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ISRAEL: A SOCIAL REPORT 2010

Dr. Shlomo Swirski | Etty Konor Attias | Hala Abu-Khala ||| December 2010

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I s ra e l : A S o cia l Re p o r t 2 0 1 0

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P.O. Box 36529, Tel Aviv 61364 Telephone: 03-5608871 Fax: 03-5602205 www.adva.org [email protected]

B o a r d o f D i r e c t o r s Dr. Yossi Dahan, Chair Gilberte Finkel (M.A.), Treasurer Professor Ismael Abu-Saad Dr. Nitza Berkovitz Professor Yossi Yona Professor Oren Yiftachel Professor Hubert Law-Yone Professor Rivka Savaiya Dr. Yitzhak Saporta Dr. Dani Filc Professor Rachel Kallus Professor Uri Ram

A u d i t Co m m i t t e e Attorney Ovadia Golestany Attorney Dori Spivak

S t a f f Executive Director: Barbara Swirski Academic Director: Shlomo Swirski Research Coordinator: Etty Konor-Attias Economist: Hala Abu-Khala Economist: Safa Agbaria Researcher: Attorney Noga Dagan-Buzaglo Researcher and Co-coordinator Women’s Budget Forum: Yael Hasson Co-coordinator Women’s Budget Forum: Maysoon Badawi Advocacy Expert, Women’s Budget Forum: Valeria Seigelshifer Popular Education Coordinator: Yaron Dishon Office Manager: Mira Oppenheim

I s ra e l : A S o cia l Re p o r t 2 0 1 0

INTRODUCTION

T he countries of Europe and North America are still struggling with the consequences of the financial crisis that erupted at the end of 2008. Israel was also affected, since the United States and the countries of the European Union are its main trading partners and their adversity has a negative effect on Israeli exports.

However, Israel was less affected by the crisis than other countries. While Israel’s rate of economic growth dropped to 0.7% in 2009 – after an average growth rate of 5% during the years 2004-2008 – and its unemployment rate rose to 8%, Israel made a quick recovery: in 2010, the economy is expected to register a 4% growth rate. By the middle of 2010, the unemployment rate had dropped to 6.3%. Israel has received many compliments for its macro-economic stability, in comparison with the emergency measures instituted by other countries, among them England and France, and in comparison with the even larger difficulties experienced by countries like Ireland and Greece. However, it should be remembered that Israel had allready instituted similar emergency measures in 2001-2003, in the course of a deep recession brought on by the second intifadah: education and health services were adversely affected following cuts in their budgets; social security payments were also reduced; and the poverty rate jumped to a new level, where it has remained ever since. Moreover, the appearance of macro-economic stability conceals inequality that continues to grow in many areas: uneven economic

growth, the concentration of investments in limited sectors of the economy, widening income disparities, large gaps in educational achievements and college attendance, disparities in access to medical services and widening gaps in retirement savings. Israel’s current macro-economic policy focuses on maintaining stability and increasing economic growth. The data presented in this document point out how problematic this policy is, accompanied as it is by a continuous increase in inequality. Israeli society is in need of concerted social action to narrow existing inequalities and to compensate for the harm done to its social services and social safety net in the course of the past decade, as well as to ensure that future economic growth will encompass many more Israelis. Increasing the degree of equality and social justice requires active social policies designed to distribute collective resources fairly, stimulate full employment, ensure a living wage, re-institute public control over retirement savings, provide quality public education for all children, maintain public health services, and guarantee a reliable social safety net. Most of the annual figures utilized in Israel: A Social Report are published by the Israel Central Bureau of Statistics (CBS) a year late. Thus the picture presented here is mostly for 2009. However, in most of the tables and figures, we also present figures for the past ten years, 2000-2009, so as to allow the identification of long-term processes.

Note: Figures for 2010 and 2011 are estimates. Source: Adva Center analysis of IMF, World Economic Outlook, October 2010.

THE DOUBLE JEOPARDY OF THE ISRAELI ECONOMY

Israel’s economy is subject to double jeopardy. Along with many other countries, it is subject to the threat of global economic crises, like the present one. But Israel is also subject to the threat of violent political conflicts due to the volatile situation in the region, and especially the absence of a political solution to the Israeli-

Palestinian conflict. In the past three decades, Israel experienced two Palestinian uprisings against its continuing occupation – the first and second intifadahs. The figure presented below clearly outlines the problem of double jeopardy. The first crisis occurred at the beginning of the present decade, with the outbreak of the

second intifadah; the second crisis occurred towards the end of the decade, with the global financial crisis. Between the two crises, Israel enjoyed five years of economic growth that averaged a healthy 5%. However, this period of growth did not compensate for the losses incurred during the two crises.

I s ra e l : A S o cia l Re p o r t 2 0 1 0

Israel’s GDP 2000-2009 and forecast for 2010 and 2011 Annual change rates

-1

-2

2011*2010*2009200820072006200520042003200220012000%

3.84.00.84.25.35.74.95.11.5-0.6-0.19.1

THE DOUBLE JEOPARDY RESULTS IN LOWER ECONOMIC GROWTH

Due to the double jeopardy that faces Israel, in the last decade it registered lower economic growth than many other countries. The graph below presents annual average GDP per capita growth for selected countries, from 2000 through 2009, the last year for which there are complete figures. China experienced the largest economic growth: its GDP per capita increased by an annual average of 9.6%. India, too, grew by leaps and bounds – by an annual average of 5.2%. China and India are the most prominent countries of South East Asia, many of which experienced high growth rates. Another region that experienced

high growth was Eastern Europe, represented in our graph by Poland, whose average annual per capita GDP growth was 4.1%. In contrast, Israel’s average annual rate of growth of per capita GDP was 1.6%. This is a higher rate than some of the world’s richest countries – the United States with 0.8% and Germany with 0.9% – but the per capita GDP in these countries is much higher than that of Israel: approximately $41,000 in Germany and $46,000 in the United States, compared with $27,000 in Israel (2009). If Israel aspires to a per capita GDP similar to that of Germany and the United States, it needs to grow at a

much faster rate for a long period of time. In the years 2004-2008, the per capita rate of economic growth was 3.0%. However, during the intifadah years, 2001-2003, instead of growing, per capita GDP decreased by an average annual rate of 1.7%, and in 2009, following the global economic crisis, it shrunk once again, by 1.4%; as a result, Israel’s average annual per capita growth in 2000-2009 was only 1.6%. Many countries are paying a heavy price for the global crisis. Israel pays this plus the cost of the absence of a political solution to the Israeli-Palestinian conflict.

GDP Per Capita Selected countries, 2000-2009 Average change rates in per capita GDP, constant prices, in local currency

Sources: Adva Center analysis of CBS, Statistical Yearbook of Israel, various years; CBS, Press Release, “Preliminary Estimate for the Third Quarter of 2010,” November 16, 1010; Bank of Israel, graph of quarterly economic growth and unemployment, November 2010, website of the Bank of Israel.

United States

Germany IsraelBrazilPolandIndiaChina

2000-2009 2001-2003 2004-2008

20099.6

8.5

11.0

8.5

5.2

3.4

7.0

4.2 4.1

5.4

2.4 1.7 2.0

0.2

3.6

-1.2

1.6

-1.7

3.0

-1.4 0.9

0.2

1.9

-4.4 0.8 0.8

1.3

-3.5

BUSINESS-LED GROWTH IS NOT ENOUGH

Israel’s economic leadership puts all its eggs in the business sector. Thus, for example, it reduced government outlays in order to avoid competition with business over sources of credit; it privatized retirement savings funds so that they could be put at the disposal of big business; and it reduced corporate taxes to attract foreign corporations to Israel. These measures were taken under the assumption that the growth stimulated by the business sector would be sufficient to respond to all the needs of Israeli society. The measures did strengthen the business sector, but they did not lead to economic growth benefitting the whole population of Israel. To illustrate: During the past decade, the highest rate of economic growth was registered in the hi-tech and banking-insurance- provident funds sectors. Hi-tech is the pride and joy of Israeli business: it accounts for about half of Israel’s manufacturing exports. However, the hi-tech sector, together with the banking-

insurance-provident funds sector, employs no more than 13% of the Israeli workforce. Moreover, most of the employees in those sectors of the economy have college degrees. This is at a time when most Israeli youngsters – almost three-fourths – do not go on to college within eight years of high school graduation (See page 24). Remuneration in these sectors of the economy is high, but very a-typical. Finally, these sectors are located in the center of the country and in the case of banking- insurance-provident funds, in the city of Tel Aviv. In contrast, the lowest growth rates were registered in the traditional industries. In fact, the activities of those industries shrank throughout the decade. In principle, one could view this phenomenon as a positive indication that the Israeli economy is leaving low- tech behind in favor of a more profitable hi-tech. In reality, the shrinking of traditional industries leaves numerous workers without a source of livelihood. Hi-tech is not an option for them, either because

it requires a college education or because it is located in the center of the country, while the low-tech industries are concentrated in the Galilee and the Negev. Against the background of these figures, it is clear that Israel’s leaders should not be content with economic growth per se and certainly not with economic growth that takes place mainly in the center of the country and benefits a relatively small stratum of the labor market. Rather, they should aspire to economic growth that benefits a broad spectrum of society. This can be achieved, on the one hand, by a technological upgrade of low-tech industries, and on the other, by offering continuing education and vocational training to the relevant parts of the Israeli work force. This requires a concerted effort on the part of the state. It cannot be left to the business sector, because the latter is not motivated by a broad social perspective but rather by the short-term profit considerations of each individual business concern.

I s ra e l : A S o cia l Re p o r t 2 0 1 08

Notes: 1. Capital stock – total outlays of factories, government and non-profits on fixed assets for civilian use,

construction works in progress, investments in machinery, equipment and vehicles. 2. Mixed Tech manufacturing includes chemicals and oil, mines and quarries, plastic and rubber, machinery and equipment, vehicles, jewelry

and decorative ornaments. We include both sub-categories of mixed tech manufacturing: mixed hi-tech and mixed low-tech. Source: Adva Center analysis of figures obtained from the Bank of Israel.

INVESTMENTS CLUSTER IN A NARROW SECTOR OF THE ECONOMY

Investments are necessary to stimulate economic growth. To stimulate economic growth that will benefit more and more Israelis, it is necessary for investments to be made in different sectors of the economy and in different parts of the country. During the past decade, investments were concentrated in very few sectors of the economy and in a limited area of the country. The graph below presents investment figures for the manufacturing sectors of the

economy only. In 2009, the last year for which complete figures are available, hi-tech manufacturing attracted the highest investments, followed by manufacturing based on mixed-hi-tech and low-tech. The picture was the same for the whole 2000-2009 period. Hi-tech attracted the highest investments, which grew by an average annual rate of 8%, including during the intifadah years. In 2009, the capital stock of the hi-tech sector was about double what it had been in 2000.

Investments in the other sectors were far more modest. In the mixed technologies sector, investments grew at an average annual rate of 3.5%; in 2009, the capital stock was about 1.3 times what it had been in 2000. In the low-tech sector, the average annual rate of growth was 2%. Between 2000 and 2009, its capital stock grew by only 19%. The graph presents the changes in the rate of growth of capital stock for each manufacturing sector.

Gross Capital Stock 2000-2009 2000 = 100

250

200

150

100

2009200820072006200520042003200220012000

Hi-Tech

Mixed Tech

Low Tech

Notes: 1. Incomes are gross annual incomes. 2. It should be noted that GDP is presented in NIS millions, while household incomes are presented in NIS. 3. Household income figures on this page are taken from the household Income Survey, conducted annually by the CBS. The CBS asks heads of

households to report on their income from all sources – wages, pensions, capital gains, and real estate. In actuality, the amounts reported are close to the income received from wages and pensions only, as can be ascertained by salary figures reported by the State Revenues Authority at the Ministry of Finance. The disparity between the amount reported to the CBS census takers and the actual income of households, from all possible sources, is especially salient in the top decile: had all income been reported, the income disparities on this and the following pages would be much greater.

Source: Adva Center analysis of CBS, Statistical Abstract of Israel, various years; CBS, Income Survey, various years; the figure for 2009 is courtesy of the CBS Consumption Department.

THE FRUITS OF GROWTH TRICKLE UP MORE THAN DOWN

How are the fruits of growth divided among the various parts of the population? In the following, we focus on the distribution of wealth – more precisely – on the distribution of income, as Israel does not collect figures on wealth. The graph below presents the connection between economic

growth (increase in GDP) and the increase in the income of selected income deciles of households in Israel during the years 2000-2009. Politicians often contend that even if the fruits of economic growth are unevenly divided at first, in the end they trickle down to persons with low incomes. The

graph demonstrates that this is not what happened in Israel between 2000 and 2009: not only are the incomes of households in the top decile much higher than those in the other deciles, but they also increased more.

I s ra e l : A S o cia l Re p o r t 2 0 1 0

GDP and the Average Annual Income of Households in Israel 2000-2009, Households headed by employed persons in selected income deciles, 2009 prices

800,000

700,000

600,000

500,000

400,000

300,000

200,000

100,000

2009200820072006200520042003200220012000

GDP (NIS millions)

Top decile

6th decile

2nd decile

Source: Adva Center analysis of CBS, Income Survey, various years.

WHAT HAPPENED TO HOUSEHOLD INCOMES BETWEEN 2000 AND 2009?

When one examines the incomes of households over the past ten years by income decile, the following picture arises: The second intifadah had an adverse effect on the income of all households. The decline lasted five years – from 2002 through 2006. During most of those years, the average incomes of households in deciles one through nine were smaller than they had been in

2001. For households in the top decile, the decrease in income began only in 2003 and continued through 2006. For households in deciles one through nine, recovery began only in 2007 – and lasted no more than a year: the global financial crisis had an adverse effect on households in all income deciles, with the exception of the seventh and eighth. For households in

deciles one through six, the decline in income began in 2008 and continued into 2009. Following that decline, the income of households in the bottom four deciles was lower in 2009 than in 2000. The income of households in the top decile decreased only in 2009; but even after that decrease, their incomes remained higher than they had been in 2000.

Gross Average Monthly Income of Households Headed by Employed Persons 2000-2009, 2009 prices

In co

m e

d ec

ile

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Percentage change

2000-2009

NIS per month %

1 3,764 3,840 3,503 3,574 3,514 3,638 3,674 3,835 3,819 3,602 -163 -4.3

2 6,055 6,140 5,833 5,682 5,681 5,726 5,782 6,044 5,908 5,798 -257 -4.3

3 7,781 7,925 7,526 7,312 7,360 7,367 7,425 7,792 7,695 7,510 -271 -3.5

4 9,504 9,715 9,137 8,965 9,163 9,131 9,250 9,577 9,474 9,333 -171 -1.8

5 11,351 11,628 11,007 10,773 11,096 11,071 11,204 11,548 11,473 11,384 33 0.3

6 13,510 13,897 13,097 12,906 13,244 13,279 13,459 13,947 13,861 13,803 293 2.2

7 16,312 16,577 15,734 15,429 15,951 15,975 16,204 16,757 16,608 16,675 363 2.2

8 20,185 20,460 19,417 18,722 19,423 19,766 19,863 20,839 20,488 20,512 327 1.6

9 26,220 26,724 25,141 24,050 25,039 25,550 25,850 26,921 26,635 26,383 163 0.6

10 44,644 46,595 47,157 41,243 42,553 44,013 44,420 46,221 46,403 45,794 1,150 2.6

Note: Percentage changes were calculated from the original figures; thus there may be differences of a tenth of a percent in the table. Sources: Adva Center analysis of CBS, Income Survey, various years; the figure for 2009 was received courtesy of the Consumption Department of the CBS.

THE SHARE IN THE INCOME PIE OF HOUSEHOLDS IN THE FOUR BOTTOM INCOME DECILES DECLINED; THE SHARE OF HOUSEHOLDS IN THE TOP INCOME DECILE INCREASED

In 2009, the share of households in the four bottom income deciles in the total income pie was smaller than it had been in 2000; the share of households in the top decile was larger.

I s ra e l : A S o cia l Re p o r t 2 0 1 0

The Distribution of Income by Deciles 2000-2009 Calculated by the gross monthly income of households headed by salaried persons, in percentages

Decile 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

1 2.4 2.3 2.2 2.4 2.3 2.3 2.3 2.3 2.4 2.2

2 3.8 3.8 3.7 3.8 3.7 3.7 3.7 3.7 3.6 3.6

3 4.9 4.8 4.8 4.9 4.8 4.7 4.7 4.8 4.7 4.7

4 6.0 5.9 5.8 6.0 6.0 5.9 5.9 5.9 5.8 5.8

Total of deciles 1-4

17.0 16.9 16.5 17.2 16.8 16.6 16.6 16.7 16.6 16.3

5 7.1 7.1 7.0 7.2 7.3 7.1 7.1 7.1 7.1 7.1

6 8.5 8.5 8.3 8.7 8.7 8.5 8.6 8.5 8.5 8.6

7 10.2 10.1 10.0 10.4 10.4 10.3 10.3 10.3 10.2 10.4

8 12.7 12.5 12.3 12.6 12.7 12.7 12.6 12.7 12.6 12.8

9 16.5 16.3 16.0 16.2 16.4 16.4 16.5 16.5 16.4 16.4

10 28.0 28.5 29.9 27.7 27.8 28.3 28.3 28.3 28.6 28.5

Total 100 100 100 100 100 100 100 100 100 100

Note: The average monthly wage for an employed person in 2008 was NIS 8,518, in current prices. Source: Adva Center analysis of National Insurance Institute, Average Wage and Income by Locality and by Various Economic Variables, Jacque Bendelac, various years.

THE PERCENTAGE OF PERSONS EARNING THE MINIMUM WAGE OR LESS INCREASED BETWEEN 2000 AND 2008

Up to now we have been examining income disparities among households. We now turn to disparities among individual wage-earners. The National Insurance Institute publishes figures on the percentage of employed persons earning the minimum wage or less, the average wage or less, and more than the average wage. Unfortunately, these figures are

published two years late and we do not have information with regard to 2009. Regarding the years 2000 through 2008, the figures indicate an increase in the proportion of employed persons earning the minimum wage or less. In 2000, this percentage was 29.1%; in 2008, it climbed to 32.8%, down from the 2006 high of 35.1%.

In contrast, the percentage of employed persons earning the average wage or more, which was 27.8% in 2000, declined by 2006 to 26.1%, rising to 28.1% in 2007 and declining to 27.4% in 2008. The proportion of Israeli employees earning the average wage or less was in 2008 72.7%, following 73.8% in 2006 and 72.2% in 2000.

Employed persons in Israel, by wage level 2000-2008 Percentages in relation to the average wage

0 200820072006200520042003200220012000Employed persons receiving%

32.832.835.132.734.135.431.729.229.1Minimum wage or less

6.85.95.08.26.45.87.610.011.7Up to half the average wage

20.820.921.320.420.220.320.320.319.9 Between above half of the average wage and 75% of the average wage

12.312.312.412.012.211.512.312.111.5 Between above 75% of the average wage and the average wage

72.771.973.873.372.973.071.971.672.2Total average wage or less

17.818.417.717.718.317.718.819.018.1Twice the average wage

9.69.78.48.98.79.39.39.69.7Three times the average wage

Employed persons earning minimum wage or less

Employed persons earning more than the average wage

Source: Adva Center analysis of CBS, Income Survey, various years.

THE WAGE GAP BETWEEN WOMEN AND MEN NARROWED SOMEWHAT IN 2009 DUE TO THE DECLINE IN MEN’S WAGES

Wage disparities between women and men appear to be relatively stable. In 2009, the average monthly salary of women was NIS 6,280 – 66% of the average monthly salary of men. This compares with 61.6% in 2000. The average hourly salary of

women in 2009 was NIS 42.6 – 85% of the average hourly salary of men. It should be pointed out that between 2000 and 2008, which included periods of high economic growth as well as those of deep recession, wage disparities between women and men changed

very little. The narrowing of the wage gap registered in 2009 does not stem from a real improvement in women’s hourly pay, but rather from the decline in men’s average hourly and monthly pay. This decline was the result of the global financial crisis.

I s ra e l : A S o cia l Re p o r t 2 0 1 0

Women’s Salaries as a Percentage of Men’s 2000-2009 Per month and per hour

100

2009200820072006200520042003200220012000%

MenMonthly wage in NIS

In 2

0 0

9 p

ri ce

Women

MenHourly wage in NIS Women

Hourly wage

Monthly wage

9,808 10,291 9,755 9,421 9,507 9,514 9,461 10,014 9,947 9,527

6,037 6,144 5,999 5,857 6,020 6,012 5,996 6,429 6,279 6,280

50.2 53.1 51.1 49.6 49.7 49.8 49.7 52.1 51.5 50.4

41.5 41.8 41.4 41.0 41.8 41.5 41.6 43.8 42.6 42.6

1 Does not include the population of East Jerusalem. Sources: Adva Center analysis of CBS, Income Survey, various years; the figure for 2009 courtesy of the Consumption Department of the CBS.

THE SALARIES OF URBAN ASHKENAZI AND MIZRAHI WORKERS ROSE SOMEWHAT IN 2009; THE SALARIES OF URBAN ARAB WORKERS REMAINED THE SAME

Salary differences between Jews and Arabs and between Mizrahi Jews (native-born Israelis born to fathers born in Asia or Africa) and Ashkenazi Jews (native-born Israelis born to fathers born in Europe or America) have not undergone significant changes over the past decade. In 2009, the average monthly

salaries of urban Ashkenazi Jews increased relative to the average monthly salary of all urban employees – by three percentage points – from 38% above the average in 2008 to 41% above the average in 2009. The salaries of their Mizrahi counterparts also increased by three percentage points, to 3%

above the average. This represents a slight improvement in the income of urban Mizrahi employees, following a decline in 2008. The average monthly salary of Arab urban employees remained the same – at about a third below the national average.

Monthly Income from Wages of Urban Employees 2000-2009 Ashkenazim, Mizrahim, Arabs

Base: National Average = 100

150

140

130

120

110

100

200920082007200620052004200320022001 1

2000 1%

141138137136139136137126138139 Native-born to father born in Europe or America

1031001061021001001001009595Native-born to father born in Asia or Africa

67677168727573717067Arabs and others

Native-born to father born in Europe or America

Native-born to father born in Asia or Africa

Arabs and others

Source: Adva Center analysis of CBS, Income Survey, various years.

THE MIDDLE CLASS CONTINUED TO SHRINK

The degree of income inequality can also be examined by looking at the situation of the middle class in Israel. We divided Israeli households into three groups: the middle stratum containing all households whose incomes fall between 75% and 125% of median household income; the top stratum, containing all households whose incomes are

higher than 125% of the median household income; and the bottom stratum, whose incomes fall below 75% of the median household income. Thus, in accordance with this definition, the middle class in Israel includes the fifth and sixth income deciles, as well as part of the fourth and seventh deciles. In 2009 the size of the middle class

I s ra e l : A S o cia l Re p o r t 2 0 1 0

Proportion of Households in Each Stratum 1988-2009, in percentages, by median income of households headed by employed persons

100

M ed

ia n

in co

m e

of h

ou se

h ol

d s

20092008200720062005200420032002200120001999199819971997 1

1992 1

1988 1%

35.535.034.734.834.734.634.234.333.833.534.234.234.233.232.631.6 Top stratum

26.627.127.727.027.627.628.228.128.928.728.328.528.530.030.933.0 Middle stratum

37.937.937.738.137.737.837.637.637.337.937.437.337.336.836.535.4 Bottom stratum

Top stratum

Middle stratum

Bottom stratum

Source: Adva Center analysis of CBS, Income Survey, various years.

Share of Each Stratum in the Total Income 1988-2009, in percentages, by median income for all households headed by employed persons

experienced further shrinkage, from 27.1% of all households to 26.6%. Likewise, its share of the total income of households in Israel decreased from 20.7% to 20.5%. (That share is calculated by summing the incomes of all the households in the middle class.) This is a continuing trend. Between 1998 and 2009, the size of Israel’s middle stratum shrank by

approximately 7%, from 28.7% to 26.6% of all households. At the same time, its share of the total income decreased by approximately 7%, from 22% to 20.5%. The shrinking of the middle class occurred during the recession of the period of the second intifada as well as during the wave of economic growth experienced

during the years 2004-2008. Between 2001 and 2003, the middle stratum shrank by 0.7%, from 28.9% to 28.9%. During the years of economic growth, it continued to shrink, decreasing to 26.6% in 2009 – for the low of the decade.

100

M ed

ia n

in co

m e

of h

ou se

h ol

d s

20092008200720062005200420032002200120001999199819971997 1

1992 1

1988 1%

13.613.513.413.313.413.413.513.313.113.013.413.513.613.613.513.9 Top stratum

20.520.721.020.521.121.421.921.322.021.721.822.022.123.724.727.9 Middle stratum

65.965.865.666.165.565.164.565.464.965.364.864.664.362.761.858.2 Bottom stratum

Top stratum

Middle stratum

Bottom stratum

Source: Globes newspaper, March 28-29, 2010.

SALARIES OF TOP EXECUTIVES DECLINED SOMEWHAT IN 2009

At the top end of the salary scale are the top executives of corporations listed on the Tel Aviv Stock Exchange. (Still higher are the owners who employ them, but the CBS does not publish figures on their income. The salaries of the top executives of corporations not listed on the Stock Exchange are not published either). The global financial crisis resulted in a slight decrease in the salaries of top executives, though they remained very high. The average cost of the salary of the top executive of a corporation included in the “Tel Aviv 25” list (the 25 largest corporations on the

Stock Exchange) declined by 6% to NIS 9.13 million a year, or NIS 761 thousand a month. In contrast, there was an increase in the cost of the average annual salary of top executives of corporations included in the “Tel Aviv 100” list (the 100 largest corporations on the Stock Exchange). The salary bill was NIS 5.93 million a year, or NIS 494 a month – a real increase of 11% over 2008. These figures are typical of the trend seen over the last decade: an increase in the salaries of top executives of corporations listed on the Tel Aviv Stock Exchange.

Between 2000 and 2009, the salary bill of top executives in the 25 largest corporations on the Tel Aviv Stock Exchange nearly doubled, from NIS 4.81 million in 2000 (NIS 401,000 per month) to NIS 9.13 million in 2009 (NIS 761,000 per month). In 2000, the average monthly salary bill of top executives in the 25 largest companies on the Tel Aviv stock exchange was 49 times higher than the average monthly wage; in 2009, it was 94 times higher. In addition, many top executives receive perks like stock options.

I s ra e l : A S o cia l Re p o r t 2 0 1 0

Monthly Cost of Top Executives of the 25 largest corporations on the Tel Aviv stock exchange

2000-2009 In comparison with the average monthly wage, in current prices for 2009

100

2009200820072006200520042003200220012000???

761810758942712524372362361401 Monthly cost in NIS thousands, current prices for 2009

949594107846045464449 Salary Costs In comparison with the national average monthly wage

Average monthly

wage

Source: National Insurance Institute, Annual Survey, various years.

THE POVERTY RATE INCREASED IN 2009

At the bottom of the salary scale are families whose incomes are so low that they position them beneath the poverty line (defined as equal to 50% or less of the median income of households in Israel). In 2009, the poverty rate increased to 20.5% - three percentage points higher than it was at the start of the decade. The most significant change in the poverty rate occurred between 2001 and 2004, when it grew from 17.6% to 20.3%, following the budget cuts made in social security payments during the crisis period of the second intifadah. Since

then, the rate has not returned to its previous level, which was itself quite high. The reasons are many: the absence of investments in Arab localities, the low workforce participation level of Arab women and ultra- Orthodox men, new jobs that are only part-time, and the increasing use of perm-temp agencies for employment. The wave of economic growth that occurred between the end of the second intifadah and the outbreak of the global economic and financial crisis succeeded in halting the increase in poverty, but not in reducing it.

An especially large increase occurred in the poverty rate of Arab families: from 41.2% in 2001 to 54.0% in 2006. In the succeeding years, the rate decreased, but in 2009 it increased sharply, to 53.5%. It should be borne in mind that even at the beginning of the decade, the picture was far from rosy; then the poverty rate among Arabs was nearly 2.9 times that of Jews. Among Jews, the highest poverty rate is among ultra-Orthodox Jews; their poverty rate is similar to that of the Arab population of Israel.

Poverty Rate among Families in Israel 2000-2009 Af ter direct taxes and transfer payments, in percentages

2009200820072006200520042003200220012000%

20.519.919.920.020.620.319.318.117.717.6Overall poverty rate

53.549.451.454.052.149.948.347.641.242.9Arab families

15.215.315.014.715.915.914.913.914.414.3Jewish families

Overall poverty rate

Arab families

Jewish families

INEQUALITY: UNEMPLOYMENT MAP

One of the most painful consequences of economic crisis is the rise in unemployment. The global crisis that broke out in 2008 resulted in an increase in unemployment, from 5.9% in the middle of 2008 to 7.8% in the middle of 2009. One of the signs that Israel emerged from the crisis faster than many other countries was the fact that by the middle of 2010, the unemployment rate dropped to 6.3% (CBS, “Unemployment Rate in August 2010,” Press Release, October 21, 2010). Unemployment hits mainly the weakest sectors of the population; it is higher in Arab localities than in Jewish ones, higher in Jewish development towns than in affluent towns and higher among Arab women than among Jewish women.

Unemployment hits those to whom the education system failed to provide a decent education. It also hits young people who have not had time to establish themselves in the labor market. The following table presents figures from September 2010 on job seekers, by locality, as published on the website of the Government Employment Service of the Ministry of Industry, Commerce and Employment. Persons considered unemployed are those who registered with the Government Employment Services. However, many unemployed persons do not do this, either because there is no employment office in their community, because they were turned away empty- handed in the past, or because they do not believe they have a

chance to find work. Thus, the number of registered job seekers is lower than the actual number of unemployed persons. A more complete picture of the extent of unemployment can be obtained from figures published by the CBS; however, the CBS does not present unemployment figures by locality. We chose to present the figures on job seekers, since they allow us to see the differences among localities. At the top of the list, with the highest percentage of job seekers, are the Arab localities. Among Jewish localities, the highest percentages of job seekers are to be found in development towns and in localities far from the center of the country.

I s ra e l : A S o cia l Re p o r t 2 0 1 020

Source: Web site of the Ministry of Industry, Commerce and Employment, www.tassuka.gov.il

National Average 5.8

Rahat 36.7

Umm Al–Fahm 28.6

Sakhnin 26.2

Tamra 24.1

Arrabe 23.7

Tayibe 23.1

Shefar’am 19.1

Akko 15.9

Dimona 14.0

Nazareth 13.7

Ofakim 13.5

Qiryat Gat 10.4

Netivot 10.3

Arad 9.6

Tiberias 9.1

Zefat 8.9

Qiryat Yam 8.7

Ma’alot–Tarshiha 8.7

Beer Sheva 8.2

Afula 8.0

Ashqelon 7.7

Ashdod 7.7

Qiryat Atta 7.7

Majd Al – Kurum 7.7

Nahariyya 7.6

Nazareth Illit 7.3

Karmiel 7.0

Baqa Al–Gharbiyye 6.8

Migdal Haemeq 6.5

Lod 6.3

Haifa 6.0

Qiryat Bialik 5.7

Qiryat Shemona 5.6

Betar Illit 5.5

Hadera 5.3

Daliyat Al–Karmel 5.3

Qiryat Motzkin 5.3

Yavne 5.0

Bene Braq 4.8

Ramla 4.8

Or Yehuda 4.7

Netanya 4.7

Bet Shemesh 4.6

Bat Yam 4.6

Nesher 4.5

Pardes Hanna–Karkur 4.5

Tire 4.4

Elat 4.3

Rehovot 4.1

Jerusalem 3.6

Petah Tiqwa 3.5

Modi'in Illit 3.5

Rosh Haayin 3.5

El'ad 3.4

Tel Aviv–Yafo 3.1

Mevasseret Ziyyon 3.1

Rishon Leziyyon 3.1

Nes Ziyyona 3.0

Yehud 2.9

Ma’ale Adummim 2.9

Holon 2.9

Giv’at Shemuel 2.6

Ramat Gan 2.5

Qiryat Ono 2.4

Modi'in-Makkabbim-Re'ut 2.2

Giv’atayim 2.2

Herzliyya 2.0

Kefar Sava 2.0

Hod Hasharon 1.9

Ramat Hsharon 1.7

Ra’anana 1.6

Percentage of Job Seekers By locality, September 2010, localities of 20,000 residents or more, as a percentage of the work force, in descending order

I s ra e l : A S o cia l Re p o r t 2 0 1 0

The School System

OVER HALF OF ISRAELI YOUTH FAILED TO RECEIVE MATRICULATION DIPLOMAS

Only 46.1% of Israeli high school seniors received matriculation diplomas in 2009. This represents a slight increase over the success rate in 2008: 44.4%. Not all matriculation diplomas qualify their holders for college admission: in 2009, 14% of those diplomas were not up to par. In other words, only 39% of the age group qualified to apply for college entrance.

The inequality inherent in the school system is reflected in the differences in success rates in the matriculation exams when they are examined by locality. We have chosen to present the percentage of students from among the age cohort succeeding in the matriculation exams, including students in East Jerusalem and ultra-Orthodox students (who are often excluded

from such figures), as the Israel education system is responsible for the level of educational achievements of the entire population, including these two groups. The figures were calculated by dividing the number of students eligible for matriculation diplomas by the total number of 17-year-olds residing in the locality.

Source: Adva Center, “Eligibility for Matriculation Diplomas, by Locality, 2008-2009,” December 2010.

Students Eligible for Matriculation Diplomas As a Percentage of 17-year-olds residing in the locality 2009, localities of 10,000 or more, in ascending order

National Average 46.1

Modi'in Illit 5

Bene Braq 6

Betar Illit 7

Jisr Az–Zarqa 13

Jerusalem 18

Ein Mahel 19

Kafar Manda 21

Reine 21

Abu Sinan 22

Kuseufe 23

Rahat 27

Tur’an 28

Iksal 29

El'ad 29

Ma’ale Iron 29

Tel Sheva 29

Tayibe 31

Arad 31

Qalansawe 31

Yirka 32

Lod 32

Arrabe 32

Shefar’am 32

Ar’ara 33

Shagor 33

Umm Al–Fahm 35

I’billin 35

Kafar Qara 36

Nahef 36

Zefat 36

Gedera 37

Kafar Kanna 37

Ar’ara–Negev 37

Ramla 37

Migdal Haemeq 38

Ofakim 39

Nazareth 39

Sakhnin 39

Afula 39

Bet Shemesh 40

Judeide - Maker 40

Baqa-Jatt 41

Akko 41

Tire 43

Tamra 43

Hadera 44

Pardes Hanna – Karkur 44

Tiberias 45

Yafi 45

Kafar Qasem 46

Bet She’an 47

Qiryat Eqron 47

Daliyat Al-Karmel – Isifya 48

Or Yehuda 49

Ma’a lot - Tarshiha 49

Mughar 51

Bat Yam 52

Nahariyya (52)

Netivot 52

Qiryat Shemona 52

Kefar Yona 53

Qiryat Tivon 53

Elat 54

Qiryat Gat 54

Giv’at Ze’ev 55

Gan Yavne 55

Kefar Sava 55

Qiryat Bialik 55

Ashdod 56

Dimona 56

Zikhron Ya’aqov 56

Tirat Karmel 56

Karmi’el 56

Fureidis 56

Petah Tiqwa 56

Yoqne’am Illit 57

Qiryat Atta 57

Nazareth Illit (58)

Rehovot 58

Even Yehuda 59

Ashqelon 59

Holon 59

Ariel 60

Beer Sheva 60

Binyamina–Giv'at Ada 60

Netanya 60

Ma’ale Adummim 61

Nes Ziyyona 61

Rishon Leziyyon 61

Haifa 62

Yavne 62

Qiryat Yam (62)

Qiryat Motzkin (62)

Tel Aviv–Yafo 62

Or Aqiva 63

Ramat Hsharon 63

Mevasseret Ziyyon 64

Zoran–Qadima 64

Beit Jann 65

Rosh Haayin (65)

Ramat Gan 65

Nesher 66

Ganne Tiqwa 67

Yehud–Newe Efrayim 68

Azur 69

Giv’at Shemuel 71

Modi'in-Makkabim-Re'ut 71

Qiryat Ono 72

Hod Hasharon 73

Herzliyya 73

Tel Mond (75)

Giv’atayim 75

Ra’anana 76

I s ra e l : A S o cia l Re p o r t 2 0 1 0

Notes: 1. Arabs – includes Moslems and Christians but not Druze and Negev Bedouins. 2. College – universities and academic colleges in Israel, both private and public, exclusive of the Open University. Sources: Adva Center analysis of Ministry of Education, Pedagogical Authority, Examinations Department, ”Matriculation Examination Figures by Locality“, various years; CBS, Statistical Abstract of Israel, various years.

Higher Education

ONLY ABOUT A FOURTH OF 17-YEAR-OLDS WENT ON TO COLLEGE

Higher education is the way to a better future. In Israel, this way is arranged in the form of a pyramid: all schoolchildren start off at the same baseline, but the higher one climbs, the fewer go on to the next level. Only a minority make it to the top: in 2009, only 26.9% of persons who were 17 years old in 2001 had gone on to college.

If we follow the climb, we find that in 2001, only 75.4% of the age cohort was enrolled in high school in a track leading to matriculation. The matriculation diploma was obtained by no more than 45.3% of the age cohort. Among them, some held diplomas that were not up to the standards of college admission. The result: the percentage of young people

with matriculation diplomas that qualified them to apply for college entrance was 37.3% of the age cohort. Among that group, not everyone had gone on to college in Israel by 2009: only 26.9% had – that is, slightly more than one out of four. The proportion of Jewish youth going on to college is double that of Arab youth.

Percentage of 17-Year-Olds Beginning College by 2009

Number that had enrolled in college 8 years

later

Number qualifying for college

entrance

Number qualifying for matriculation

diplomas

Number of seniors

Total number of 17-year-

olds, including ultra-Orthodox

and East Jerusalem

100% 112,000

75.4% 84,430

45.3% 50,680

37.3% 41,740

26.9% 30,150

100% 88,300

80.6% 71,193

49.6% 43,794

41.7% 36,865

31.5% 27,833

100% 15,300

66.1% 10,117

34.9% 5,340

28.5% 3,621

15.3% 2,338

Total Population Jews Arabs

Notes: 1. The average figure includes East Jerusalem and ultra-Orthodox youngsters. 2. Affluent localities are defined as those categorized by the CBS as socio-economic clusters 8-10. 3. The figures include youngsters residing in localities comprising regional councils. Source: Adva Center, “Eligibility for Matriculation Diplomas, by Locality, 2008-2009,” December 2010

Eligibilit y for Matriculation Diplomas by Social Group

INCREASE IN ELIGIBILITY RATES IN AFFLUENT LOCALITIES; DECREASE IN DEVELOPMENT TOWNS AND ARAB LOCALITIES

In 2009, there was an increase in the percentage of seniors succeeding in the matriculation exams, from 44.4% to 46.1%. Looking at the past decade, we find a reversal in the trend: while at the beginning of the decade the success rate increased, from 45.3% to 49.2%, after 2004 it decreased to 44.4% in 2008 – lower than the rate at the beginning of the decade. While the rate increased somewhat in 2009, it was still lower than in 2004.

If we disaggregate the success rate by population group, we find that the average conceals an increase in inequality. Young persons in affluent localities registered a consistently high success rate during the last five years, with an average of approximately 67%. In contrast, young persons living in Jewish development towns and Arab localities (excluding East Jerusalem) experienced a steep decrease in success rates: in the development towns, it decreased

from 54.2% in 2004 to 47.3% in 2009 – a decline of 13%. In Arab localities, it decreased from 42.2% in 2004 to 34.4% in 2009, a decline of 18%. Bedouin youngsters residing in the Negev experienced a decline in success rates throughout the decade. In 2009, their success rate increased somewhat and was similar to that of 2001. The success rate of Druze youngsters showed ups and downs: in 2009, it climbed to 48%.

Success Rates in the Matriculation Exams among 17-year-olds 2001-2009, by social group, in percentages, including localities with 10,000 residents or more

200920082007200620052004200320022001Social Group%

46.144.446.345.946.449.248.348.445.3National average 

66.067.268.266.664.566.7- - - Affluent localities 

47.347.648.248.746.854.2- - - Jewish development towns 

63.761.360.5 58.758.259.758.457.753.9Jews, excluding ultra-Orthodox

52.250.551.850.851.153.5- - - Jews, including ultra-Orthodox

48.039.543.744.440.740.542.339.840.8Druze 

34.432.435.635.736.842.239.338.334.9Arabs, excluding East Jerusalem 

29.426.631.027.928.825.627.627.829.9Negev Bedouins 



   

Note: The figures do not include students enrolled in the Open University. Sources: Adva Center analysis of CBS, Local Authorities in Israel, various years; CBS, Demographic Characteristics of Applicants for Studies, Students, and Degree Recipients at Institutes of Higher Education, various years; Figures on the number of students enrolled in universities and academic colleges in 2009 were received courtesy of the Higher Education Department at the CBS.

Higher Education

THE GAPS REMAINED STABLE IN 2008/09

The proportion of residents of affluent Jewish localities aged 20-29 studying for bachelors’ degrees at Israeli universities was 10.1% in 2008/09. This was double the proportion in Arab localities – 4.8%. In Jewish development towns, the proportion was slightly higher than in the Arab localities – 6.0%.

These gaps have been stable since the year 2000. The gaps exist not only at universities, but also at academic colleges, despite the fact that one of the purposes of the public academic colleges was to increase the opportunities for higher education for residents

of peripheral communities. Unfortunately, CBS figures do not allow us to differentiate between public academic colleges and private colleges that serve better- off students. Figures for academic colleges are available beginning only from the 2002/03 academic

I s ra e l : A S o cia l Re p o r t 2 0 1 0

12.0

10.0

8.0

6.0

4.0

2.0

2008/092007/082006/072005/062004/052003/042002/032001/022000/01%

4.84.95.25.05.05.14.74.84.5Arab localities

6.05.95.95.65.75.85.75.75.6 Jewish development towns

10.110.110.210.510.610.610.310.010.1Affluent localities

Undergraduate Students Enrolled in Israeli Universities 2000-2009, by type of locality, in percentages of the 20-29 age cohort

Arab localities

Affluent localities

Jewish development towns

Notes: 1. No figures were published for 2000/2001. 2. Figures do not include teachers’ colleges. Sources: Adva Center analysis of CBS, Local Authorities in Israel, various years; CBS, Demographic Characteristics of Applicants for Studies, Students, and Degree Recipients at Institutes of Higher Education, various years; Figures on the number of students enrolled in universities and academic colleges in 2009 were received courtesy of the Higher Education Department at the CBS.

year. They demonstrate, first, an increase in the number of students from all three types of localities. They also show an over- representation for young people from affluent localities. In 2009, the proportion of 20-29 year-olds from affluent localities enrolled

in undergraduate programs in academic colleges was 10.6%, compared with 6.4% from Jewish development towns. Both these figures are similar to those for enrollment in universities. In contrast, the proportion of 20-29 year-olds from

Arab localities enrolled in undergraduate programs in academic colleges was much lower – 2.1% – and much lower than the proportion of Arab students enrolled in undergraduate programs in universities – 4.8%.

12.0

10.0

8.0

6.0

4.0

2.0

2008/092007/082006/072005/062004/052003/042002/03%

2.12.02.42.11.51.61.5Arab localities

6.45.95.55.14.44.03.8 Jewish development towns

10.69.89.18.58.06.56.9Affluent localities

Arab localities

Affluent localities

Jewish development towns

Undergraduate Students in Academic Colleges 2001-2009, by type of locality, in percentages of the 20-29 age group

I s ra e l : A S o cia l Re p o r t 2 0 1 0

Locality

Total 13.6 6.7 6.9

Lehavim 30.9 18.3 12.7

Savyon 29.7 14.8 15.0

Omer 29.5 19.2 10.3

Har Adar 28.6 17.5 11.2

Metar 27.2 15.1 12.1

Rosh Pinna 27.2 16.3 10.9

Elqana 27.0 12.2 14.8

Kefar Weradim 26.6 15.5 11.1

Metula 26.5 6.7 19.8

Kefar Shemaryahu 26.0 9.8 16.1

Qedumim 25.3 9.9 15.4

Giv’at Shemuel 25.2 16.8 8.4

Ramat Hsharon 24.5 11.6 12.9

Ramat Yishay 24.0 12.5 11.5

Kokhav Yair 23.5 12.0 11.5

Qiryat Ono 23.1 10.7 12.4

Shoham 23.0 11.8 11.2

Qiryat Tivon 22.9 15.1 7.8

Giv’atayim 22.8 11.0 11.8

Ra’anana 22.5 10.9 11.6

Even Yehuda 22.3 10.1 12.1

Alfe Menashe 21.8 8.4 13.3

Modi'in– Makkabim–Re'ut

21.5 11.3 10.2

Nesher 21.4 15.8 5.6

Herzliyya 21.4 8.4 13.0

Efrata 21.3 11.3 10.0

Mevasseret Ziyyon 20.8 10.1 10.8

Mi'elya 20.8 15.9 4.9

Ganne Tiqwa 20.6 10.4 10.2

Nes Ziyyona 20.5 9.9 10.6

Qiryat Motzkin 20.5 13.1 7.4

Pardesiyya 20.4 8.7 11.7

Karmiel 19.6 9.4 10.3

Locality

Mazkeret Batya 19.6 10.3 9.3

Yesud Hama'ala 19.6 9.0 10.6

Hurfeish 19.5 13.7 5.8

Qiryat Bialik 19.5 12.0 7.4

Zikhron Ya’aqov 19.2 10.2 9.1

Hod Hasharon 19.2 8.3 11.0

Binyamina–Giv'at Ada

19.2 8.9 10.3

Kafar Kama 19.2 9.2 10.0

Tel Aviv–Yafo 19.1 9.4 9.8

Ramat Gan 19.0 9.4 9.7

Qarne Shomeron 18.9 7.5 11.4

Kefar Sava 18.8 8.8 10.0

Haifa 18.8 13.8 5.0

Oranit 18.4 5.8 12.6

Rishon Leziyyon 18.1 7.0 11.2

Jish (Gush Halav) 18.0 11.3 6.7

Nahariyya 17.8 11.1 6.7

Ariel 17.8 3.1 14.7

Yehud 17.5 7.7 9.8

Tel Mond 17.2 6.6 10.6

Bet El 17.1 6.1 11.1

Giv’at Ze’ev 17.0 7.3 9.6

Petah Tiqwa 16.7 7.1 9.7

Gedera 16.7 8.4 8.3

Rehovot 16.7 8.8 7.9

Yavne 16.4 7.8 8.5

Qiryat Shemona 16.3 5.4 10.8

Yoqne’am Illit 16.2 9.6 6.6

Beer Sheva 16.0 7.5 8.5

Gan Yavne 15.9 7.5 8.4

Qiryat Atta 15.8 9.1 6.7

Bet Arye 15.6 6.9 8.7

Ma’ale Adummim 15.5 6.7 8.8

Rosh Haayin 15.3 5.4 9.8

Locality

Nazareth Illit 14.9 7.6 7.3

Arad 14.7 6.3 8.5

Ashqelon 14.7 6.6 8.2

Holon 14.6 5.2 9.4

Julis 14.5 9.5 4.9

Shelomi 14.4 8.3 6.1

Zoran–Qadima 14.4 6.5 7.9

Kefar Yona 14.3 5.1 9.2

Afula 14.2 5.5 8.7

Netanya 14.0 5.2 8.8

Rame 14.0 9.7 4.2

Kafar Yasif 14.0 11.5 2.4

Ma’a lot–Tarshiha 13.9 8.6 5.3

Ashdod 13.7 6.4 7.4

Fassuta 13.5 8.4 5.0

Sederot 13.4 3.2 10.2

Qiryat Gat 13.3 5.8 7.6

Bet Dagan 13.2 5.1 8.1

Hadera 13.1 5.1 7.9

Qiryat Yam 12.8 7.4 5.4

Mizpe Ramon 12.8 6.6 6.2

Peqi’in 12.8 9.7 3.1

Azur 12.7 5.1 7.6

Qazrin 12.6 6.3 6.3

Pardes Hanna– Karkur

12.5 5.2 7.2

Ma'ale Efrayim 12.3 4.5 7.8

Bet Shean 12.2 6.0 6.2

Bene Ayish 12.2 5.3 6.9

Akko 12.2 8.4 3.8

Nazareth 12.1 8.2 3.9

Hazor Hagelilit 12.1 6.1 6.0

Tiberias 12.0 7.0 5.0

Zefat 11.8 7.5 4.3

Migdal Haemeq 11.6 4.9 6.7

Undergraduate Students in Israeli Universities and Academic Colleges 2008/09 As a proportion of the 20-29 age cohort, by locality, localities in which there are 30 or more students, in descending order of total students

O f t

h at

: S tu

d en

at U

n iv

er si

ti es

O f t

h at

: S tu

d en

ts a

t A

ca d

em ic

C o

lle ge

Total Students Enrolled Of

t h

at : S

tu d

en ts

U n

iv er

si ti

O f t

h at

: S tu

d en

ts a

t A

ca d

em ic

C o

lle ge

Total Students Enrolled Of

t h

at : S

tu d

en ts

U n

iv er

si ti

O f t

h at

: S tu

d en

ts a

t A

ca d

em ic

C o

lle ge

Total Students Enrolled

Sources: Adva Center analysis of CBS, Local Authorities in Israel 2008, database for analysis, CBS website; Figures on the number of students enrolled in universities and academic colleges in 2009 were received courtesy of the Higher Education Department at the CBS.

Locality

Or Aqiva 11.3 4.5 6.8

Dimona 11.2 4.2 6.9

Tirat Karmel 11.2 7.2 4.0

Eilabun 11.0 7.5 3.5

Beer Ya’aqov 10.8 4.7 6.1

Dabburye 10.6 6.3 4.3

Elyakhin 10.6 2.7 7.9

Yeroham 10.5 4.3 6.2

Kafar Bara 10.5 5.0 5.5

Migdal 10.3 7.1 3.2

Kaokab Abu Al- Hija

10.2 7.2 3.0

Sajur 10.2 7.4 2.8

Bat Yam 10.2 3.9 6.2

Qiryat Eqron 10.2 5.0 5.2

Beit Jann 9.7 6.6 3.1

Ofakim 9.7 3.2 6.5

Or Yehuda 9.6 2.6 7.0

Zemer 9.4 6.1 3.3

Netivot 9.3 3.0 6.3

Elat 9.3 6.9 2.4

Qiryat Mal’akhi 9.2 3.8 5.4

Daliyat Al-Karmel –Isifya

9.1 7.2 1.9

Tur’an 8.8 6.8 2.0

Jerusalem 8.8 4.2 4.6

Lod 8.8 3.7 5.1

Qiryat Arba 8.5 2.5 6.0

Shibli–Umm Al– Ghanam

8.3 5.6 2.7

Mughar 8.3 6.6 1.7

Yanuh–Jat 8.3 6.8 1.5

Yafi 8.3 5.7 2.6

Locality

I'billin 8.1 6.3 1.8

Mazra'a 8.1 7.6 0.5

Yirka 7.9 6.4 1.6

Kafar Qara 7.9 4.6 3.3

Nahef 7.6 5.8 1.8

Yavneel 7.5 4.1 3.5

Tamra 7.5 6.4 1.1

Iksal 7.5 3.9 3.6

Tire 7.4 4.9 2.5

Deir Hanna 7.4 5.4 2.0

Sakhnin 7.4 5.5 1.8

Shefar’am 7.3 5.3 1.9

Ramla 7.2 2.6 4.6

Abu Sinan 7.1 5.4 1.7

Abu Ghosh 7.0 3.6 3.4

Jaljulye 7.0 4.4 2.6

Kafar Kanna 7.0 5.5 1.6

Reine 6.9 5.1 1.8

Sha’ab 6.8 4.6 2.2

Mashhed 6.7 5.3 1.4

Arrabe 6.7 5.3 1.4

Baqa-Jatt 6.7 4.6 2.0

Kabul 6.5 4.8 1.6

Ar’ara 6.4 4.0 2.4

Kisra-Sumei 6.3 5.2 1.0

Bet Shemesh 6.2 2.5 3.7

Kafar Qasem 6.2 4.1 2.1

Shagor 6.1 4.8 1.3

Bu'eine-Nujeidat 6.0 4.6 1.3

Ka'abiyye– Tabbash–Hajajere

5.9 3.6 2.3

Tayibe 5.9 3.0 2.9

Locality

Judeide - Maker 5.6 4.3 1.3

Mas'ade 5.5 2.1 3.4

Ein Mahel 5.5 4.1 1.3

Ein-Qiniyye 5.4 3.5 1.9

Majdal Shams 5.2 2.1 3.1

Ma’ale Iron 5.1 3.3 1.8

Basma 5.0 3.0 2.0

Buq'ata 4.8 1.8 3.0

Umm Al–Fahm 4.8 3.4 1.4

Qiryat Ye'arim 4.7 1.5 3.2

Tuba–Zangariyye 4.7 3.3 1.3

Fureidis 4.3 3.5 0.7

Basmat Tab’un 4.2 3.0 1.3

Ilut 4.2 2.5 1.7

Bene Braq 4.2 1.6 2.6

Zarzir 3.7 2.7 1.0

Kafar Manda 3.6 2.6 1.0

Rekhasim 3.2 1.2 2.0

Ghajar 3.1 0.6 2.5

Kuseufe 3.0 2.3 0.7

El'ad 2.9 0.6 2.3

Tel Sheva 2.9 1.2 1.6

Bir Al–Maksur 2.8 2.1 0.7

Laqye 2.7 1.6 1.1

Rahat 2.7 1.3 1.4

Hura 2.5 1.5 1.1

Segev–shalom 2.3 0.6 1.6

Qalansawe 1.6 0.8 0.8

Ar’ara–Negev 1.3 0.7 0.6

Betar Illit 1.3 0.1 1.2

Jisr Az–Zarqa 1.2 0.6 0.6

Modi'in Illit 0.9 0.2 0.7

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Total Students Enrolled

Note: The fully indexed cost was calculated to include demographic changes, technological changes, and changes in health inputs. For each parameter, costs were calculated on a yearly basis. Source: Adva Center, The Proposed Budget and Budget-Arrangements Law for Fiscal 2011-2012: Tight-Fisted on Civilian Expenditures.” Powerpoint Presentation, November 2, 2010.

Health Care System

EROSION IN PUBLIC FINANCING AND INCREASE IN CO-PAYMENTS

The disparity between the desirable level of funding for the basket of health services provided by the health funds under the National Health Insurance Law and the actual level of funding continued to increase in 2009. The desirable level of funding involves indexing the cost of three parameters: demographic

changes, changes in the costs of health inputs, and technological changes. The gaps came into being due to the fact that the National Health Insurance Law does not include an indexing mechanism for these changes. Lacking funding, the health system needs to raise funds from

additional sources, first and foremost by imposing co-payments on medications and medical services above and beyond the monies paid out in health taxes. With full indexing, the basket of services would have cost NIS 41.5 billion in 2009, whereas its actual budgeted cost was NIS 28.1 billion.

I s ra e l : A S o cia l Re p o r t 2 0 1 0

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

2 0 0 9

2 0 0 8

2 0 0 7

2 0 0 6

2 0 0 5

2 0 0 4

2 0 0 3

2 0 0 2

2 0 0 1

2 0 0 0

1 9 9 9

1 9 9 8

1 9 9 7

1 9 9 6

1 9 9 5NIS

Millions

28,14126,58324,94624,04122,76822,00821,13521,11820,26819,26918,00816,61415,35813,85912,244 Actual cost, in current prices

41,49437,97735,44833,36531,15128,94427,15126,27424,35322,75520,74118,55816,87114,58812,244 Fully indexed

Actual cost, in current prices

Fully indexed

Cost of the Basket of Health Services 1995-2009 in NIS millions

Notes: 1. Health fund income from co-payments includes both medications/services that are included in the

basket of services under the National Health Insurance Law and those that are not. 2. The above figures are exclusive of payments for nursing care insurance. Source: Adva Center analysis of figures received courtesy of the National Accounts Department of the CBS.

Health Care System

THE BURDEN OF PAYMENTS DOUBLED

As a result of the erosion of government financing for the basket of health services, the burden of payments on health care consumers increased. Thus, for example, only some of the new medications considered effective were included in the basket of services. Other medications were included in the

supplemental insurance policies marketed by health funds and insurance companies. Persons not purchasing extra insurance do not receive discounts on the latter medications. Consumers of health services are charged co-payments not only for medications, but also for various other services. For example, the

health funds charge co-payments for visits to specialists and hospital outpatient services. All of the above increase the financial burden of health services for persons who need them. In 2000, this burden amounted to four billion shekels; in 2008, it had grown to 7.1 billion.

Income of Health Funds and Insurance Companies from Payments Made by Households Above and beyond health taxes, 2000-2008 In NIS billions

200820072006200520042003200220012000

In N

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2.42.32.01.81.81.61.41.21.0 Health fund income from the sale of supplemental insurance

3.13.33.33.23.02.82.62.42.2 Health fund income from co- payments for medications and services

1.71.61.61.41.11.00.90.80.8 Insurance company income from the sale of health insurance

7.17.26.86.46.05.44.84.44.0

Total income of health funds (above and beyond health taxes) and insurance companies

Note: Figures are rounded to nearest whole numbers. Source: Adva Center analysis of figures received courtesy of the National Accounts Department of the CBS.

Health Care System

THE EROSION OF EQUALITY IN HEALTH CARE OPPORTUNITIES: THE HIGHER THE INCOME, THE MORE HEALTH INSURANCE

In 2009, household expenditures on extra health insurance continued to increase. The average monthly outlay of households in the top income decile increased from NIS 352 to NIS 387, and the average outlay of households in the sixth income decile from NIS 165 to NIS 181. In contrast, there was a slight decline in the outlay of households in the second income decile. In the course of 2000-2009, the

share of extra health insurance in household expenditures on health doubled, from 17% to 30%. Everyone paid more for health – but households with high incomes purchased more and more, while those with low incomes bought relatively less. The disparity is greatest in the area of extra health insurance. In 2009, households in the top income decile spent an average of NIS 196 per month on extra insurance policies, while

households in the second income decile spent only a tenth of that – NIS 10. The main danger of this phenomenon is that medications and health services are liable to be shunted from the basic basket of services available to all to the extra health care insurance policies, a process that would lower the accessibility of the general public to the same medications and services.

I s ra e l : A S o cia l Re p o r t 2 0 1 0

2009200820072006200520042003200220012000

Second decile

10171616741514710Extra insurance sold by insurance firms

72685959584845444031Extra insurance sold by health funds

82857675655260574740Total

Sixth decile

46445651423633302232Extra insurance sold by insurance firms

1351221201031039583807659Extra insurance sold by health funds

1811651761541451311161109891Total

Top decile

19617916618418712213211689107Extra insurance sold by insurance firms

191174172155148140129122111103Extra insurance sold by health funds

387352338338336263261238200210Total

Total Outlays of Households on Extra Health Insurance Policies Top, sixth and second income deciles 2000-2009 NIS, in 2009 prices

Sources: Adva Center analysis of CBS, Household Income Survey, various years; the figure for 2009 was received courtesy of the Consumption Department at the CBS.

Retirement Income

THE NEXT GENERATION OF SENIOR CITIZENS WILL EXPERIENCE LARGE INCOME GAPS

In 2009, households in the top income quintile saved an average of NIS 972 a month for their old age – less than they saved in 2008 – but much more than other households managed to save. The same year, households in the bottom quintile saved an average

of NIS 35 a month. Obviously, the standard of living of persons in these two groups will be quite different after retirement. The table below also shows that in the course of the past decade, households in the top quintile increased their retirement savings by 62%; in contrast, households

in the third quintile increased their savings by 39% and those in the bottom quintile by only 13%. It should be borne in mind that averages include households in which no one saves for retirement, along with those who report savings.

Average monthly retirement savings

By Income quintile 2000-2009 In NIS, 2009 prices

1,000

800

600

400

200

2009200820072006200520042003200220012000NIS

1st quintile

2nd quintile

3rd quintile

4th quintile

5th quintile

31 21 29 25 40 29 27 28 34 35

102 119 97 101 84 106 113 128 141 137

199 230 210 220 215 245 249 267 258 276

351 404 397 396 447 471 410 457 470 490

600 832 762 781 923 920 976 1,006 1,024 972

5th quintile

4th quintile

3rd quintile

2nd quintile 1st quintile

I s ra e l : A S o cia l Re p o r t 2 0 1 034

This report was made possible by generous grants from

Ford Foundation

MAZON: A Jewish Response to Hunger

The Adva Center is supported by the following individuals and foundations:

Jacob & Hilda Blaustein Foundation

Heinrich Boell Foundation

Naomi & Nehemia Cohen Foundation

Nathan Cummings Foundation

Friedrich Ebert Stiftung

Ford Foundation

Hadassah Foundation

Mr. Howard Horowitz and Ms. Alisse Waterston

Israel Delegation of the European Commission

Daphna Izraeli Fund

Kahanoff Foundation

MAZON: A Jewish Response to Hunger

Middle East Dialogue/Richard Goodwin

National Council of Jewish Women

New Israel Fund

Rosa Luxemburg Foundation

Tikkun Olam Women’s Foundation of Greater Washington, DC

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