: A SOCIAL REPORT 2014

Dr. Shlomo Swirski | Etty Konor-Attias | Ariane Ophir | January 2015 2 Israel: A Social Report 2014 3

مركز ,ISRAELI'S HEART LIES IN WESTERN EUROPE أدفا BUT ITS FEET ARE PLANTED AT THE EASTERN AND SOUTHERN MARGINS OF THE CONTINENT Adva Center This report was made possible P.O. Box 6136401 by a generous grant from Telephone: 972-3-5608871 MAZON: A Jewish Response to Hunger We belong to the West — that is Israel’s economy is actually industries and the financial Fax: 972-3-5602205 how most Israelis see themselves showing impressive advances. institutions. That is, by a small www.adva.org The Adva Center is supported by the following: and their country. In Israeli In the decade following the sector of the Israeli population. [email protected] New Israel Fund public discourse, the countries of crisis caused by the second Israeli leaders, their attention and Kathryn Ames Foundation reference on almost every topic Palestinian Intifada, between resources focused on maintaining Jacob & Hilda Blaustein Foundation are those of Western Europe 2004 and 2013, Israel’s GDP occupation of the Palestinian Heinrich Boell Foundation and North America. On the grew by approximately 45%. The territories, are not doing very Board of Directors Fund face of it, this sentiment has its global financial crisis of 2008 hit much to expand that island so Professor Yossi Dahan, Chair CORDAID justifications: Israel has Nobel Israel less hard than it hit other as to accommodate additional Ms. Gilberte Finkel, Treasurer Friedrich Ebert Stiftung Prize laureates in chemistry, countries. Israel was able to find Israelis. Israel is devoting fewer Professor Ismael Abu-Saad Hadassah Foundation economics and literature. Israel new markets in India, China and and fewer resources to civilian Dr. Nitza Berkovitz has satellites circling Planet Earth. Russia. Participation in the labor needs: as stated by the Bank of Jewish Women's Foundation of New York Professor Yossi Yona Israel has academic institutions force rose while unemployment Israel, “public expenditure in Israel Delegation of the European Commission Professor Oren Yiftahel that place high on international declined. general, and civilian expenditures Rich Foundation Professor Emeritus Hubert Law-Yone rankings. Israeli scientists and in particular, are lower than the Yet the fruits of growth, instead Professor Riki Savaiya Rosa Luxemburg Foundation entrepreneurs register more average for OECD countries . . . of trickling down, as promised Dr. Yitzhak Saporta MAZON: A Jewish Response to Hunger international technological the size of public services, public by politicians, trickled up, as Professor Dani Filc Tikkun Olam Women's Foundation patents than their counterparts investments in infrastructures if defying the laws of nature. poverty־Professor Rachel Kalush Women's Amutot of the Greater Miami Jewish Federation in most other countries. Israeli and in government anti Employers’ share of national Professor Uri Ram Zabar Family films win prizes in Europe and programs are lower than average income grew during the in the United States. Israelis feel levels in other OECD countries.” 2003–2012 period, from 11% Audit Committee at home when traveling to the Tax policy favors the big to 15%, while workers’ share Ms. Ruti Gur countries of Western Europe and corporations and the rich, thus decreased from 66% to 62%. Ms. Hanna Langer to the United States. foregoing resources that could Employees’ real wages, whether enable the government to upgrade Yet, on most social and economic median or average, hardly Staff the standard of living of most indicators, Israel ranks closer to changed. The bargaining power Executive Director: Barbara Swirski Israelis. Academic Director: Shlomo Swirski southern and eastern European of employees is on the wane, Research Coordinator: Etty Konor-Attias countries than to the United States parallel with the weakening Thus, most Israelis are firmly Researcher: Attorney Noga Dagan-Buzaglo or the countries of Northern and of labor unions and the planted in Eastern and Southern Researcher & Coordinator of the Women’s Budget Forum: Yael Hasson Western Europe. Israel’s median growth of the phenomena of Europe. Israel’s grip on “the West” Coordinator of Gender Equality Projects: Valeria Seigelshifer disposable household income contracting out jobs. At the is weak. A great collective effort Community Action Workers: Shira Pinhas and Maytal Shtrul is similar to that of Slovenia, the same time, the earnings of top is required to strengthen and widen that grip. Such an effort, in ־Researcher & Outreach Coordinator: Yaron Hoffman-Dishon Czech Republic, Greece and Spain. corporate executives have sky Office Manager and Press Liaison: Mira Oppenheim The same is true for the average rocketed. Publicly held financial turn, can come only after Israeli Financial Advisor: Roi Maor wage of Israelis. Israel’s GDP per assets, which as we know are leaders free themselves from Research Assistant: Emma Rapoport capita is similar to that of Spain concentrated mainly in the hands two illusions: one, that economic and only a bit higher than that of of the top one percent, have vastly growth, in and by itself, can bring Slovenia and the Czech Republic. increased. The resulting inequality about the necessary improvement; Israel’s middle class is in retreat. places Israel amongst the two, that Israel can keep on Israel’s poverty rate is closer to the countries of Eastern and Southern growing indefinitely without a ־poverty rates of South American Europe — and at quite a distance political settlement of the Israeli countries like Mexico and Chile from the West of the continent. Palestinian conflict. than to those of most Western The Israeli “West” is an island countries. populated by the high tech 4 Israel: A Social Report 2014 5

Median Disposable Income of Households among OECD Countries, 2010 Average Yearly Wage for a Full-time Job in OECD Countries, 2013 In US dollars, based on purchasing power (PPP) In US dollars, current prices, at exchange rates

Luxembourg 36,400 Switzerland 91,574 Norway 32,400 Norway 81,685 Switzerland 31,300 Luxembourg 73,153 United States 29,100 Australia 73,035 Canada 27,700 Austria 27,600 Denmark 71,944 Australia 27,000 Ireland 61,863 Denmark 26,100 Canada 58,263 Holland 24,900 Sweden 56,691 Belgium 24,400 Belgium 55,968 Sweden 24,300 United States 55,708 Germany 24,200 Finland 23,700 Holland 55,206 Ireland 23,500 Finland 52,362 France 23,300 Austria 50,903 Great Britain 23,200 Great Britain 49,231 Iceland 23,200 Germany 46,960 New Zealand 21,900 France Italy 21,100 46,918 South Korea 21,100 Japan 40,798 Japan 20,100 Italy 37,892 Slovenia 19,200 Spain 35,075 Spain 17,700 Israel 33,995 Israel 15,600 South Korea 30,099 Greece 15,300 Czech Republic 13,600 Slovenia 28,451 Portugal 13,100 Greece 24,931 Slovakia 12,700 Portugal 21,868 Poland 11,800 Estonia 15,744 Estonia 10,000 Czech Republic 15,266 Hungary 9,300 Slovakia 15,239 Chile 8,300 7,100 Poland 13,690 Mexico 4,500 Hungary 13,214

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 6 Israel: A Social Report 2014 7

ECONOMIC GROWTH AGAINST A Economic Growth in Israel and in OECD Countries, BACKGROUND OF INSTABILITY 2003-2013 and Forecast for 2014-2015 In percentages Economic growth is generally example, it is $46,000 in Germany second intifidah, the following presented as the key remedy for all and $60,000 in Sweden, compared confrontations took place in the social ills. to $36,000 in Israel (in 2013, current Gaza Strip: “First Rain,” September prices). If it is to catch up, Israel’s 2005, “Summer Rains,” June 2006, ־If that were the case, the socio economy will need to grow like the “Hot Winter,” February 2008, “Cast economic situation of Israel would “tigers” — China, India, or Brazil. Lead,” December 2008, “Pillar be better than it is today, as Israel of Defense,” November 2012, 7.00 experienced greater economic This is not what happened. The “Protective Edge,” July 2014. The growth than European countries reasons given by the powers that direct economic implications of 6.00 in the wake of the global financial be: low productivity or low workforce each of the above campaigns were crisis. Between 2008 and 2013, participation, especially on the part limited, but their accumulated 5.00 Israel’s GDP increased at an average of Haredi men and Arab women. effect on specific social groups and annual rate of 3.6%, compared to repeated explanation, geographic areas was damaging. 4.00 Israel־A less oft the average of 0.65% per year in if not an unknown one, is the They also resulted in an atmosphere OECD countries.1 3.00 absence of a political settlement of instability, a hesitancy to invest, As we will see, that growth did not with the Palestinians and the high and the fragility of Israel’s credit 2.00 bring Israel much closer to the West, frequency of violent confrontations rating. for two main reasons. Firstly, if with them. Large confrontations Moreover, in the absence of a 1.00 Israel is to have a standard of living like the first and second intifadahs OECD political settlement, Israel devotes similar to that of Western European caused real harm to the Israeli a large part of its resources to its 0.00 countries, it needs to experience economy. For example, the second security needs, at the expense of high levels of economic growth for a initifadah led to two years of social and economic investments -1.00 much longer period of time, as the negative growth in Israel’s GDP. that could stimulate economic per capita GDP in those countries is More limited confrontations -2.00 growth and improve the lot of much higher than that of Israel. For occur quite frequently: since the numerous Israelis -3.00

-4.00

Estimate Estimate 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Israel 1.1 5.1 4.3 5.8 6.3 3.5 1.9 5.8 4.2 3.0 3.2 2.6 3.2

OECD 2.1 3.2 2.6 3.0 2.6 0.2 -3.6 2.9 1.7 1.3 1.4 - -

Sources: Adva Center analysis of CBS, Statistical Abstract of Israel, various years; CBS, Press Release, “Early Estimates of National Accounts for 2014,” ;Economic Forecast of the Research Department, December 29, 2014־December 31, 2014; Bank of Israel, Macro OECD figures:www .data.worldbank.org 8 Israel: A Social Report 2014 9

GDP Per Capita, Israel and OECD Countries, 2013 WEALTH IS ON THE INCREASE, BUT SALARIES LAG BEHIND

The main reason that economic A study published by the National 1990s until about 2000 wages growth is not reflected in Insurance Institute found that in increased in tandem with the 100,819 Norway improvements in the standard of the past, economic growth — as increase in per capita GDP, if at a Switzerland 84,815 living of the general population is measured by an increase in per lower rate, from then on, real wages Australia 67,458 that the fruits of economic growth, capital GDP — was accompanied did not change. This means that the Sweden 60,430 which are supposed to trickle down, by an increase in real wages. fruits of economic growth did not (on Denmark 59,832 actually trickle up. “However,” the report continues, average) go to the workers but rather 2 United States 53,042 “while from the beginning of the were channeled in other directions.” Canada 51,958 Holland 50,793 Austria 50,547 Ireland 50,503 Finland 49,147 Economic Growth and the Increase in Real Wages in Israel, 1968-2012 Iceland 47,461 3.00 Belgium 46,878 Germany 46,269 Average of high-income OECD 43,398 Per capita GDP (CBS) countries 2.50 42,503 France 41,787 Great Britain 41,556 New Zealand 2.00 39,360 Euro Block countries 38,634 Japan Wages (Bank of Israel) 38,029 OECD average 1.50 36,051 Israel 35,926 Italy 35,438 European Union 1.00 Spain 29,863 South Korea 25,977 23,289 Slovenia 0.50 Greece 21,956 Portugal 21,733 Czech Republic 19,845 0.00 Estonia 18,783 Slovakia 18,047 1968 1973 1978 1983 1988 1993 1998 2003 2008

Chile 15,732 Source: Miri Endeweld and Oren Heller, “Wages, the Minimum Wage and their Contribution to Reducing Poverty: Israel in International Comparison,” National Poland 13,648 Insurance Institute, 2014, Working Paper 119. Hungary 13,481 Turkey 10,972 Mexico 10,307 Palestinian Authority 2,783

0 20,000 40,0000 60,0000 80,000 100,000

Source: World Bank website: www.data.worldbank.org 10 Israel: A Social Report 2014 11

WHO REAPED THE FRUITS OF ECONOMIC WHO SHOWED GAINS ABOVE AND BEYOND GDP GROWTH? GROWTH? ONLY A SMALL MINORITY While the wages of 99 percent of corporations declined relative to The table below shows that the Israelis failed to rise in tandem with 2011. Among the reasons for this most significant decrease (in 2011) Firstly, the profits of employers foremost senior managers. In life insurance policies)5. Between — salary remuneration־economic growth figures, those decline: public criticism of executive was in non increased, especially those of the decade between 2000 and 2003 and 2013 these assets grew of the top managers of the largest wages, problems that beset several bonuses, stock equity, and “other.” owners of large corporations. Figures 2010, the average annual salary by some 80%, from NIS 1,704 corporations showed much greater large companies, and changes in This occurred at the time that on the distribution of the national bill of a manager of the 25 largest billion to NIS 3,048 billion. In Israel, general־gains. regulations. In 2013, executive the salaries of directors income reveal that while the share corporations traded on the Tel Aviv breakdowns of financial assets by salaries (not including bonuses and declined somewhat and the salaries of workers decreased, from 67% in Stock Exchange more than doubled, income bracket are not published. We have information about their stock options) returned to and even of top executives as a whole rose. 2002 to 62% in 2012, the share of from NIS 415,000 to NIS 998,000.4 However, from what is known about salaries because Israeli law requires surpassed their 2011 levels. employers increased from 8% to such breakdowns in other countries, companies traded on the Tel Aviv In 2013, the gaps between the In general, wealth in Israel is on the salaries of the five highest wage ־it is reasonable to assume that the Stock Exchange to publish the salary The 2013 salary bill of the directors 3.15% increase. This is clear from what top one percent in Israel holds a bills of their top five wage earners. general of the 100 largest companies earners in the largest corporations Employers, and especially the major is referred to as “financial assets large part of those assets. (We have no information about top whose stocks were traded on the and the salaries of other Israeli ones, know how to remunerate held by the public” (bank deposits, executive salaries in companies Tel Aviv Stock Exchange was, on employees were extremely large: the those who serve them: first and securities, pension savings and not traded on the Tel Aviv Stock average, NIS 6.16 million per year, or average monthly salary bill of top Exchange.) The figures presented NIS 513,000 per month. executives was 36 times the average here include the most recently salary (NIS 9,212) and 77 times the The average salary bill of the five published ones, relating to 2013. minimum wage (NIS 4,300). highest earners in these companies In 2012, the salary bill of the was NIS 3.96 million per year, or NIS Financial Assets Held by the Public, 2003-2013 top executives of the largest 330,000 per month. In NIS billions, 2013 prices 3,048 Executive Salary Bills in the Top 100 Companies 2,834 2,844 Traded on the Tel Aviv Stock Exchange, 2011-2013 2,607 2,683 In NIS thousands, at 2013 prices

2,241 2,174 Top Executives Directors-General

1,704 2011 2012 2013 2011 2012 2013

Average monthly salary bill 553 383 513 350 291 330

Wage or management fee 226 218 231 165 170 173

Bonuses 190 123 163 108 90 90

Stock equity 252 129 165 128 82 97

2003 2005 2008 2009 2010 2011 2012 2013 Other 28 10 54 38 21 32

Source: Adva Center analysis of CBS, Statistical Abstract of Israel, various years. Notes: 1. Does not include the following corporations: Teva, Elbit, and Nice, which publish their reports in the US. 2. The analysis was conducted by economist/accountant Safa Sabah Agbaria. Source: Adva Center analysis of corporate financial reports from the website of the Government Securities and Commodities Authority for the years 2011 and 2013. 12 Israel: A Social Report 2014 13

ABOUT ONE-THIRD OF EMPLOYEES EARN Percentage of Employees Earning Low Wages in Israel and in OECD Countries, THE MINIMUM WAGE OR LESS 2012 United States 25.3 The National Insurance Institute earning the minimum wage or less workers earning the average wage or 25.1 publishes figures on wages by three increased: in 2002, they comprised less was 70.7%. South Korea categories: (1) minimum wage or 31.7% of wage earners; in 2003 22.1 The figures reflect wage stability. Israel less, (2) minimum to average wage, they comprised 35.4%, and in 2006 Despite general agreement that 21.8 and (3) above the average wage. a similar proportion. After that, Ireland the minimum wage fails to provide Unfortunately, these figures become the proportion declined; in 2011 it 21.7 a decent standard of living, the Canada year lag. was 30.5%. In 2012 the proportion־available after a two proportion of Israelis at that wage Poland 21.6 increased to 31.3%. In the period following the second level did not decrease significantly Great Britain 20.5 intifadah, the proportion of persons In 2012, the proportion of Israeli over the last decade. Czech Republic 19.7 Denmark 19.0

% Slovakia 19.0

90 Australia 18.9

80 Employees earning the average wage or less Germany 18.3

Breakdown of 70 Hungary 17.4 Israeli Wage- 60 OECD 16.3 Earners by The OECD publishes another Wage Level, 50 Austria 16.1 important figure: the 2003-2012 percentage of employees 40 Employees earning the minimum wage or less Mexico 16.0 In percentages earning low wages, defined 30 Iceland 14.7 as a salary that does not 20 New Zealand 14.6 exceed two-thirds of the median wage. Israel "excels" 10 Spain 14.6 in having a high proportion 0 Japan 14.3 of low wage earners, placing it third from the top in a list Employees Earning: 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 11.8 Greece of 28 countries. Up to the minimum wage 35.4 34.1 32.7 35.1 32.8 32.8 33.2 31.4 30.5 31.3 Italy 10.1 Up to half of the average wage 5.8 6.4 8.2 5.0 5.9 6.8 5.6 8.1 10.6 6.8 Chile 9.4

Up to 75% percent of the average wage 20.3 20.2 20.4 21.3 20.9 20.8 20.7 20.3 19.9 20.2 Switzerland 9.2

Up to the average wage 11.5 12.2 12.0 12.4 12.3 12.3 12.4 12.1 11.7 12.4 Finland 8.9 Portugal 8.8 Total average wage or less 73.0 72.9 73.3 73.8 71.9 72.7 71.9 71.9 72.7 70.7 Belgium 6.0 Twice the average wage 17.7 18.3 17.7 17.7 18.4 17.8 18.3 18.4 18.3 19.3 0.0 5.0 10.0 15.0 20.0 25.0 30.0 Three times the average wage 9.3 8.7 8.9 8.4 9.7 9.6 9.7 9.6 9.1 10.1

Total average wage or more 27.0 27.0 26.6 26.1 28.1 27.4 28.0 28.0 27.4 29.4 Note: Figures for Switzerland are for 2010 and for Israel and Chile, 2011. Source: OECD, Employment Outlook 2014, Table N, p. 287. Notes: 1. The average wage in 2012 was NIS 9,514, in current prices. 2. The minimum wage that year was NIS 4,150. 3. Figures are rounded. Source: Adva Center analysis of Jacques Bendelak, “Average Wages and Salaries by Locality and Selected Economic Variables,” National Insurance Institute, various years. 14 Israel: A Social Report 2014 15

GENDER PAY GAPS Women's Monthly and Hourly Pay as a Percentage of Men's Pay, 2003-2013

Gender pay gaps are quite stable: household expenditures survey 85.6% of men’s hourly pay. Men while the monthly pay gap conducted by the CBS. In international comparison, Israel’s Women decreased somewhat, the hourly pay The gaps are especially large when hourly gender pay gap of 15.5% is gap remains the same. it comes to monthly pay, due to the in the middle of the table, placed Monthly Pay, in NIS between countries whose hourly Women's pay as a percentage of men's pay, in 2013 prices ־The table below presents monthly fact that many women work part and hourly salary figures for Israel time. The monthly pay of women is gender pay gap is 20% and countries 12,000 and other selected countries. The 68.1% of the monthly pay of men. whose hourly gender pay gap is figures for Israel, which are for much lower — 10%. In contrast, women’s hourly pay is 10,000 2012–2013, are from the new

8,000 Hourly Gender Pay Gap, Selected Countries, 2012 6,000 In percentages

4,000 Country Hourly Gender Pay Gap Country Hourly Gender Pay Gap

Estonia 30.0 Denmark 14.9 2,000

Austria 23.4 France (2011) 14.8 New Germany 22.4 Bulgaria 14.7 0 Series 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Czech Republic 22.0 Canada 14.0 Slovakia Ireland (2010) 21.5 13.9 62.2% 63.3% 63.2% 63.4% 64.2% 63.1% 65.9% 65.7% 66.2% 67.4% 68.1% Hungary 20.1 Latvia 13.8

Finland 19.4 Lithuania 12.6 Great Britain 19.1 United States (2011) 10.6 Hourly Pay, in NIS Switzerland (2011) Belgium 17.9 10.0 Women's pay as a percentage of men's pay, in 2013 prices Spain 17.8 Rumania 9.7 60.0

Holland 16.9 Luxembourg 8.6 50.0 Cyprus 16.2 Poland 6.4

Sweden 15.9 Malta 6.1 40.0

Portugal 15.7 Italy (2011) 5.8 30.0 Israel 15.5 Turkey (2010) 3.8

Norway 15.1 Slovenia 2.5 20.0

Greece (2010) 15.0 10.0 Source: UNECE, Statistical Data Base, September 2014 New 0 Series 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

82.6% 84.2% 83.3% 83.6% 84.0% 82.7% 84.5% 83.7% 83.0% 85.2% 85.6%

Sources: Adva Center analysis of CBS, Income Surveys, various years. 16 Israel: A Social Report 2014 17

ASHKENAZIM, MIZRAHIM AND ARABS Pensions

Pay gaps between Ashkenazim, , whose fathers were born in Ashkenazim — NIS 11,897 (2013 Mizrahim and Arabs are quite Israel. prices) was the highest, amounting INEQUALITY WILL ALSO CHARACTERIZE THE significant. to 32% above the average monthly In 2013, whereas the average NEXT GENERATION OF SENIOR CITIZENS wage. In 2012 the average wage Below we present figures on pay monthly wage was NIS 9,030, the of Ashkenazim was NIS 12,425 (in gaps between three groups: Arabs, average monthly wage of Arabs In 2013, households in the top types of households at retirement savings. 2012 prices). It is not clear whether quintile put aside an average of NIS will be quite different. generation Ashkenazi was NIS 6,076 — the lowest of Moreover, saving for retirement is־second fold־the decline is the result of the new 1,244 per month, which is 15 Jews (whose fathers were born in the three groups, placing it 33% It should be noted that the more common among employees measuring methodology or if it is the average sum that households ,below the average. This proportion average includes households in from the middle and upper classes ־Europe or America), and second indicative of a temporary change like in the bottom quintile put aside for generation Mizrahi Jews (whose has been stable since 2008. It which no one puts aside savings despite the fact that pension savings the one that occurred in 2010–2011. retirement: NIS 83. fathers were born in Asia or Africa). should be noted that in 2004 the for retirement, together with have been mandatory for everyone It should be noted that among Jews, average monthly wage for Arabs was The average monthly wage of The standard of living of the two households that do have pension since 2008. the second generation is the largest proportionately higher — 24% below Mizrahim, NIS 10,033 (2013 prices), group — larger than the group of first the average wage. places that group 11% above the generation immigrants and larger national average, similar to the The average monthly wage of than the group of third generation situation in 2012. Monthly Savings for Retirement, by Income Bracket, 2003-2013 By net income per standard person In NIS In 2013 prices

Average Monthly Wage, 2003-2013 1,400

1,200 160 5th quintile Basis: Total Second-generation Ashkenazim 1,000 average monthly 140 wage = 100 120 800

Second-generation Mizrahim th 100 600 4 quintile

3rd quintile 80 400 2nd quintile 60 Arabs 200 1st quintile 40 0

20 New Series

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 New Series 1st quintile 28 44 32 29 30 37 38 56 60 74 83 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

nd Average monthly wage 100 100 100 100 100 100 100 100 100 100 100 2 quintile 111 93 116 124 141 155 150 136 180 229 253

Second-generation 3rd quintile 242 236 269 274 293 283 303 326 341 411 480 Ashkenazim 137 136 139 136 137 138 141 133 133 142 132

Second-generation th 434 491 517 450 501 516 538 572 551 683 706 Mizrahim 100 100 100 102 106 100 103 107 107 111 111 4 quintile

Arabs 73 75 72 68 71 67 67 68 67 68 67 5th quintile 857 1,013 1,009 1,072 1,105 1,124 1,067 1,088 1,018 1,127 1,244

Source: Adva Center analysis of CBS, Income Surveys, various years. Sources: Adva Center analysis of Household Expenditures Survey, various years. 18 Israel: A Social Report 2014 19

ONE IN FIVE FAMILIES LIVES BELOW THE POVERTY LINE UNEMPLOYMENT IS A POVERTY TRAP

Among Jews, the highest poverty rate published by the National Insurance Israel’s economic leadership is persons who were laid off their employed.” Unfortunately, such ־The monthly income of about one fifth of Israeli families is so low that is to be found among Haredi Jews, Institute, which, as we have seen, proud of the fact that the national jobs and find it difficult to find new figures are not published by locality; it places them below the poverty similar to the rate among Arabs. showed a slight decline. Publication unemployment rate is low — 5.6% in employment because of their age. thus we chose to present figures on seekers, as they allow us to see־line (defined as 50% or less of the of the alternative poverty report November 2014 6 — compared with job The reasons for Israel’s high The following table presents median income of Israeli families). stimulated a debate over how one the average of 11.5% in the Euro differences among localities. poverty rate are numerous: among unemployment figures on job In 2013 the poverty rate was 18.6% ought to define poverty. It should zone.7 seekers־others, low business investment in seekers by locality for the month At the top of the table of job slightly lower than in 2012, when be noted that the figures used by -־ peripheral areas in general and in However, the average unemployment of September 2014, as published are to be found Arab localities, and the poverty rate was 19.4% the National Insurance Institute are Arab localities in particular, the fact rate fails to reveal large gaps on the website of the Government at their head — Bedouin localities based on the definition of poverty In 2013 there was also a decline in that many of the new jobs created between different localities and Employment Service of the Ministry in the Negev. In the largest Bedouin accepted by statistical agencies seekers in־seekers locality, Rahat, job־time jobs at low pay, population groups. Unemployment of the Economy. Job־the poverty rate of Arab families: from are only part around the world. Still, the technical 54.3% in 2012 to 47.4% in 2013. and the increase in employment affects mainly weaker population are persons who registered at September 2014 constituted 33.3% definition — 50% of the median One of the explanations for this through contracting agencies. groups: it is much higher in Arab the Government Employment of the work force. Similar rates are to income — is problematic when a decline is the increase in labor force localities than in Jewish localities, Service. However, numerous be found in some of the large Arab On December 21, 2014, the reality test is applied to it, for if the participation among Arabs. Still, the in Jewish development towns than unemployed persons do not villages in the North of the country: organization Latet published its poverty line for a family of five is NIS gap between the Jewish and Arab in affluent localities, among women register, either because there is no Arrabe (27.8%), (23.9%), annual alternative poverty report, 8,900, no one can claim that a family populations of Israel is very large: the than among men and among Arab office near their home, because (24.8%) and Mghar which indicated an increase in the of five with an income of NIS 9,000 poverty rate among Arab families is women than among Jewish women. their past applications for jobs (15.4%). poverty rate between 2012 and is not poor. 3.5 times that of Jewish families. went unanswered, or because 2013, in contrast to the figures Unemployment affects those whom In most Jewish localities, the they despaired of finding a job. seekers is below־Israel’s education system failed to percentage of job seekers־Thus, the number of job provide with a good education. It 5%. However, larger rates were to is lower than the actual number of Poverty Rate among Families in Israel, 2003-2013 also affects young people who have be found in development towns unemployed persons. Unemployed not yet managed to get a foothold like Yeruham (16.4%) and Dimona After transfer payments and direct taxes, in percentages persons are those whom the Central in the labor market, as well as older (15.4%). Bureau of Statistics defines as “not 60

50 Arab families 40

30

All families 20

10 Jewish families 0 New Series 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 All families 19.3 20.3 20.6 20.0 19.9 19.9 20.5 19.8 19.9 19.4 18.6 Arab families 48.3 49.9 52.1 54.0 51.4 49.4 53.5 53.2 53.5 54.3 47.4 Jewish families 14.9 15.9 15.9 14.7 15.0 15.3 15.2 14.3 14.2 14.1 13.6

Notes: Poverty figures do not include the Bedouin population of the Negev, which was not included in the CBS survey upon which the poverty figures of the National Insurance Institute are based. Sources: National Insurance Institute, Annual Report, various years. 20 Israel: A Social Report 2014 21

Proportion of Job-Seekers by Locality, September 2014 From high to low

seekers as־seekers as Locality Job־seekers as Locality Job־seekers as Locality Job־seekers as Locality Job־seekers as Locality Job־Locality Job a percentage of a percentage of a percentage of a percentage of a percentage of a percentage of the work force the work force the work force the work force the work force the work force Laqye 43.2 Yeroham 16.4 11.4 Peqi’in 7.0 Gan Yavne 4.3 Giv’at Shemu’el 2.7 Giv’at 4.3 Sha’are Tiqwa 2.6־Ar’ara BaNegev 37.5 Tayibe 16.3 Qiryat Gat 11.3 Qiryat Shemona 6.9 Binyamina Ada 11.2 Immanu’el 6.9 Metar 2.6 16.3 ־Tabbash־Tel Sheva 34.4 Ka’abiyye Hajajre Or Yehuda 4.2 Rahat 33.3 11.0 Karmi’el 6.8 Ramat Gan 2.6 Mizpe Ramon 15.5 Kefar Weradim 4.0 Segev Shalom 31.8 Basmat Tab’un 9.6 Lod 6.5 Kefar Sava 2.6 Akko 15.5 Kefar Yona 4.0 Sha’ab 30.9 9.3 Yoqne’am Illit 6.5 Qarne Shomeron 2.5 Dimona 15.4 Qiryat Arba 3.8 Fahm 30.8 Tirat Karmel 9.2 Qiryat Atta 6.3 Jaljulye 2.5־Umm al Kafar Yasif 15.1 Petah Tiqwa 3.7 Arrabe 27.8 Abu Ghosh 9.1 6.0 Azor 2.5 Zoran 3.6־Meshhed 15.1 Qadima Sakhnin 24.8 Ma’alot Tarshiha 9.0 Rekhasim 5.9 Kefar Habad 2.5 Mazra’a 14.7 Oranit 3.6 24.8 Qalansawe 8.9 Bet Shemesh 5.8 Giv’atayim 2.5 Yafi 14.6 Zikhron Ya’aqov 3.6 Kuseife 24.6 Betar Illit 8.9 5.8 Elqana 2.4 14.5 Ramat Yishay 3.6 Tamra 23.9 8.8 Modi’in Illit 5.8 Qedumim 2.4 Mazkeret Batya 3.6 14.3 ־Shibli Umm al Makkab- 2.4־Modi’in 5.6 ־Mughar 23.9 Ghanam Ar’ara 8.8 Pardes Hanna Re’ut־Karkur Giv’at Ze’ev 3.6 bim Jat 8.7־Kafar Kanna 23.7 Reine 14.1 Yanuh 5.5 Gedera 3.5 Hod Hasharon 2.3 Krum 13.6 Nazerat Illit 8.6־Maker 23.4 Majd al־Judeide Yavne 5.4 Ari’el 3.5 Omer 2.3 Karmel 8.6־Hura 21.5 Zefat 13.6 Daliyat al Harish 2.3־Ramla 5.3 Rishon Leziyyon 3.4 Qazir Ma’ale Iron 21.3 13.5 Qazrin 8.6 (Gush Halav) 5.3 Tel Mond 3.4 Ra’annana 2.2 Samei 8.4־Buq’ata 21.2 Ofaqim 13.1 Kisra Qiryat Eqron 5.2 Rosh Haayin 3.4 Pardesiyya 2.2 Kafar Manda 20.6 Nahef 12.9 Or Aqiva 8.2 Eliakhin 5.2 Ma’ale Adumim 3.3 Lahavim 2.1 Nujeidat 19.9 12.7 Nahariyya 8.2־Bu’eine Qiryat Bialik 5.0 3.3 Herzliyya 2.1 Asad 12.7 Migdal Haemeq 7.9־Mas’ade 19.8 Deir al Bene Beraq 5.0 Bet Arye 3.2 Qiryat Ono 2.1 Maksur 19.0 Qiryat Mal’akhi 12.6 Hazor Hagelilit 7.8־Bir el Qiryat Motzkin 5.0 Bat Hefer 3.2 Kokhav Ya’ir 1.9 18.8 Rame 12.5 7.8 Jerusalem 4.9 Holon 3.1 Har Adar 1.9 Kabul 18.3 12.4 Kafar Qara 7.7 Bene Ayish 4.8 Even Yehuda 3.1 Bet El 1.9 Shefar’am 18.2 Shelomi 12.3 Be’er Sheva 7.6 4.8 Yehud 3.1 Ramat Hasharon 1.8 Bi’ne 17.7 12.2 Ashqelon 7.6 Elat 4.8 Mevasseret Ziyyon 3.1 Qesaryya 1.8 Zangariyye 17.6 Netivot 12.2 Qiryat Yam 7.5־Tuba Yafo 3.1 Shoham 1.8־Netanya 4.7 Tel Aviv I’billin 17.4 Bet She’an 12.0 Ashdod 7.4 Tire 4.7 Kafar Qasem 3.0 Efrat 1.7 Ein Mahel 17.3 12.0 7.4 El’ad 4.7 Ganne Tiqwa 3.0 Kefar Bara 1.4 16.7 Yirka 11.9 Arad 7.3 Be’er Ya’aqov 4.7 Nes Ziyyona 3.0 Savyon 1.3 Zarqa 11.8 Zemer 7.2־Tur’an 16.6 Jisr az Bat Yam 4.4 Qiryat Tiv’on 2.9 Jatt 7.1־Sinan 16.4 Sederot 11.6 Baqa־Abu Rehovot 4.4 Alfe Menashe 2.7 Source: Website of the Government Employment Service, www.taasuka.gov.il 22 Israel: A Social Report 2014 23

SUMMING UP: INEQUALITY IN ISRAEL — ISRAEL’S PUBLIC EXPENDITURE IS NOT SUFFICIENT AMONG THE HIGHEST IN OECD COUNTRIES TO OFFSET LABOR MARKET INEQUALITY

Inequality in OECD Countries, 2011 If there is one figure that sums Over the past three decades Israel Total Government Expenditures in OECD Countries, up the figures presented in the Gini coefficient, by disposable income after has been striving to strengthen the as a Percentage of GDP, 2013 foregoing pages on economic growth direct taxes and transfer payments business sector, in the expectation and income distribution, it is the that this will stimulate widespread degree of inequality in Israel, as economic growth. During Israel’s Slovenia 59.7 Chile 0.503 measured by the Gini coefficient. first three decades, the state was Greece 59.3 Mexico (2012) 0.482 The Gini coefficient is a measure of the main actor shaping economic Finland Turkey 0.412 57.8 income inequality that ranges from and social policies — economic United States France 57.1 0 (when everybody has identical 0.389 development, employment, Denmark incomes) to 1 (when all income is in Israel 0.377 immigrant absorption, housing, 56.7 the hands of one individual). Spain 0.344 education — but in recent decades, it Sweden 54.4 Great Britain 0.344 has sought to shift responsibility and Belgium 54.4 Israel’s Gini coefficient is among the Portugal 0.341 resources to the business sector. highest in OECD countries; in 2011, Austria 50.9 Greece 0.335 the Gini coefficient was 0.377, fifth The result has been a tight fiscal Italy 50.5 Australia (2012) 0.324 policy that led, among other highest among 34 countries. Portugal 50.1 Estonia 0.323 things, to the dilution of the social Hungary 49.7 Since the middle of the 1980s, New Zealand 0.323 services provided by the state: inequality, as measured by the Gini Italy 0.321 schooling, higher education, health, Holland 46.8 coefficient, has risen by an average OECD average 0.320 welfare and social security. Total Norway 44.6 of 3.5% in OECD countries. In Israel, government expenditure (including Canada 0.316 Great Britain 44.4 from 0.326 to local authorities) in 2013, which -־ it rose by 15.6% 8 South Korea 0.311 Spain 0.377. constituted 41.3% of GDP, places 44.3 France 0.309 Israel with the countries of Eastern Germany 44.3 Poland 0.304 Europe and those with a tradition of Iceland 44.1 Ireland 0.302 low government spending like New Luxembourg 43.8 Germany 0.293 Zealand and Canada (which have New Zealand 42.8 Hungary (2012) 0.290 much lower defense expenditures Switzerland 0.289 than Israel). Moreover, government Japan 42.8 Austria 0.282 social security and social assistance Poland 42.2 Holland (2012) 0.278 expenditures (the purpose of OECD average 42.0 which are to assist households Luxembourg 0.276 Czech Republic 42.0 and individuals in their hour of Sweden 0.273 need, like social security transfers, Israel 41.3 Finland 0.265 tax exemptions and services Slovakia 41.0 Belgium (2010) 0.264 for toddlers, senior citizens and Canada 40.7 Slovakia 0.261 disabled persons) amounted to Ireland 40.5 Czech Republic 0.256 15.8% of GDP, close to the bottom Estonia 38.9 Denmark 0.253 of the scale of spending in OECD Iceland 0.251 countries. United States 38.9 Norway 0.250 Australia 35.0 Thus, Israelis who wish to receive the 0.245 Slovenia best services find themselves paying Switzerland 33.5 South Korea 32.8 0 0.1 0.2 0.3 0.4 0.5 0.6 out of pocket for more than the public services provide for education 0 10 20 30 40 50 60 70 Source: www.stats.oecd.org and health.

Note: Government expenditures include the central government, the local authorities and the National Insurance Institute. Source: OECD, Economic Outlook, Vol. 2014, Issue 2, Annex Table 25. 24 Israel: A Social Report 2014 25

Percentage of GDP Expended on Social Security INEQUITABLE TAX POLICY and Social Assistance, OECD Countries, 2013 Low government spending keeps in Israel the share of indirect taxes Insurance Institute to finance an France 33.0 taxes relatively low. Indeed, at (VAT, sales tax, import duties) in total adequate social support system was is higher eroded. Most of the social security -־ the beginning of the past decade tax revenues — 39.2% Denmark 30.8 the government cut spending and than the average in OECD countries transfers in Israel are lower than Belgium 30.7 lowered direct taxes. If once upon a — 33.6%. This means that affluent those in other OECD countries. time it could have been argued that persons in Israel contribute less than Finland 30.5 In addition to increasing inequality, the burden of direct taxes in Israel their counterparts in OECD countries Sweden 28.6 lowering direct taxes has the was among the highest in the West, to financing the country’s needs. effect of reducing the capability of Italy 28.4 today it is among the lowest. Revenue from social security taxes is governments to invest in services Austria 28.3 However, at the same time that also relatively low in Israel — 17.1% that could compensate for the income and corporate of total tax revenues — compared unequal distribution of the benefits -־ Spain 27.4 direct taxes were lowered (while the to the average of 26.2% in OECD of economic growth. We are talking -־ taxes Portugal 26.4 large corporations paid less than the countries. This is due to the fact that about the provision of schooling, Germany 26.2 official corporate tax rate), indirect employers were given large social higher education and a social safety Holland 24.3 taxes, foremost among them valued security tax breaks, in the framework net for Israelis for whom economic added tax, were raised. of efforts to strengthen the business growth fails to supply with the tools Great Britain 23.8 sector by lowering the cost of labor. needed make a decent living. OECD figures for 2012 show that Slovenia 23.8 The result: the ability of the National

Luxembourg 23.4 Norway 22.9 Distribution of Revenues from Taxation: New Zealand 22.4 Israel Compared with the OECD Average, 2012 Greece 22.0 Percentage of total tax revenues OECD average 21.9 Israel Czech Republic 21.8

Hungary 21.6 OECD

Ireland 21.6

Poland 20.9

United States 20.0

Australia 19.5

Switzerland 19.1

Canada 18.2

Slovakia 17.9

Estonia 17.7

Iceland 17.2

Israel 15.8 VAT, sales tax, Income tax Social security Property tax Other taxes 0 5 10 15 20 25 30 35 customs duties age and survivors’ pensions, disability, income maintenance, active labor policies, unemployment compensation, housing Israel 39.2 30.8 17.1 9.0 3.9־Note: Figures include old assistance and health care subsidies. Source: OECD, National Accounts Database, OECD StatExtracts, www.stats.oecd.org/index.aspx?datasetcode=SOCX_AGG. OECD 32.8 33.6 26.2 5.5 1.7

Source: www.stats.OECD.org 26 Israel: A Social Report 2014 27

Public Education

HIGHER EDUCATION: ONLY A MINORITY GO ON TO COLLEGE Percentage of 17-year-olds in 2005 Who Had Enrolled in College by 2013 Higher education is the path school diplomas qualified for college University has no admissions to a better future. In Israel, this admission. requirements and boasts a wide age path ascends a pyramid. All range of students. In the 2012/13 Not all of those who qualified schoolchildren start off at the same school year, 46,544 students, most actually enrolled in universities: only 29.4% 34.3% 19.4% baseline, but the higher the climb, of them 25 years of age or older, 33,229 30,166 3,128 29.4% made it; that is, somewhat the fewer make it to the next level. were enrolled. The number receiving Number that more than one out of four. had enrolled in academic degrees in 2013 was college 8 years Only a minority reach the top: By The proportion of Jewish youngsters 3,810.10 later 2013, only 29.4% of young people going on to college was double who were 17 years old in 2005 The teachers’ seminaries are also that of Arab youngsters. However, had gone on to higher education in not under the aegis of the Council for it should be mentioned that many Israel. Higher Education, and the entrance Number Arab youngsters go abroad to study. requirements to these institutions qualifying for Following the climb of this age For example, in 2007, 5,400 Arab college entrance 39.5% 44.7% 27.2% vary. In the 2012/13 school year, group, we find that in 2005, 82% students were studying in Jordanian 44,747 39,292 4,381 32,164 students were enrolled in of seniors were enrolled in tracks universities.9 teachers’ seminaries, about 90% leading to matriculation. The Number The foregoing figures refer to of them for undergraduate degrees. qualifying for matriculation diploma was obtained matriculation 46.4% 51.1% 36.5% year students 52,520 44,929 5,869־institutions under the supervision If we add the first by 46.4% of the age cohort. And diplomas of the Council for Higher Education, in the academic teaching colleges, some of these diplomas were not which apply admissions criteria the number of those enrolled in up to the standards of college Number of set by the Council; the figures do academic studies within eight years seniors 82.0% 86.8% 77.5% admission. The result was that only not include the Open University of completing high school increases 92,845 76,322 12,475 39.5% of young people with high 11 Total number of or teachers’ seminaries. The Open by 4.1%. 17-year-olds, including ultra- Orthodox and 100% 100% 100% East Jerusalem 113,200 87,900 16,100 Total Population Jews Arabs

Sources: Adva Center analysis of Ministry of Education, Pedagogical Department, Examinations, Matriculation Figures, various years; Adva Center, Success Rates in the Matriculation Exams, various years. 28 Israel: A Social Report 2014 29

SUCCESS IN MATRICULATION EXAMS Matriculation Success Rates by Locality, 2013 Localities with a population of 10,000 or more The proportion of Israelis who go on to college is relatively low, primarily because the proportion of youth who succeed in the matriculation exams is low. Locality Proportion of Locality Proportion of Locality Proportion of olds־year־olds 17־year־olds 17־year־olds rose 10 percentage 17־year־In the 1980s and 1990s, the success rate in the matriculation exams among all 17 who passed who passed who passed points each decade: from 20% in 1980 to 30% in 1990 to 40% in 2000. In the first decade of this century, the their matricula- their matricula- their matricula- success rate was uneven but did not break the 50% barrier. In 2013, for the first time, the percentage of students tion exams tion exams tion exams passed the 50% mark. Now we need to see if this progress is Ra’annana (90) Sederot 68 Fureidis 51 -־ passing their matriculation exams — 53.4% Gharbiyye 50־maintained in the coming years. Mazkeret Batya (89) Azor 66 Bakq al Asad 65 Arrabe 50־Tel Mond 87 Deir al Netanya 65 Tiberias 49 (86) ־Makkabbim־Modi’in Re’ut Qiryat Bialik 65 Tayibe 49 olds Giv’atayim 85 Zikhron Ya’akov 64 Kabul 49־year־Success Rates in Matriculation Exams among 17 Beit Jann 84 Or Yehuda 63 Tire 47 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Giv’at Shemu’el 84 Be’er Sheaa 63 Migdal Haemeq 47 Hod Hasharon 84 48.3 49.2 46.4 45.9 46.3 44.4 46.1 48.3 48.1 49.8 53.4 Giv’at Ze’ev (63) Arad 47 Nes Ziyyona 82 Nazerat Illit (63) Ramla 47 Fahm 46־Herzliyya 80 Elat 62 Umm al Note: Includes students in Haredi education and Arab students in East Jerusalem. Sources: Ministry of Education, “Matriculation Success Figures,” PowerPoint November 2014; Ministry of Education, Matriculation Figures, various years. Even Yehuda 79 Tirat Karmel 62 Ofaqim 45 Ganne Tiqwa 79 Qiryat Yam 62 Tur’an 45 Rosh Haayin (79) Qiryat Eqron 62 Yirka 45 Gan Yavne 78 Ashkelon 61 Iksal 44 Zoran 78 Tamra 61 Kafar Manda 44־Qadima Qiryat Ono 78 Laqye 61 Shefar’am 44 Qiryat Atta (78) Dimona 60 Tel Sheva 43 Yavne 76 Kefar Yona (60) I’billin 42 Ma’aleh Adumim 75 Hadera 59 Kafar Qara 42 Rishon Leziyyon 75 Isifiya 59 Reine 42 Yoqne’am Illit (73) Afula 59 Bet Shemesh 41 Karkur 58 Lod 41־Nesher 73 Pardes Hanna Sinan 40־Ramat HaSharon 73 Jatt 57 Abu Yafo 73 Karmi’el 57 Ma’ale Iron 40־Tel Aviv Or Aqiva (72) Sakhnin 57 Kuseife 38 Mughar 72 Qiryat Tiv’on 57 Ara’ra 38 Yehud 71 Ashdod 56 Zefat 37 Ramat Gan 71 Majdal Shams 56 Ein Mahel 36 Holon 70 Yafi 55 Kafar Qasem 35 Nahariyya (70) Nahef 55 Ara’ra BaNegev 35 Kurum 54 Qalansawe 35־Qiryat Shemona 70 Majd al Haifa 69 Kafar Kanna 53 El’ad 33 Tarshiha (69) Netivot 53 Rahat 32־Ma’alot Rehovot 69 Qiryat Gat 53 Hura 31 Zarqa 19־Makar 52 Jisr az־Giv’at Ada 68 Judeida־Binyamina Bat Yam 68 Gedera 52 Jerusalem 18 Karmel 52 Betar Illit 10־Kefar Sava 68 Daliyat al Mevasseret Ziyyon 68 Akko 52 Bbne Baraq 6 Petah Tiqwa 68 Nazareth 51 Modi’in Illit 3

.olds by locality for 2013־year־Source: Adva Center analysis of Ministry of Education, website; CBS, database of 17 30 Israel: A Social Report 2014 31

THE HIGH SCHOOL VOCATIONAL TRACK WHO GOES TO COLLEGE?

In recent years, there has been a in Jewish development towns, in that among students graduating Those who enter college are not classified as belonging to a high localities classified as belonging economic־economic cluster. The lowest to the top three socio־section socio־demand, especially on the part of the poor neighborhoods of the big from high school in 2005, 43.8% a representative cross is double that -־ industrialists, to expand vocational cities, and, today, in Arab localities. of graduates of academic tracks of Israeli society. The table below figures were for Arabs from localities clusters — 52.5% education in high schools. Prime Generally, vocational tracks are had begun college study by 2013, shows data for those who graduated classified as belonging to a low of persons from localities classified ־economic cluster. as belonging to the bottom 4 socio־called “comprehensive” compared with 31.2% of graduates high school in 2005 and entered socio־Minister Binyamin Netanyahu part of so expressed support for the demand schools that include one or two of vocational tracks. a university or academic college economic clusters — 25.1%. Among Jews, there is a big difference at a Cabinet meeting, at which Silvan academic tracks.13 within 8 years of completing high The table below shows the location between the percentage of graduates The percentage of women going Shalom, Minister of Development school, i.e., by 2013. The highest In should be noted that in contrast of high schools belonging to the of academic tracks attending on to college is higher than the of the Negev and the , figures for entering college were and graduates percentage of men: 39.2% compared -־ to the impression given by persons two largest networks of vocational college — 43.8% responded angrily, “[Let’s see recorded for Jews who graduated demanding expansion of vocational track high schools, ORT and Amal. of technological tracks — 31.2%. to 31.3%. you] send your own son to learn to from an academic track in a locality education (today referred to Out of 159 schools belonging to The percentage of persons from become a welder.”12 as “technological” education), the two networks, 113 (71%) were The background to the anger vocational education has not to be found in localities with a low economic rating: 35 in Arab High School Graduates of 2005 Who Entered an Israeli־expressed by Minister Silvan Shalom disappeared from the Israeli high socio and others is the fact that since school scene: up to the 1990s, localities, 43 in Jewish development 1965, when high school vocational about 50% of high school students towns, and 35 in other localities University or Academic College by 2013 tracks were expanded, they were were enrolled in them. While the rated at the bottom half of the By various characteristics economic scale. It should be Percentage of all who graduated high school in each row־intended for and attended by proportion of high school students socio Mizrahi pupils. In fact, vocational enrolled in vocational tracks has noted that in most affluent cities, education was expanded in the first declined, in 2014, 35% of Jewish vocational high schools, if they Total Jewish sector Total Arab sector place in order to enable Mizrahi high school students and 43% of exist at all, are to be found in the Total 35.4 38.6 19.9 youngsters to receive a high school Arab high school students were still poorer neighborhoods. In other schools schools education, as during the period of enrolled in vocational tracks.14 words, vocational or technological expansion very few of them attended education are still considered Men 31.3 Men 34.0 Men 17.0 On average, the achievements high school, most of which were options primarily for Mizrahi and of vocational track students are academic. In the 50 years since that Arab students, or, to put it another Women Women Women lower than those of academic track 39.2 42.9 22.1 income־time, vocational tracks became the way, for students from low students. The following table shows main track offered in high schools localities or neighborhoods. Graduates of academic Graduates of academic tracks 43.8 tracks 21.1

Distribution of Graduates of Graduates of ORT and Amal technological tracks 31.2 technological tracks 18.2 Vocational High Jewish development Arab Live in localities in Live in localities in Schools, by Type towns economic 15.7־economic 25.1 socio־of Locality, 2014 localities socio 27% clusters 1–4 clusters 1–2 In percentages 22% Live in localities in Live in localities in economic 22.6־economic 39.5 socio־socio clusters 5–7 clusters 3–4

Live in localities in Live in localities in economic 37.0־economic 52.5 socio־socio Jewish localities, 11% clusters 8–10 clusters 5–10 economic־socio clusters 6–10 Source: CBS, Statistical Abstract of Israel 2013, # 64, December 2014. 22% Jewish localities: economic־socio 18% clusters 1–5 Source: Adva Center analysis of the websites of Forum 15 the ORT and Amal school (affluent localities) networks, December 2014. 32 Israel: A Social Report 2014 33

IN 2012/2013 MOST UNDERGRADUATES Undergraduates in Israeli Universities and Academic Colleges, 2011/2012 olds־CAME FROM AFFLUENT TOWNS By locality, as a percentage of 20–29 year

Other data that help explain the Looking at universities alone, the differentiate between public and educational gaps are related to the proportion of undergraduates private academic colleges. Percentage of undergraduates Percentage of undergraduates distribution by locality of 20–29 from affluent localities was Locality Locality In the period between the 2002/03 University Academic Total University Academic Total compared to 5.3% from -־ olds who study in academic 9.3%־year and 2012/13 school years, the College percent College percent institutions. development towns and only 4.8% olds Total 6.3 8.1 14.4 Nes Ziyyona 8.5 14.2 22.7־proportion of 20–29 year from Arab cities and towns. In the 2012/13 school year, 20.5% enrolled in universities declined from Hod Hasharon 9.6 13.1 22.7 olds from The figures for academic colleges 7% in 2002/03 to 6.3% in 2012/13. Omer 19.2 15.7 34.9־of the 20–29 year affluent localities were enrolled as are 11.2%, 7.7% and 2.8%, In parallel, the proportion of those Kefar Tavor 17.3 16.8 34.1 Nesher 15.5 7.1 22.6 undergraduates in Israeli universities respectively. The disparities in enrolled in academic colleges rose, Lehavim 19.8 14.2 34.1 Yehud 8.3 14.3 22.6 and academic colleges, about 3 attendance at academic colleges from 4.4% to 8.1%. 15 times the proportion from Arab are particularly striking in view of Savyon 11.5 21.7 33.2 Kefar Sava 9.1 13.0 22.1 These figures do not include persons localities — 7.5%. The proportion the fact that one of the aims of studying at the Open University or Metar 17.6 15.6 33.2 Herzliyya 8.5 13.5 21.9 in Jewish development towns was the public academic colleges is to in teachers’ seminaries. Students 13.0 — a higher proportion than in provide opportunities for young Kokhav Ya’ir 15.7 15.9 31.6 Mevasseret Ziyyon 10.7 10.9 21.6 in teachers’ seminaries constitute economic־Arab localities but lower than the people from the socio 2.4% of the 20–29 age group.16 A Kefar Shemaryahu 9.1 22.2 31.3 Gedera 8.4 13.1 21.5 proportion from affluent Jewish cities periphery. Unfortunately, the figures similar calculation is not possible for and towns. published by the Central Bureau Shoham 12.7 17.6 30.4 Gan Yavne 8.3 13.0 21.3 the Open University, many of whose of Statistics do not allow us to 13.1 8.0 21.1 students are older. Har Adar 18.1 12.0 30.1 Oranit 10.9 18.2 29.1 Qiryat Motzkin 11.5 9.5 21.0 Pardesiyya 11.2 17.7 28.9 Qarne Shomron 7.5 13.4 20.8 Efrat 14.9 13.6 28.5 Zikhron Ya’akov 11.2 9.3 20.5 Re’ut 11.9 15.2 27.2 Giv’atayim 8.8 11.4 20.2־Makkabbim־Modi’in Ra’annana 12.2 14.3 26.5 Rishon Leziyyon 6.6 13.6 20.2 Kafar Kama 12.0 14.1 26.1 Nahariyya 11.0 9.1 20.1 Giv'at Shemu’el 16.6 9.4 26.0 Karmi’el 8.8 10.8 19.6 Ramat Hasharon 10.7 15.1 25.8 Rehovot 8.9 10.7 19.6 Mazkeret Batya 10.6 15.1 25.7 Bet El 6.1 13.5 19.6 Ganne Tiqwa 11.0 14.0 25.0 Qiryat Bialik 10.1 9.4 19.5 5.4 19.6 25.0 Tel Mond 7.9 11.2 19.1 Zoran 8.3 10.6 18.9־Qiryat Ono 11.0 13.9 24.9 Qadima Yesud Hama’ala 12.4 12.4 24.8 Petah Tiqwa 6.9 11.6 18.4 Even Yehuda 10.3 14.3 24.5 Ramat Gan 7.8 10.6 18.4 Qedumim 8.7 15.6 24.3 Haifa 11.9 6.3 18.2 Yafo 8.3 9.7 18.0־Elkqna 10.5 13.2 23.7 Tel Aviv Mi’elya 13.2 10.4 23.6 Rosh Haayin 6.1 11.8 17.9 Bet Arye 7.9 15.4 23.3 Rame 10.8 7.0 17.8 Giv’at Ada 8.3 9.1 17.4־Rosh Pinna 8.3 14.6 22.9 Binyamina Alfe Menashe 8.4 14.4 22.8 Peqi’in 10.8 6.6 17.4 Qiryat Tiv’on 13.2 9.6 22.8 Yavne 6.5 10.8 17.3 34 Israel: A Social Report 2014 35

Percentage of undergraduates Percentage of undergraduates Percentage of undergraduates Percentage of undergraduates

Locality University Academic Total Locality University Academic Total Locality University Academic Total Locality University Academic Total College percent College percent College percent College percent Fahm 4.5 2.0 6.5־Yoqne’am Illit 7.4 9.7 17.2 Hadera 4.5 8.4 12.9 Qiryat Mal’akhi 3.0 6.3 9.3 Umm al Jish (Gush Halav) 12.0 4.9 16.9 Arad 5.8 6.9 12.6 Kafar Kanna 6.8 2.4 9.2 Mas’ade 3.2 3.0 6.3 Nazerat Illit 6.9 9.8 16.7 Akko 7.1 5.4 12.5 Kafar Bara 4.7 4.5 9.1 Ar’ara 3.5 2.6 6.1 Qiryat Shemona 4.1 12.5 16.6 Sajur 9.1 3.4 12.5 Yirka 2.7 6.4 9.1 Ein Mahel 4.3 1.6 5.9 Giv’at Ze’ev 6.1 10.4 16.6 Hazor Hagelilit 4.4 8.0 12.4 Nahef 6.3 2.7 9.0 El’ad 1.3 4.6 5.9 Ma’ale Adumim 5.7 10.9 16.5 Yafi 7.8 4.5 12.3 Kabul 7.0 1.9 8.9 Ma’ale Iron 3.7 2.1 5.7 Isifiya 3.7 2.0 5.7־Karmel־Afula 5.0 11.1 16.2 Julis 6.7 5.5 12.2 Reine 5.9 3.0 8.9 Daliyat al Hajajre 3.3 1.9 5.2־Tabbash־Tarshiha 8.0 7.8 15.8 Tiberias 6.1 6.1 12.2 Shefar’am 6.4 2.4 8.8 Ka’abiyye־Ma’alot Bene Ayish 6.8 9.0 15.7 Or Aqiva 4.1 7.8 11.9 Jaljulye 3.6 5.1 8.8 Kuseife 2.7 2.5 5.2 Holon 4.7 10.7 15.4 Nazareth 7.5 4.2 11.7 Tire 4.8 3.9 8.6 Fureidis 3.6 1.5 5.1 Tab’un 3.3 1.5 4.9־Sinan 7.1 1.5 8.6 Basmat־Hurfeish 9.1 6.3 15.4 Tirat Karmel 5.6 6.0 11.5 Abu Netanya 4.9 10.4 15.3 Zefat 5.8 5.7 11.5 Iksal 5.1 3.4 8.5 Ilut 2.3 2.3 4.6 Jat 6.3 2.3 8.5 Tel Sheva 1.9 2.6 4.5־Qiryat Yam 7.9 7.3 15.2 Or Yehuda 2.5 9.1 11.6 Yenuh Jatt 2.9 1.6 4.5־Ashkelon 5.7 9.6 15.2 Dimona 4.4 7.0 11.4 Jerusalem 3.6 4.8 8.4 Baqa Shelomi 8.1 7.1 15.2 Be’er Ya’aqov 3.0 8.5 11.4 0.9 7.4 8.4 Bene Baraq 1.2 3.1 4.2 Be’er Sheva 6.5 8.6 15.1 Elat 6.8 4.5 11.2 Zemer 5.3 2.9 8.2 Rahat 1.5 2.5 4.0 Ashdod 5.8 9.3 15.1 Sakhnin 6.9 4.1 11.1 Kafar Qasem 4.9 3.0 7.9 Kafar Manda 2.4 1.3 3.7 Ma’ale Efrayim 2.0 13.0 15.0 Abu Gosh 5.8 5.1 10.9 Tayibe 4.4 3.4 7.9 Hura 1.8 1.8 3.6 Maksur 3.2 0.4 3.6־Qiryat Eqron 4.5 10.4 14.9 Beit Jann 4.9 6.0 10.8 Mazra’a 6.1 1.7 7.8 Bir el Nujeidat 5.6 1.6 7.2 Shaghor 2.3 1.1 3.4־Abu alHija 8.1 2.7 10.7 Bu’eine־Qazrin 6.9 7.9 14.8 Kaokab Sumei 4.8 2.4 7.2 Zarzir 1.4 1.8 3.2־Elyakhin 3.0 11.7 14.7 Deir Hanna 6.8 3.8 10.6 Kisra Qiryat Gat 5.7 8.9 14.6 Bat Yam 3.3 7.2 10.6 Meshhed 5.3 1.9 7.2 Immanu’el 1.3 1.9 3.2 Kefar Yona 4.4 10.1 14.5 Mughar 6.5 3.9 10.4 Buq’ata 3.3 3.9 7.2 Rekhasim 1.4 1.8 3.2 Karkur 5.5 8.9 14.4 Kafar Qara 6.6 3.5 10.2 Bet Shemesh 2.5 4.6 7.2 Segev Shalom 0.9 2.0 2.9־Pardes Hanna Qiryat Atta 6.9 7.5 14.4 Arrabe 6.5 3.5 10.0 Qiryat Ye’arim 1.4 5.7 7.1 Betar Illit 0.6 2.2 2.8 Kafar Yasif 10.2 3.9 14.1 Tamra 7.8 2.1 9.8 Laqye 3.4 3.6 7.1 Ar’ara BeNegev 1.2 1.6 2.8 Ariel 2.7 11.4 14.1 Ramla 2.3 7.4 9.7 Sha’ab 5.4 1.5 6.9 Ramat Yishay 1.3 1.3 2.6 Migdal Haemeq 4.6 9.4 14.0 Netivot 3.2 6.5 9.7 Qalansawe 3.7 3.1 6.8 Modi’in Illit 0.5 1.4 1.9 Zarqa 0.8 0.4 1.2־Qiryat Arba 4.5 9.0 13.5 Lod 3.1 6.6 9.7 Majdal Shams 3.7 3.1 6.8 Jisr az Zangariyye 0.3 0.2 0.6־Azor 3.8 9.5 13.3 Yeroham 3.9 5.6 9.5 Basma 4.7 1.9 6.6 Tuba Eilabun 9.4 3.9 13.3 Ofaqim 2.5 6.9 9.4 Daburiyya 7.9 5.3 13.2 I’billin 7.6 1.8 9.4 Notes: Bet She’an 5.3 7.9 13.2 Tur’an 6.7 2.7 9.3 1. Includes localities with at least 30 students and at least 2,000 residents; and does not include localities belonging to regional councils. 2. The national average includes all localities in Israel, including those not presented in the table. .Ghanam 6.1 3.2 9.3 3. Does not include students in teachers’ seminaries or the Open University or Arab students from mixed cities־Umm al־Mizpe Ramon 4.7 8.3 13.0 Shibli Sources: Adva Center analysis of CBS, “Local Authorities in Israel, 2012,” database, CBS website; figures on undergraduate students courtesy the Higher .Maker 7.1 2.2 9.3 Education Department at the CBS־Sederot 3.0 10.0 13.0 Judeida 36 Israel: A Social Report 2014 37

Undergraduates in Israeli Universities and Academic Colleges 2011–2012 Health Care System By type of locality Percentage of 20–30 age group in localities with 30 or more undergraduates EROSION OF PUBLIC FINANCING AND PAYMENTS־INCREASED CO Universities Academic colleges In 2013, the gap continued to widen 1994 does not provide a mechanism Had the basket of services been fully 20.5 between the desirable and actual for comprehensive and regular indexed every year, from 1995 to Total levels of funding for the basket of indexing of these changes. 2013, it would have cost NIS 56.88 health services provided by the billion, whereas the actual budget in When indexing is not public health funds. 2013 was NIS 36.55 billion. 14.4 comprehensive, the health system 13.0 The desirable level of funding has to raise funds from additional In the graph below, the line 11.2 requires annual indexing of the sources, first and foremost by representing payments of payments on patients households to the Health Funds is an־cost of the basket of services to imposing co 9.3 7.5 7.7 8.1 keep pace with demographic and to help pay for medications and estimate, shown here for purposes 6.3 technological changes, as well as medical services — above and of illustration. These payments counter־the־changes in the cost of health inputs. beyond the monies they pay in also include over 5.3 4.8 health taxes — and by the sale of medications. 2.8 This has not happened, however, as supplemental insurance policies. the National Health Insurance Law of Arab localities Jewish development towns National average Affluent localities Cost of the Basket of Health Services 1995–2013

Notes: In NIS billions Includes localities with at least 30 students and at least 2,000 residents; and does not include localities belonging to regional councils. The national average includes all localities in Israel, including those not presented in the table. Does not include students in teachers’ seminaries or the Open University or Arab students from mixed cities. 60.00 Sources: Adva Center analysis of CBS, “Local Authorities in Israel, 2012,” database, CBS website; figures on undergraduate students courtesy the Higher Fully indexed cost at current prices Education Department at the CBS. Payments of households to the health funds

50.00 Actual cost at current prices

40.00

Payments of households to the health funds 30.00

20.00

10.00

0.00 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 38 Israel: A Social Report 2014 39

Cost of the Basket of Health Services 1995–2013 THE BURDEN OF PAYMENTS DOUBLED In NIS billions As a result of the erosion of primarily to choose a surgeon or How do we arrive at these figures? government financing for the basket obtain a second opinion, but also They represent the total income of Actual cost at current prices + actual pay- of health services, the burden of in order to purchase medicines and the health funds and commercial Year Actual cost at current prices Fully indexed cost ments of households beyond the health tax payments on health care consumers additional medical services. insurance companies from the sale ־has grown. Additional expenses may of supplemental insurance and co In 2003, this burden amounted to 1995 12.24 -- 12.24 include, for example, the purchase payments (to the health funds) for NIS 6.6 billion. In 2013, the burden of supplemental insurance policies, medicines and treatments. grew to NIS 11.3 billion. 1996 13.86 -- 14.56

1997 15.36 17.16 16.83 Income of Health Funds and Insurance Companies from Payments Made by 1998 16.61 18.81 18.46 Households In addition to health tax 2003–2013 In NIS billions 2013 Prices 1999 18.01 21.21 20.60

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2000 19.27 22.77 22.50 Estimates

2001 20.27 24.47 24.06 Health fund income from the sale of supplemental 1.7 2.0 1.9 2.1 2.5 2.7 3.0 3.2 3.4 3.7 4.1 2002 21.12 25.82 26.03 insurance

2003 21.14 26.54 26.96 Health fund income payments־from co 3.1 3.3 3.5 3.6 3.7 3.4 3.3 3.3 3.1 3.3 3.3 2004 22.01 27.91 28.66 for medications and services

2005 22.77 28.97 30.74 Insurance company income from the sale 1.8 2.0 2.1 2.3 2.7 2.9 3.2 3.2 3.4 3.8 4.1 2006 24.04 30.74 32.71 of health insurance

2007 24.95 32.45 34.52 Total income of health funds (in addition to 2008 government transfers) 6.6 7.3 7.5 8.0 8.9 9.1 9.4 9.7 9.9 10.8 11.5 26.58 34.58 37.05 and insurance companies 2009 28.14 36.74 40.36 Notes: 2010 30.33 39.43 43.67 1. Includes Health Fund revenues received in the framework of the National Health Insurance Law (medications, doctors’ fees, various quarterly payments) as well as for medications and treatments not included in the Health Law. 2. Does not include nursing care insurance. 2011 32.67 42.27 47.91 3. 2013 figures are estimates. Source: Adva Center analysis of figures received courtesy the Department of National Accounts at the CBS. 2012 34.78 45.28 52.46

2013 36.55 48.06 56.88

Notes: 1. Fully indexed — calculated in accordance with three indicators: demographic changes, technological improvements, and changes in the index of health inputs. 2. The costs include other minor elements not included in our calculation. 3. The fully indexed cost shows how much the basket of services would have cost had it kept pace with the above changes and remained at the same level as it was in 1995. both those included in -־ payments for medications and treatments־Household payments include both supplemental and private insurance policies, co .4 the basket of services and those not included. Sources: Adva Center analysis of Ministry of Health, National Health Insurance Law of 1995–2013 Statistics, edited by Daniela Arieli, Tuvia Horev and Nir Kadar, November 2014, Health Ministry website; household expenditures courtesy the Department of National Accounts at the CBS. 40 Israel: A Social Report 2014 41

EROSION OF EQUALITY IN HEALTH CARE: Total Monthly Outlay on Supplemental and Private Health Insurance Policies of Households in the 2nd, 6th and 10th Income Deciles THE HIGHER THE INCOME, THE MORE HEALTH INSURANCE By net household income, in NIS, 2013 prices In 2013, the average monthly Everyone paid more for health care, with additional health insurance income households could policies receive priority when it New Series־expenditure of households in the but high top income bracket on private afford to purchase more insurance — comes to surgery; the losers are health insurance policies amounted and more expensive kinds — while persons without such policies. 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 income households could־to NIS 247. The expenditure on low Secondly, private health policies Decile 2 supplemental health fund insurance afford to buy much less. have led to surgeons leaving policies was slightly higher, NIS 284. It should be noted that the figures public hospitals in the afternoons Private 17 4 8 18 18 19 11 15 22 17 21 Thus the total monthly household are averages that hide the fact that in order to perform operations in spending on health insurance Supplemental 49 53 63 64 65 75 79 90 92 95 109 in the lower income brackets there the framework of private health beyond the health tax in the top are households that do not purchase insurance policies. This situation Total 66 57 71 82 83 93 89 106 114 112 130 income bracket was NIS 531. any extra health insurance policies. leads to the creation of waiting lists Decile 6 Households in the top income decile for surgery and for consultations Supplemental (marketed by heath spent twice as much on health with specialists in the framework of Private 36 40 47 56 62 48 50 84 65 65 73 funds) and private health insurance insurance as those in the sixth decile the public health system. (marketed by insurance companies) and 4 times as much as those in the Supplemental 91 104 113 113 132 133 148 151 165 182 189 lead to a number of distortions in the If we were to conduct a survey with second decile. public health system: regard to the accessibility of health Total 128 144 159 169 193 182 198 234 230 246 262 In 2013, the share of extra health care services to citizens by economic First of all, they have a negative Decile 10 insurance in total household decile, we would most probably find effect on the public and universal expenditures on health amounted large gaps in favor of persons in the Private 145 134 206 201 183 196 215 242 285 225 247 nature of the health system. Persons to 35%. higher income brackets. Supplemental 141 154 163 170 189 191 210 230 255 272 284

Total 287 288 369 371 371 387 425 472 541 497 531

Source: Adva Center analysis of figures received courtesy the Household Consumption Department of the CBS.

Total Monthly Outlay on Supplemental and Private Health Insurance Policies of Households, by Income Decile, 2013 By net household income, in NIS, 2013 prices

10th Decile 284.1 246.7 9th Decile 251.6 162.6 8th Decile 238.3 124.7 7th Decile 213.5 90.2 6th Decile 188.7 72.9 5th Decile 167.3 54.4 4th Decile 149.8 40.1 Health Fund Policies 3rd Decile 119.6 35.7 Insurance Company Policies 2nd Decile 109.4 21.0 1st Decile 79.9 9.0

0 100 200 300 400 500 600

Source: Adva Center analysis of figures received courtesy the Household Consumption Department of the CBS. 42 Israel: A Social Report 2014 43

Endnotes 1 Adva Center, Workers and Employers and the Division of National Income 2012, April 2013. 2 Miri Endeweld and Oren Heller, “Wages, the Minimum Wage and their Contribution to Reducing Poverty: Israel in an International Comparison,” National Insurance Institute, 2014, Working Paper 119. 3 Adva Center, Workers and Employers and the Division of National Income 2012, April 2013. 4 Adva Center, Israel A Social Report 2011, December 2011. 5 “Financial assets held by the public” include assets owned by individuals and corporations, households, firms and pension funds. They do not include assets held by the government, the Bank of Israel, commercial banks, mortgage banks and investments of foreign residents. 6 In January 2012 the CBS changed its methodology for calculating unemployment, in accordance with the demands of OECD. Under the new system, data are collected on a monthly basis and they include not only the civilian labor force but also persons in compulsory military service andregular military personnel. Thus, unemployment figures under the new system are higher than they were previously: CBS, Press Release: “Figures from the Manpower Survey for November 2014,” December 22, 2014. release_STATA–14–16–146_en.htm־August 2014: http://europa.eu./rapid/press 7 8 Adva Center calculation based on OECD Stat. Yehia, 2013, “Higher education abroad: Palestinian students from Israel studying in־Khalid Arar and Kussai Haj 9 Jordanian universities,” Journal of Applied Research in Higher Education, 5(1), pp. 95–112. 10 Council for Higher Education, Higher Education in Israel 2014, May 2014. 11 CBS, Statistical Abstract of Israel 2014, Tables: 8.48, 8.54. 12 Leor Dattel, “Send Your Son to Learn to be a Welder,” The Marker, October 22, 2014. 13 CBS, Statistical Abstract of Israel 2014, Table 8.19. 14 The figure is for students in the Hebrew education system. CBS,Statistical Abstract of Israel 2014, Table 8.48. 15 For details see: Adva Center, Israel — A Social Report, various years. 16 Adva Center analysis of CBS, Local Authorities in Israel 2012, database, CBS website; figures on undergraduates received courtesy the Department of Higher Education at the CBS. Studio Noam Tamari