Report says that lack of quality education will stymie future growth
While new luxury apartments in downtown Jerusalem are selling for upwards of $5.7 million, poverty has continued to increase over the last three decades, according to a new report by the Taub Center for Social Policy in Jerusalem.
"All you need to bring is your toothbrush," Dalia Azar-Malimovka, the spokeswoman for Africa Israel Residences told The Media Line during a tour of a high-end fully furnished penthouse with marble floors and huge walk-in closets, selling for a cool $5.7 million.
Israelis prefer owning homes to renting them, and right now demand exceeds supply.
"We're still in a market of very strong demand for housing," Israeli real estate analyst Shai Lipman told The Media Line. "Last Friday, 800 apartments in Rosh Ha'ayin (near Tel Aviv) were bought in under 3 hours for a total of more than $285.7 million."
But these apartments, which sold for an average of $357,000 each, are far out of the range of most of Israel's population. Many Israelis are finding it difficult to make it to the end of the month, let alone buy a house.
Two large sectors of Israel’s population are vastly under-represented in the work force. Arab citizens of Israel make up 20 percent of the population, but only about a quarter of the women work, mostly for cultural reasons. Among the ultra-Orthodox, who are approaching ten percent of the population, many of the men prefer full-time study of Jewish texts to working.
"The primary problem is that a very large and growing share of Israel's population isn't receiving either the tools or the conditions to work in a modern economy," Dan Ben-David, the Executive Director of the Taub Center told The Media Line.
The Taub Center this week published the annual "State of the Nation," a report compiled by experts on Israel from across a spectrum of academic fields, from economists to sociologists to policy analysts. The 2013 report shows that even when ultra-Orthodox Jews and Arab citizens of Israel are excluded from the figures, 29% of Israelis live below the poverty line. The analysis also shows that without the welfare and tax safety net provided for them, two-thirds of ultra-Orthodox households, often with at least eight children, would live under the poverty line.
The ultra-Orthodox go to separate schools where the “core curriculum” of math, science, and English studied in other Israeli schools takes a back seat to Jewish texts.
"The education that they receive is “third world” and below, and so will the economy that we're going to have if we don't give them the best education in the world, something we are capable of because we have some of the best universities in the world," Ben-David said.
The report also found that Israel's welfare system is ranked as the second least effective, ahead of only the United States. The small country's income equality, meaning the gap between the richest and poorest, is almost as large as in the US.
"A policy should include making it difficult for these people to manage without a job," Eyal Winter, a professor of economics and the director of the Center for the Study of Rationality at The Hebrew University of Jerusalem told The Media Line. "They should create opportunities and incentives to enter the market."
Ben-David points to Israel's education system as being one of the core reasons for the country's problems.
"We have the largest gap in achievement in the core subjects in the Western world in the past decade among our children. If the gaps are that big when they are in school, and from school you enter the marketplace, what can we expect will happen with these kids when they reach the marketplace?" Ben-David said.
Limited opportunities for those with a higher education have led to a brain drain in Israel, with leading scientists often accepting positions at private companies and educational institutions outside Israel.
"Keeping this enormous, excellent human capital in the country is an opportunity to foster the high tech industry in the country, to increase growth, to increase prosperity, to increase GDP, and eventually to decrease poverty and decrease inequality," Winter said. "People pay less attention to this aspect and talk more about how to come up to immediate solutions to inequality and poverty."
During Israel’s last election earlier this year, social issues were at the forefront of the campaign.
"The most recent election that we had was the first time that I could think of when those who talked about national security issues lost ground and those on both sides who talked about domestic issues gained ground," Ben-David said.
The key to a successful intervention into the economy by the Prime Minister Binyamin Netanyahu's administration is whether it will stick to its election campaign pledges.
"I think the government could do better by implementing a policy which has been the basis of the last election campaign, which is trying to improve the economic situation of the middle class in Israel, and perhaps upper middle class, and using this as the main source of income for the country," Winter said. "These are the people who pay income tax. Incentivize them to stay in Israel because there is a problem of immigration of talented people who seek opportunities outside the country. There is no incentive to keep them in the country such as building educational infrastructure for future generations."
In the end though, simple politics is what Ben-David cites as the cause of Israel's woes.
"Nobody looks at the big picture, nobody looks at the long run, because nobody gets elected on that usually," Ben-David said. "But in the process you screw up entire countries. In our case we are on the brink, and we need to get our act together."