2023 Poverty Report: Israel's Poverty Rate Stabilizes Despite War's Toll - every 4th child is poor

 cKey Findings from the 2023 Poverty Report:

• Poverty Rate: 20.7% of the population lives below the poverty line, with government transfers (such as grants) helping to curb a further rise. Without these interventions, the poverty rate would have been 31.1%.
• Child Poverty: Children make up 44% of all poor individuals in Israel, even though they represent only 32.5% of the population. A staggering 50% of Arab and ultra-Orthodox children live in poverty.
• Geographic Disparities: The Jerusalem, Northern, and Southern districts show higher-than-average poverty rates, with family poverty rates of 36.2%, 22.5%, and 22.6%, respectively. In contrast, poverty is lower in Tel Aviv and the Central districts.
• Vulnerable Groups: The highest poverty rates are found in the Arab community (38.4%) and the Haredi (ultra-Orthodox) community (33%). Families with four or more children make up 41.5% of poor households.
• Deep Poverty: The "depth of poverty" is particularly high among non-working families (63.4%) and young people aged 29 and under (47.2%).

War's Impact on Poverty:

The report emphasizes that the ongoing war has had a profound effect on Israel's economy, both directly and indirectly. Economic growth slowed significantly, from 6.5% in 2022 to just 2% in 2023. The self-employed have been among the hardest hit, with poverty in households led by self-employed individuals increasing from 13.3% to 13.8%.

The war has also severely impacted industries such as tourism, catering, and trade, which suffered from closures and a sharp drop in demand. Families with children, single mothers, and elderly veterans faced further economic strain due to decreased incomes and increased expenses for security and evacuee care. While government grants, such as housing assistance for evacuees and direct financial support, helped mitigate some of the damage, they were not enough to fully compensate all affected populations.

Government Assistance:

In 2023, government transfer payments increased by 15.2%, primarily due to grants aimed at war-related damage. These transfers helped reduce poverty by 33.5% per capita and by 41.2% for families. However, the rate of intervention in Israel's poverty reduction policy, at 35%, is lower than the OECD average of 58%, suggesting that government support is less effective than in other developed countries.

Pension and Welfare System Effectiveness:

The report found that pensions play a key role in reducing poverty, particularly among senior citizens, with the pension system cutting poverty among recipients by 64.8%. However, income support benefits were less effective, reducing poverty among recipients by only 16.4%. Notably, 52.5% of families receiving income support benefits and 37.9% of families receiving alimony still live below the poverty line.

Rising Inequality:

The report also highlights increasing income inequality, with the wealthiest deciles seeing minimal income growth compared to the lowest. The first decile (bottom 10%) saw a 10% increase in income, while the tenth decile (top 10%) saw only a 0.8% increase. The Gini index, which measures income inequality, shows that Israel's inequality is high compared to developed countries, though it is lower than in countries like the United States, Mexico, and Costa Rica.

Government and NGO Reactions:

Labor Minister Yoav Ben-Zur (Shas) responded to the report, noting that the increase in employment and wages during his tenure as Minister helped lift many out of poverty. He emphasized the government's socio-economic policies, which have targeted assistance for vulnerable groups. "This year, the poor were less poor, and we also saw an improvement in the severity of poverty," Ben-Zur stated.

Eli Cohen, CEO of the Pithon Lev organization, warned that the full impact of the war on poverty would become apparent in next year's report. "We have already seen a 23% increase in requests for assistance in 2024. The true picture of the war’s economic toll will be evident next year, with the collapse of the middle class," Cohen said.

Conclusion:

Despite government efforts to mitigate the economic fallout of the war and the ongoing socio-economic challenges, Israel continues to struggle with high poverty rates, especially among children, the elderly, and marginalized communities. The country's poverty rates are among the highest in the developed world, second only to Costa Rica in overall poverty and child poverty. Moving forward, experts warn that the war's long-term effects on the economy and the middle class could exacerbate the situation, making further government intervention and social safety nets even more critical.