OECD Gives Israeli Economy High Marks, Notes Inequality

YERUSHALAYIM - The Organization for Economic Co-operation and Development (OECD) rated the Israeli economy as strong and steady but noted problems of inequality and social tensions in its 2013 Economic Survey.

“Given the state of affairs in the world, Israel is looking steady, strong and I think moving in the right direction,” said OECD Secretary-General Angel Gurria, who was in Israel to meet with the Cabinet and present the report.

With GDP growth rates projected near 3.7 percent for 2013 and only a slight decline expected in 2014, Israel was growing faster than the world average of 2.7 percent and at about three times the rate of the OECD average of 1.2 percent.

New Finance Ministry figures released on Sunday, however, put growth somewhat lower, estimating it at 3.6 percent for 2013 and projecting 3.1 percent for 2014.

Many OECD countries are “still looking and suffering the effects of the crisis. Unemployment is still growing in the Eurozone, around 12 percent.” In Israel it has dropped below 6 percent.

Gurria attributed the country’s impressive performance to a surging high-tech sector and new-found natural gas reserves. The latter represents 1 percentage point of national economic growth, which means it could account for the entire difference between Israel’s GDP growth and the world average.

But the bright picture was clouded by the fact that 20 percent of the population lives under the poverty line. Poverty in Israel is the highest (proportionally) of the 34 OECD member states, which include Mexico, Poland, Turkey, Chile, England and the United States.

According to the report, one in every five families in Israel lives under the poverty line; among those one in every two are Arab and chareidi families.

The middle and lower classes are also struggling. The OECD criticized the high cost of living and noted that buying power in Israel is lower than in other OECD states.

If that’s not enough, the report claims that Israel’s education system needs improvement, and that the overcrowding in hospitals is a problem that must be addressed. And for those who claim that the social revolution was a fiction: the report addresses the trend and claims that the issues raised then are still relevant.

What does the Finance Ministry have to say? “The report is positive, and adopts our approach that it is necessary to fight poverty and inequality through the labor market in the short term — and through education in the longer term.”

Addressing the inequalities, Gurria said, “I think the question is broadly how to translate these … good numbers into a broad-based improvement in living standards across the population,” he said.