In Land Of Milk And Honey, No Money For Cottage Cheese

Behind Israel’s protests is a population struggling to pay the bills.

08/09/11
Israel Correspondent
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Jerusalem — After taxes, Orit Mizrachi, a secretary, takes home about $1,400 a month, while her husband, a factory worker, takes home about $1,550.

But after buying food and paying their mortgage, taxes, utilities and other expenses each month — shopping only at bargain stores for their three children’s shoes and clothing — it’s “impossible to finish the month in the black,” says Orit, a petite woman in her 40s.

“I’m actually at the point where I pray that my kids’ feet haven’t grown this month,” she adds. “We both work and yet we’re sinking while the rich get richer.”

Families like the Mizrachis and the purchasing gap between various sectors of Israeli society — between not only the rich and the poor, but also the struggling middle class — are fueling the mass protests that have swept Israel in recent weeks.

It started a few months ago when, inspired by the Arab Spring protests in the Arab world, Israelis began boycotting cottage cheese and other dairy products, whose prices have recently skyrocketed. Citizens have now taken to the streets over the soaring prices of apartments, gasoline, electricity, water, university tuition, and even school backpacks, which cost $50 and up.

It remains to be seen whether Prime Minister Benjamin Netanyahu’s promises this week to lower Value Added Tax (a whopping 16.5 percent), tariffs (a car that costs $14,000 in the U.S. costs $28,000 in Israel and gas prices are carefully regulated) and to regulate certain industries will be implemented.

If they are implemented, some warn that it could threaten Israel’s balanced budget, which is decreed by law, and its ability to withstand the global financial crisis. Others insist that economic prosperity enjoyed by just a tiny segment of society is a stain on the State of Israel.

In a recent op-ed in Ha’aretz, economics commentator Meirav Arlosoroff urged fiscal restraint, especially during the past week’s global uncertainty.

While acknowledging that the protesters are right to question the government’s priorities, the assistance they receive “must not imperil Israel’s achievements based on responsible conduct … and budgetary discipline,” Arlosoroff said.

Others, like Ben Gurion University social work lecturer David Davidi, want massive government reforms, including an end to the government’s ongoing privatization process, “which instead of spurring competition has actually created private monopolies.”

Regardless of the solution, no one denies that Israel has become a land of economic inequality.

“Israel is a classic case of a country whose macroeconomic indicators are good but most of whose households are not invited to the end-of-year celebration,” wrote Shlomo Swirski, academic director of the Adva Center think tank, in a recent paper.

Despite having a GDP per capita of $29,500 in 2009, it also has “one of the highest poverty levels in the OECD” and “one of the highest levels of inequality,” Swirski wrote.

While Israel’s high-tech sector has created both influence and wealth (average high-tech salaries in 2010 were $5,000 per month), it employs no more than 10 percent of the Israeli civilian workforce, the paper noted. Based largely in the center of the country — and especially in ultra-expensive Tel Aviv — the jobs that do exist are nearly inaccessible to Israelis who live elsewhere.

Adding to the wage inequality — 75 percent of Israel’s workers earn no more than $1,700 per month — is the fact that those who invest in Israeli high-tech, finance and real estate, rarely do so in Jerusalem, Israel’s largest and poorest city, and almost never in the periphery.

The government’s goal of “maximizing business-led growth” has led, Swirski argued, to the marginalization “of large chunks” of Israeli society.

“The same country that has some of the most advanced R&D facilities in the world is home to towns that are still stuck with low-tech, low-wage, low-mobility industries established in the 1950s.”

Those caught in the ‘50s poverty cycle are often Sephardic Jews and immigrants, especially Ethiopians, with a poor education and few local job prospects

Given the proper training and opportunities, economists agree, poverty among these groups can be alleviated.

Due to their very high birth rates and relatively low incomes (both have low workplace participation), fervently Orthodox Jews and Muslim Arabs find it much harder to rise out of poverty, according to Shlomo Yitzhaki, an economics professor at Hebrew University.

“As long as they are demographically increasing and their incomes do not, there will be an increasing gap” between them and other Israelis, Yitzhaki said.

While many Israelis have compassion for large Arab and haredi families — provided there is at least one wage-earner — most Israelis in the tent cities are young, not particularly religious and either single or with at most three kids.

“I’m protesting because I work hard and yet I’m still poor,” said a single mother from Haifa in her 30s who said she cleans other people’s homes for a living.

“To get by each month I hide my income from the government and receive Bituach Leumi [social security]. I don’t know which is more humiliating. Cleaning toilets or receiving welfare.”

And there are people like Karen Kaufman and her husband, who have jobs that pay well above the national average wage but are living on the edge of financial ruin.

“We have no savings, no future,” Kaufman, a mother of two young children recently wrote in an essay on +972, a new online magazine. “We’ve been driving the same third-hand car for seven years.”

The couple rarely goes out, and when they do, they rely on their parents to babysit. High income taxes, the high cost of child care and rent, coupled with government tariffs on everything from gasoline to car imports (there are no Israeli carmakers) forced them out of Tel Aviv a year ago, after their landlord decided to raise the rent to nearly $1,500 per month.

Today, they live “in one of Israel’s poorest and most crowded cities” and still can’t put aside a shekel.

Purchasing an apartment is out of the question, Kaufman, who works in public relations, wrote, wondering how some of her friends had managed to become homeowners.

“We were being asked to pay a half a million dollars for a pokey apartment at the end of nowhere, with no public transportation,” she lamented.

Just when Kaufman felt like the only Israeli incapable of making ends meet, she heard about the tent cities popping up all over Israel and learned that many other Israelis are in similar straits.

“I realized we’re not alone,” Kaufman said.

Last Update:

08/17/2011 - 07:58

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Harold makes some interesting comments; all of them are true. But the giant gorilla in the room is not the so-called greed of Israeli firms, it is the priorities set by successive governments that have been pouring money into the settlements and everything associated with them. One only has to do the math--those magnificent highways built in the settlements; the vast quantities of apartments being built; the huge subsidies being given to those who live in them; the infrastructure--all paid for by the government to support them. Every shekel spent in the settlements is a shekel not being spent on those who stay in Israel itself, work hard and struggle to make ends meet. The government cannot, will not help them while its obsession with expanding the settlements continues. This is all a big duh, isn't it?

There is definitely a problem with greed and with monopolies. Plenty of landlords here raise rents indiscriminately, having nothing to do with market forces, but with "this is what I would like to get for my apartment." I've seen more than a few apartments stand empty because no will pay the ridiculous rent the landlord wants - i.e. even though market is telling the landlord he's too high, he wants it anyway.

There's also a problem with Israeli companies who are bilking the Israeli consumer. For example, I can get Wissotsky tea for less money in the U.S. where it has to be imported than I can get it in Israel. Wissotsky (and they are far from the only company doing this) clearly charges less in the U.S. because otherwise they couldn't compete (although they're obviously making a profit at the lower price), and they they charge more in Israel because they think they can get away with it. I've also seen the reverse, where some imported products are less in Israel than their domestic Israeli equivalents (so it's not all a matter of government taxes and customs fees).

The protests are good, because it's time that Israeli prices come into line with the rest of the world, and with what they should be. The people who are getting rich off Israeli now will still be plenty rich if they charge normal prices.

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