HIKMA SUMMIT
OF INTERNATIONAL RELATIONS

Socio-economic disparities

Israel’s society can be defined as a mélange of people. The ethnic diversity that characterizes Israel can be interpreted on two levels: not only between Jews and Arabs, but also within the Jews.

As for the diversity between Jews and Arabs, from 1948 - the year in which the state of Israel was established -  the Arab population found itself in a subordinate position to the Jewish population in three different areas: politically, socially and economically. The lower education, standard of living, occupational status and earnings are often attributed to the discrimination perpetrated within Israeli society and their limited access to opportunities.

The differences among Jews can be traced back to the fact that they arrived in Israel from all around the world. We can identify two major geo-cultural areas: Jews of European or American origin and Jews of Asian or North African origin. When compared to Asian-Africans, European-Americans Jews are characterized by higher levels of education; they hold occupations of higher status and earnings; they own homes of higher values; and have a higher standard of living.

Moreover, in recent decades, an additional group of citizens has been identified in Israeli society. Following the downfall of the former Soviet Union, millions of Jews immigrated from the Soviet republics, increasing Israel’s population by more than 10 percent. To date, their occupational status and their economic outcomes are lagging behind Israeli-born Jews. Progress has been made since then, but despite generous government financial aid, tax exemptions and the “Absorption Basket”  - a financial assistance program during the first year of immigration to Israel - many are still facing downward occupational mobility.

At the top of the wealth ladder, we can find the Israeli-born Jews, which are by far the wealthiest group in Israeli society. They enjoy an advantage in terms of income and inheritance - which is significant when compared to that of any other group. Meanwhile, the immigrants from Eastern Europe who arrived more than 30 years ago, have the lowest income and the lowest amount of accumulated wealth. European-American Jews and Asian-African Jews, although not as wealthy as Israeli-born Jews, are substantially wealthier than Arabs. The ethnicity-linked disparities are outstanding when Israeli-born Jews are compared with immigrants from the Soviet Union and with the Arab minority population, and less pronounced when compared with Jews of Asian-African origin and with Jews of European-American origin.

Demographic characteristics, differences in labor force participation, and differences in education level are to blame for Israel’s high degree of income disparity and poverty rate differences.

How does poverty affect Holocaust survivors in Israel?

While inequalities have slightly decreased since 2012, they still remain at a very high level. At the same time, as the economy is growing, so is the gap between the rich and poor. A report brought forward by the Israeli National Insurance Institute in 2021 called “Poverty and Social Gaps in Israel” shows how nearly 2 million Israelis live in poverty, which is almost 20% of the population. The Gini Index, which measures income and wealth inequality, considers Israel to be one of the most unequal countries among other developed countries.

Holocaust survivors are the social group that is most affected by the poverty issue.

To date, about 150.000 Holocaust survivors are living in Israel. It was estimated that 25% of them live in poverty, and they mainly belong to the Soviet immigrant group we mentioned earlier. The roots of the disparities between the survivors of the Holocaust lie in the Luxembourg Agreement - a compensation program between Germany and Israel signed in 1952. While Holocaust victims who met the given criteria were provided with economic benefits, Eastern European immigrants and those who arrived after 1953 were not entitled to monetary support. Without financial support, this category of immigrants faced many difficulties throughout the years and had little chance to emancipate economically.

Conditions for many survivors improved significantly after 2014, when Yair Lapid - the finance minister at the time -  raised monthly allowances, gave survivors free access to medicines, and improved benefits for those who moved to Israel after 1953. Still, many consider that the financial support is still not enough, and it further contributes to widening the gap between social classes.

Conclusions

Israel is one of the wealthiest countries in the world. However, it is deeply affected by internal socio-economic inequalities, both between Jews and Arabs and within Jews. Although progress has been made recently, the groups that are affected the most by inequalities still have little chance to climb the wealth ladder, especially in terms of occupational mobility.

For more than a decade, Israel has been underbudgeting the social welfare system, with benefits cuts and a lower direct tax rate: its neoliberal system was a breeding ground for inequalities in the distribution of wealth and privileges and for the high poverty rates that affect the country.

Holocaust survivors, one of the groups that struggle the most, are living their final years of life having to choose whether to pay rent or buy medicine. Everyone, especially them, should have the right to live out their lives with dignity. But the state doesn’t provide enough for them, especially considering Israel’s high cost of living.

At the moment, internal issues within Israel took a back seat. But overcoming internal division is one challenge Israel will sooner or later have to face and on which his own future might depend.

Sources:

1.Wealth Inequality: Ethnic Disparities in Israeli Society

Moshe Semyonov, Noah Lewin-Epstein (March 2011);

2.https://www.btl.gov.il/English%20Homepage/About/PressReleases/Pages/DOCHoni23.aspx

3. https://www.swissbankclaims.com/Documents_New/665994.pdf

4. The Political Economy of Israeli Neoliberalism

Ronen Mandelkern, Michael Shalev (October 2018)

5. Poverty and Inequality in Israel: Trends and Decompositions

Haim Bleikh (2016)