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The latest OECD report on the Israeli economy, released earlier this year, finds it unequivocal that Israel's economic growth is far from inclusive – this is the only way in which Israel's economic growth is to be inclusive. that is, the whole population does not benefit equally. The report warns that unless this situation is corrected quickly, in a few decades, Israelis' income will be about 30% behind the OECD average. This will be the price of discrimination, abandonment of entire groups and poor long-term planning.
The focus put by the OECD, but not only by them, on inclusive growth is one of the main results of the financial and economic crisis that erupted in 2008 and led to a fundamental change in the perception of the meaning of growth by the main economic organizations. The International Monetary Fund, the World Bank and the OECD are unhappy with economic growth, but stress that growth must be inclusive, so that society benefits rather than creating larger economic gaps.
Warning
The OECD report, released in March, does not praise Israel's growth and employment, but also expresses its concern and criticism of deviations the poor state of infrastructure and the level of education in Israel. and the low level of social services provided to Israeli citizens. The organization warned that the standard of living in Israel would be compromised unless there is a rapid change in economic and social structures.
The OECD warning raises two questions: what are the processes that lead us to a situation in which we are late? long-term? And can these processes be modified by policy changes and reforms?
How do you determine if growth is inclusive? The OECD has three criteria. The first is the extent to which growth contributes to poverty reduction and greater equality in income distribution, and beyond that, how much it contributes to social solidarity in each country. The second is the extent to which growth benefits all geographical areas of a country and reduces gaps between different areas. The third and final point is the extent to which growth is balanced with the different sectors of the economy, between the part that operates in the domestic market and the part that is abroad, between different industries and industries. between industry, commerce,
Anyone who is familiar with the data on the Israeli economy and Israeli society knows how far we are in relation to any of these criteria. Growth in Israel has not helped to reduce poverty and inequality, and one could even claim that it has even increased them. Israel's outlying regions are lagging behind, both in terms of per capita income and in terms of service quality. The labor market is characterized by extreme polarity in terms of technology, productivity and wages, while the education system perpetuates this situation and creates huge gaps in skills acquisition.
If the Israelis want a concrete example by these criteria, they can look at the inclusive development index of the World Economic Forum, according to which Norway has the most inclusive economic growth, thanks to the structure of its market of work, its high quality education system, its sovereign fund, etc.
Social Changes
Any report on the Israeli economy in recent years, including the annual report of the Bank of Israel, immediately identifies groups left in the Israeli society: the Arabs and the haredim. (Ultra-Orthodox Jews). The incidence of poverty in these two groups is very high: 45% among haredim and 49% among Arabs. These rates make Israel the country where the incidence of poverty is highest among the OECD countries. OECD economists have no trouble identifying the source of the problem: a very low level of skills taught to children in these groups and the lack of real programs to improve their skills. capabilities.
The causes of the situation of these populations However, the groups are not based on a policy that can easily be changed. The fact that Israeli society is organized in "sectors", and not on the basis of citizenship or residence, is the result of a deliberate policy that goes back several decades. The question is whether there is a political will to abolish the situation in which the "sector" is responsible for mediating between government policy and the country's citizens.
All this means that the narrowing of the real and the ideal is not The question arises as to whether it is possible to adopt the recommendations of the OECD for Israel, such as imposing the basic school curriculum to the entire haredi population or ending the 70-year-old policy of excluding Arab citizens from much of the Israeli labor market. market, through an active policy of vocational training and a substantial improvement of the Hebrew teaching. The current government has allocated 15 billion NIS for a five-year plan for the Arab sector, but this sum does not provide for additional budgets to correct the discrimination that has prevailed so far, but aims only to provide budgets based the proportion of Arabs in the population.
For the moment, the answer to the question is negative, at least to go through the statements of government ministers and party leaders of the coalition. The trend is to say that excluding Arabs and haredim, our situation is excellent. The result is that the government prefers the risk that the standard of living in Israel will be delayed by political and social upheaval.
The fact that the government fails to make the required changes in the Israeli economy does not necessarily preclude the possibility of steps in the desired direction. Markets and the public may be engaging in behaviors that help make growth more equitable and inclusive. Such things have happened in the past, the most notable example being the continued reduction of gaps between Jews of different origins in Israel, despite the efforts of the media and some academics to keep them in the background. 39, public spirit.
Prof. Momi Dahan published the results of a study in which he examined the issue of wage differences between Israelis of Ashkenazi and Sephardic and Eastern origin in 2011. Dahan showed that from the middle of the 1990's the gap between the two groups began to close. 27% at the end of the period, compared to 40% at the beginning. In addition, Dahan found that the proportion of Sephardic and East Jews in the top 10% of wage earners for the first time became the same as their proportion in the population. Dahan's explanation for these phenomena was that the high performance of educational qualifications prompted young Sephardic and Eastern Jews to invest more in education, including higher education.
Speaking to "globes", Dahan pointed out that the expansion of higher education Israel, through colleges of higher education, has made a decisive contribution to this development and has allowed many young people to benefit from the better performance of academic qualifications. Dahan further pointed out that the reduction in income gaps continued after 2011 and that, among women, it had decreased to a few percentage points.
Another change initiated by the citizens themselves is the sharp decline in the birth rate. among Arab families in Israel. Israeli Arabs began to change their perception of the desirable size of a family in the 1960s, and the average number of children per Arab woman fell from nine or more to an average of 3.3 today. , About half the number of children by haredi
The haredi society is also undergoing great changes, with greater participation of women and men in the workforce. Some of these changes are difficult to estimate, but it can be badumed that tensions within Israel's haredi communities are increasing. Research by Alex Weinreb and Nachum Balas of the Taub Center for Social Policy Studies published last May showed a shift in the movement of Haredi children from schools belonging to this sector to public schools, indicating a decline in willingness to conform to haredi behaviors. 19659002] These changes could affect the long-term projections of the size of the haredi community and the behavior of the individuals in it. The prediction that haredim will account for a quarter of Israel 's population might prove to be exaggerated, or else it could prove accurate, but the rate of employment among haredim will become equal to that of the population as a whole. A change in their employment characteristics could result from government policy, but also, as we have suggested, from a bottom – up process, such as the desire to do so. part of this population to escape poverty.
Productivity, Polarization and Clbad Division
Even though the ethnic question has become less acute and important social changes are occurring, the Israeli labor market continues to show great inequality and inequality. huge productivity gaps between different industries. The problem lies not in the ethnic differences, but in the clbad differences that threaten the productivity and social solidarity of the economy, and could lead to the dismal result indicated in the OECD report. Similarly, the problem is not limited to the "Arabs and Haredim", who aspire to change, as evidenced by figures on the birth rate in the Arab population and the pbadage of Haredi children to public schools. The problem is structural and non-sectoral.
The structural problem emerges from the findings of two Taub Center researchers, Gilad Brand and Eitan Regev, who examined the evolution of productivity and wages in different sectors of the economy. They found that from the 1990s, there was a shift of workers who had been fired from low-tech traditional industries to manufacturers and service industries that did not compete with corresponding companies abroad. The result was a disconnect between these sectors and sectors based on advanced technology. The mobility of workers between one part of the Israeli economy and the other was practically nil.
On the same subject, let us quote the conclusions of an article published two years ago by two researchers from the University of Haifa in the journal "Israeli Sociology". According to Dr. Tali Kristal and Dr. Alina Rosenfeld-Kiner, a process of polarization has occurred in the local labor market since the mid-1990s, along with similar processes in most industrialized economies. "Polarization" refers to a situation in which there is a substantial decrease in the supply of mid-range wage jobs in the economy and an increase at both ends of the distribution curve salaries.
According to researchers, technology explains Unlike countries such as Israel, the United States and the United Kingdom, where polarization has been rapid and clear, in countries where unions are strong, the government's policy is Employment and the enforcement of labor laws, the polarization is more moderate. Part of the polarization phenomenon is the entry into the labor market of low-skilled, low-wage workers, but this reflects the existence of two economies in Israel: a high-tech economy; and a traditional economy with low productivity. As mentioned, mobility between the two economies is limited, and in this respect changes and changes in the haredi and Arab society are unlikely to be sufficient.
According to current economic policy, the bipolar structure of the Israeli economy will not disappear in the near future. In addition, Israel, like other industrialized countries, is entering the new digital revolution as artificial intelligence sets in, replacing workers with machines. It is feared that this will result in a loss of jobs at all salary levels, but especially in the medium and low. The Israeli economy is not about to be ready for that. Maybe in the future, government ministers claim that, considering computers and robots, our situation is excellent
Posted by Globes [online] Economic News from Israel – www.globes-online.com – July 2, 2018
© Copyright Globes Publisher Itonut (1983) Ltd. 2018
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