale

Around 10% of the National Insurance Institute of Israel's (NII) spending in 2021 went to long-term care insurance for the elderly. This portion of Israel's social security system has been a significant growth area over the past two decades. That rise in spending has been driven primarily by the shift toward an older population. However, policy changes in how care is provided and accessibility began adding to that growth in 2019. In fact, following reforms implemented in 2018, the percentage of recipients shot up dramatically from 5% to around 22%, while the actual percentage of people over 70 in the general population was falling.

An increase in the level of income support for low-income elderly and survivors

Low-income recipients of old-age and survivor benefits have also benefited from recent changes to benefits and eligibility. Income support benefits for the elderly increased by NIS 1.5 billion in 2022 to NIS 4.4 billion due to greater benefits going to recipients. For individuals, the increase went from NIS 3,237 to NIS 3,799 and was one of the largest single-year increases in the past two decades.

Social Workers Are in Short Supply

Israel is plagued with a growing number of vacant positions within welfare services. Around 10% of social worker positions in the local authority social service departments are unstaffed, even as more and more students graduate from social work schools. About 24% of local authority social service department social workers last less than a year, and about 45% of government social workers are employed part-time.

One-Fifth of Israeli Adults Are Family Caregivers

Around 20% of Israeli adults spend half or more of each year providing long-term care for a family member. This includes those caring for family members with physical, cognitive, and mental health issues. Among lower-salary earners, most caregivers address physical disabilities, while high-salary earners are more likely to provide care related to cognitive or mental disabilities. This could indicate that those with more money can address physical disabilities with money or that those without money cannot spare the time to care for family members with cognitive and mental disabilities.

Caregivers Experience More Work Impacts with More Time Providing Care

Around 88% of polled respondents said that being a caregiver for a family member negatively affected their employment. This impact can come in the form of lost work hours, loss of paid employment, or even loss of work entirely. The more time spent providing care, the more significant the impact on employment, and 27% of those who spent ten or more hours each week on caregiving reported a negative impact on their employment.

Economic Impact of the Gaza War

With the outbreak of war with Hamas , Israel's problems with poverty have only multiplied. Even just the closure of construction sites in Tel Aviv due to the threat of rocket attacks is estimated to have cost the economy NIS 150 million a day. Many Israelis have also been called up for military service, removing them from the workforce and disrupting production and supply chains.

Mission First

According to Yael Eckstein, IFCJ is committed to ensuring accountability for every dollar the organization is entrusted with. Good stewardship means attracting the best talent and ensuring that donor's money goes toward the causes they support when they give money to IFCJ. This kind of accountability keeps the organization running smoothly and ensures its mission stays the top priority, Yael Eckstein said.