The decline in living standards in 2020 was the largest recorded since 2001

The public has suffered in 2020 the most severe damage to its economic situation in the last twenty years.
 According to the report, the decline in living standards in Israel in 2020 was the largest recorded in the country since the Great Recession in 2001. Households from the middle-class deciles suffered the most economic damage while families from the highest decile suffered less income. Thus, incomes Of households in the fifth and sixth deciles decreased in 2020 by about 5% compared to 2019, in the seventh decile income decreased by 4.3%, and in the eighth decile by 4%. In the ninth decile income decreased by 3.3%, while in the most based decile in 2.5%.
According to the report, the government managed to curb a tens of percent increase in poverty through benefits, one-time grants and an extension of unemployment benefits - but this led hundreds of thousands of families to depend on grants and unemployment benefits, although according to the institution, the effects of the crisis in Israel will last for many years.
The main victims of the economic crisis are middle-class families who experienced the bulk of the decline in income - while upper-class incomes fell at a lower rate, and incomes of the lowest decile rose following the grants.
Particularly severe injury was recorded among the self-employed - the only group in the public whose poverty rate has increased. Even according to a conservative estimate by the National Insurance Institute, about 25,000 self-employed people have fallen into poverty in the past year. However, the poverty rate among the unemployed and employees remains unchanged.
About 1.5 million residents in Israel, including about 400,000 children, in 2020 relied on benefits, unemployment benefits and grants in order not to fall into poverty. Excluding benefits and grants, in Israel 48.4% of the elderly, 41% of children and 42% of families would have lived in poverty.

 poverty rate increased in all groups
Compared to the economic situation in the country in 2019, the poverty rate increased in all groups and sectors: 31.7% of children in Israel live in poverty in 2020 (compared with 30.9% in 2019), as well as 22.2% of families (compared with 21.7% in 2019). In the general public, the poverty rate rose to 23% compared to 22.4% in 2019. This is almost 2 million people, of whom about 907,000 are children living in poverty.
However, because the economic situation of most households in the public has deteriorated, the poverty line that defines the poor populations has declined and so many citizens have been “extricated” from poverty only statistically - even if they were poor in 2019 and their economic situation has deteriorated since.
The poverty rate decreased slightly to about 30% of the children and 20.8% of the families. In addition, 49% of the ultra-Orthodox and 35% of Arab families are defined as poor.
According to the National Insurance Institute, the government must increase the safety net provided to the public, as well as launch a series of measures to encourage employment. "The socio-economic impacts of the corona crisis are expected to continue in the coming years. Assistance to populations affected by the crisis requires continued social support alongside increased resources to actively encourage employment," the report said.
Unusually, due to problems in data collection by the Central Bureau of Statistics (CBS), this year the poverty measurement relied on internal information from the National Insurance Institute and not on the CBS 'annual income survey, a step that does not allow poverty data to be compared to previous years.
The Social Security report points to the success of curbing poverty following assistance to the unemployed and grants. However, this assistance will end soon and in one-time grants. .
During the crisis, the government formulated several assistance plans that included assistance to the unemployed and payment of unemployment benefits until June 2021 - even if they went on unpaid leave for a short period during the closures. The cost of the program to date amounts to NIS 20 billion.

amounts to NIS 20 billion
As part of a grant for each citizen, one-time payments were transferred directly to citizens in the amount of NIS 9 billion, but they drew much criticism.
The government has formulated various routes to help businesses and the self-employed, including participation in fixed expenses (NIS 22.3 billion), participation in property taxes and other routes designed to help the self-employed - but according to the National Insurance report these have only reduced some of their harm.
The poverty report shows that Israel is in one of the greatest economic crises in its history. "After years of rising living standards, we are therefore witnessing for the first time in many years a decline in the living standards of the population," the report said. The National Insurance Institute measures the standard of living according to the median per capita income (standard) in a household, according to which the poverty line is also determined.
According to the institution, even after the transfer of benefits and grants from the state, there was a decrease of 4.4% in the median income per capita. Because in the last two deciles the standard of living has risen at an annual rate of 4% -3%, this is actually a decrease of about 8% in 2020. The last time there was a decline in living standards was in the 2008 economic crisis, but then there was a 0.5% decline in living standards. A similar decrease was recorded in the sharp recession of 2001. An examination of public revenues before receiving benefits and grants indicates a decrease of about 23% in public revenues.