To curb binge drinking, follow Israel’s lead

The scene outside a bar in Tel Aviv looks very different from the scene outside a college party in the United States. 

Young American college kids may spend their evenings slumped over a curb, with heads in hands and consciousness in question. Young Israelis actually seem to be enjoying their evenings out. 

That’s not to say American college students don’t also enjoy their time out, but rather that the Israelis will typically remember those nights.  

Going out as an underage college student in America is a blur of cheap vodka and swigs of orange juice from a shared bottle. The result of these wild evenings often includes “blacking out,” a badge of honor in some circles.  

So what’s going on? Why does it seem as if young Israelis have a better handle on alcohol consumption than their American peers? I spent this summer working and living as an of-age adult in Israel, and I discovered revealing disparities in the laws and culture surrounding alcohol. 

In Israel, the drinking age is 18 and alcohol cannot be purchased in stores after 11 p.m. The Knesset also limits advertising and marketing of alcohol and imposes increased taxes on alcohol.  

According to a Times of Israel story, alcohol consumption in Israel is low. Binge drinking, which the Organization for Economic Cooperation and Development (OECD) says is a serious health hazard for youth, is lower in Israel than in other developed nations.

Binge drinking in the United States is on the rise. According to the Centers for Disease Control and Prevention, nearly 90 percent of alcohol consumed by adults under the age of 21 in the United States is in the form of binge drinking. 

The drinking age in the United States is 21. For many college students younger than 21, the primary objective seems to be to consume high volumes quickly. 

Given that young people use and abuse alcohol at a staggeringly high rate, we should take action to address this epidemic and our outdated laws governing alcohol consumption. 

Reforming laws surrounding alcohol can help to turn an unsafe, irresponsible and illegal activity to a regulated and safer one. According to the OECD report, individuals of higher socio-economic status as well as higher education levels are more likely to abuse alcohol. College students are at risk. 

Israel’s experience resonates with the finding of health professionals. According to a report in the U.S. National Library of Medicine — National Institutes of Health, policies that limit the hours of alcohol sale by more than two hours “might be a means of reducing excessive alcohol consumption and related harms.”

In the United States, we seem to believe that a higher drinking age will teach our children a lesson that alcohol is for more mature individuals. This is a failed experiment that did not work during Prohibition and does not work now. Rather than an absolute ban that encourages buying “by the bottle” late at night, we should encourage better behavior. Better instead to have young people drinking in bars, ordering drinks that are measured in alcohol content one at a time. 

By lowering the drinking age and imposing stricter rules about purchasing alcohol, we have a better chance at getting to the root of the issue — binge drinking. 

During my two months in Tel Aviv, I noticed how young Americans simply didn’t have the opportunity to binge drink. By the time we finished dinner, stores had stopped selling alcohol. The 11:01 p.m. dilemma ensued. Either we paid for expensive alcohol at bars, or we stopped drinking. We drank less. 

The moral of the story for those of us older than18 in Israel was that we’d plan our night out. We consumed alcohol over a longer period of time, typically with dinner, which is safer. If we did not have this foresight, the system punished you a little bit by making your ability to get belligerently drunk or “blacking out” that much harder. 

Israel has often been referred to as the “startup nation.” Perhaps in addition to its technological achievements, we Americans might now follow its lead to “start up” changing our attitudes toward alcohol and making our kids safer and healthier.

Lauren Sonnenberg is a junior at Northwestern University studying journalism and history. She recently completed an internship at Haaretz newspaper in Israel.

Israel’s soaring population: Promised Land running out of room?

Israel's birth rate, the highest in the developed world and once seen as a survival tactic in a hostile region, could be its undoing unless measures are taken to reverse the trend.

The average Israeli woman has three babies in her lifetime, nearly double the fertility rate for the rest of the industrialized countries in the OECD. That, accompanied by heavy Jewish immigration from the former Soviet Union, has seen Israel's population double in the last 25 years.

The birth rate is even higher among Israel's Arab community and more than double among its Orthodox Jews, two groups that also have low participation in the workforce, dragging the economy down.

Today's population of 8.4 million is forecast to reach 15.6 million by 2059 and 20.6 million in a high case scenario, meaning the small country could simply run out of room.

“Israel is on the road to an ecological, social and quality of life disaster because as the population density rises it becomes more violent, congested and unpleasant to live in and with absolutely no room for any species other than humans,” said Alon Tal, a professor at Ben-Gurion University's Institutes for Desert Research and founder of the Green Movement party.

Israel has 352 people per sq km, up from 215 in 1990, and forecast by the Central Bureau of Statistics (CBS) to reach 501-880 in 2059.

Excluding the nearly empty Negev desert, which occupies more than half of Israel, population density jumps to 980 people per sq km, just a little below Bangladesh.

Perhaps most troubling, activists say, is that there is no national discourse or recognition that a problem exists. On the contrary, government policies are geared to encouraging a high birth rate.

The reasons are various, from the biblical command “Be fruitful and multiply” to the death of six million Jews in the Holocaust, to fears of being outnumbered by Arabs.


“Historically, Israeli demographic policy was formed by hysteria with regard to fear of an Arab demographic takeover, fueled by the rhetoric of politicians,” Tal said.

The number of Jews in the Holy Land is now roughly equal to the number of Palestinians – each around 6.3 million.

In the case of the Palestinians, that includes 1.75 million who are Israeli citizens and 4.55 million in the Gaza Strip, West Bank and East Jerusalem. The occupied territories are also home to half a million Jewish settlers.

Palestinian population growth easily outpaces Israel's, with the average woman in the Palestinian territories having four children.

Israeli government policy encourages population growth with benefits such as child allowances, free schooling from the age of three and funding for up to four in vitro fertility treatments a year.

It also offers incentives to Jews abroad, and even to Israeli emigrants, to move to Israel, measures needed when Israel was founded in 1948 but perhaps less crucial when the population is surging.

“We forecast not to predict disaster but how to see the cliff that is coming up ahead, and there's a cliff if we don't change our behavior,” CBS demographer Ari Paltiel said.

Often a fast-growing population spurs the economy. But in Israel's case the growth is in populations where employment rates are lowest. Among both Israeli Arabs and Orthodox Jews, workforce participation is around 40 percent, far lower than the 61 percent for Israelis overall.

In the case of Israeli Arabs, the figure is dragged down by women, traditionally encouraged not to work. Among the Orthodox Jews, it is dragged down by men, many of whom devote themselves to religious study while their wives hold low-paying jobs.

“From an economic viewpoint, the current reality is not viable,” President Reuven Rivlin told a recent conference.

Assaf Geva, a senior economist at the Finance Ministry, notes that by 2059, people aged 65 and over will make up 17 percent of Israel's population compared with 10 percent now. Over the same timeframe, the percentage of Arabs in the population will grow to 23 percent from 20 percent.

Without adjustments, such as raising the retirement age and increasing Orthodox and Arab employment rates – measures the government is seeking to implement – he said the debt burden will jump to 88 percent of GDP by 2059, from 65 percent in 2022.

Paltiel, of the statistics bureau, said Israel “would go bankrupt” unless the levels of employment and contributions to social security funds were changed.

Population growth has already created shortages in Israel's most precious resources – land and water – but the government is always looking for an easy solution, said Tammy Gannot, an attorney with the Israel Union for Environmental Defense.

To alleviate a water crisis Israel has invested billions of dollars in desalination plants, but they consume large amounts of energy and land.

To cope with a housing shortage, the government wants to create fast-track approval for building permits that critics say will put aside environmental concerns without considering infrastructure and public space needs.

The authorities have given the go-ahead for 20,000 Chinese workers to be brought to Israel to speed up construction. While that may help house Israelis, it may not help employ them.

Will Israel’s achievement gap stall the start-up nation?

On a foggy hilltop in Israel’s far north, near the Sea of Galilee, around 130 Orthodox Jewish boys sleep in rows of bungalows at the Kfar Zeitim farm-turned-yeshiva. The campus is run by Israel Sci-Tech Schools — the country’s largest non-governmental schools network — but it was built in large part by the boys. They’ve converted old farmhouses into classrooms, woodshops and computer and electronics labs. Between lessons, boarding-school students take therapeutic rides on one of a dozen resident horses whose corral has a lush view of Mount Arbel. These days, a litter of Siamese kittens calls the rural campus home, too.

The Orthodox students at Kfar Zeitim carry themselves a little differently than the “black hats” down in Jerusalem — they wear their pants low, their white button-ups untucked and their kippot askew. But one thing, above all others, sets the Kfar Zeitim yeshiva apart from its Torah-only counterparts in the country’s most observant neighborhoods: Throughout a 12-hour school day, Kfar Zeitim’s students take vocational classes and core curriculum subjects, like math and English, alongside religious studies.

For fear of angering Israel’s head rabbis, Israel Sci-Tech Schools at first kept somewhat secret the hilltop yeshiva, which it adopted into its network five years ago; the school didn’t even have an entrance sign. When a reporter for the left-wing Israeli newspaper Haaretz visited the school in 2013, staffers were skittish and “reluctant to reveal,” as reporter Meirav Arlosoroff wrote, “the fact that these [Charedi] boys study — hold your breath — civics.”

But if a recent tour of the Kfar Zeitim yeshiva for a minibus full of American donors and journalists is any indication, this liberal Orthodox education movement is daring, more and more, to share its success with the public. “When these guys come here … they see themselves as total failures,” the school’s head rabbi, David Bloch, told the group at a tour stop in the school’s dining hall. He explained how Israel Sci-Tech Schools has helped gather Orthodox dropouts, rebels and street kids — essentially, the only Orthodox youth whose families are desperate enough to allow them to forgo a traditional education — and integrated them into this hidden life-skills training ground.

“They come from communities, from families, where if you’re not going to be the next Rosh Yeshiva … you’re a problem,” Bloch said. “In every one of them, we try to find some talent that he has. And from this place, he starts growing also in the academic field.”

Only half of all of Israel’s children graduate high school. More specifically, only half of all Israeli children pass their bagrut tests — exit exams — with high enough scores to win them a matriculation certificate.

Israel Sci-Tech Schools now runs five such boarding schools across Israel for around 430 Orthodox youth unable to conform to traditional schooling. Many graduates have entered the workforce. They’ve also become favorites of the Israel Defense Forces — a big taboo in the eyes of most Charedi parents — for their discipline and teamwork skills. “We can’t count the times that the army tries to grab these boys,” said school spokesman Itamar Posen. “We — as a Charedi yeshiva and as messengers of the Charedi community — we don’t educate them to go to the army at all. [But] most of them do choose to go” into the army’s all-Charedi units.

And slowly, painfully, another trend has emerged: Orthodox boys in the Israel Sci-Tech Schools network have begun earning their matriculation certificates — the Israeli equivalent of receiving a high-school diploma, necessary to move on to higher education.

Last year, nine boys at Kfar Zeitim matriculated, three more than the year before. 

Charedi students currently make up about 15 percent of Israel’s high-school population, a proportion that is continually expanding. And the Ministry of Education’s most recent statistics show that, overall, only about 22 percent of today’s Charedi students — whose Orthodox yeshivot largely ignore core subjects — even bother to take matriculation exams. About 8 percent pass

“More and more Israeli students don’t have any foundation of knowledge, any basics — not in math, not in English, not in general. Especially boys and men. They don’t join the working force; they don’t join the army,” said Miriam Ben-Peretz, professor emeritus of education at the University of Haifa. “I think everyone agrees, including some parts of the Charedi sectors, that things have to change.”

This stunted Charedi minority speaks to a greater, troubling statistic in Israel, one that’s common knowledge among locals but that rarely reaches the outside world: Only half of all of Israel’s children graduate high school.

More specifically, only half of all Israeli children pass their bagrut tests — exit exams — with high enough scores to win them a matriculation certificate.

Israel is one of 34 nations belonging to the Organisation for Economic Co-operation and Development (OECD), a global organization that promotes development in already advanced countries as well as a few emerging ones, like Mexico, Chile and Turkey. They all have different ways of marking high-school graduation, so by comparison, Israel usually places well above average in the OECD index for its graduation rate. These rankings, however, do not reflect reality at home. They mask a crisis in which Israel’s large and fast-growing minority populations — especially Orthodox Jews and Arab-Israelis — lag further behind the academic elite than in any other OECD country.

Most glaringly, Jewish Israeli students scored 133 points higher than Arab Israeli students on the Program for International Student Assessment (PISA) tests in 2012. And even within the Hebrew-speaking group, students from strong socioeconomic backgrounds scored 100 points higher than those from weak backgrounds.

In short: The achievement gap between ethnicities, religions and social classes in Israel is wider than anywhere else in the developed world. And, depending on whom you ask, this gap could be reaching a point of no return.

“Together, Charedi and Arabs are half the children in Israel,” said Dan Ben-David, until recently the executive director of the Taub Center for Social Policy Studies in Israel — a mustachioed, bespectacled Israeli economist with a jolly demeanor tempered by a rough and urgent tone. “Half the kids in Israel are receiving a Third World education.”

Ben-David is known to wax apocalyptic when speaking about the future of Israel. In a lecture at the Israeli Institute of Technology (more commonly called Technion) last summer, he compared Israel to the sinking Titanic. “This country — which has some of the best universities in the world, is cutting-edge in so many fields — is falling further and further behind,” he told his audience at Technion. “This will end in tears.”

Each year, the Taub Center releases a State of the Nation Report to grade Israeli society’s come-ups and downfalls. The report for 2014, which was released in December, included some especially grim predictions for Israel’s education system.

Israel will only be able to maintain its respected academic and tech sectors, the report said, “if, and when, it will be able to channel the knowledge that it already possesses towards a much larger share of its population.

“Israel’s rapidly changing demographic landscape,” the report said, “still provides a window of opportunity, albeit a steadily narrowing one, for harnessing the country’s unique resources before it crosses a point beyond which it will be unable to adopt policies that are already challenging to implement today.”

During his six years as director of the Taub Center, Ben-David became one of Israel’s most respected big thinkers. He stepped down in January — a move he insists was nonpolitical. (“It was a great run there, and time to open up a new chapter.”) But now that he’s not with Taub, he’s free to say it: He believes Israel’s achievement gap among its students is doing even more damage than the Taub report lets on.

“With all due respect, I think he’s kind of misleading himself,” Ben-David said of Taub senior researcher Nachum Blass, who wrote the report’s section on education.

In the report, Blass highlighted Israel’s existing efforts toward narrowing achievement gaps and recommended more of the same in the future. 

Ben-David, on the other hand, believes that without “massive, comprehensive education reform in Israel,” the country’s severe income inequality and low productivity — which also ranked abysmally on the OECD index — will continue to snowball.

“There are two Israels in one,” Ben-David told the crowd at Technion. “There is the ‘start-up nation’ Israel, which is phenomenal. But there’s another Israel. And that other Israel is not getting either the tools or the conditions to work in a modern economy.”

Ben-David is not alone in his call for a complete overhaul. Gidi Grinstein, president of the influential Reut Institute think tank, believes Israel’s current model for its start-up nation, in which kids from the same slice of society rise into top tech positions, won’t stay relevant within a changing global tech industry.

“The base is too narrow without the Arabs and the Charedim,” Grinstein said in a recent interview. “The start-up nation phenomena right now is not inclusive — it’s basically exclusive. You have a small group of people in an upwardly mobile elevator, and then you have a very large group in a downwardly mobile elevator, with less access to education and technology — and therefore less prosperity.”

To keep Israel at the forefront of 21st-century innovation and industry, he said, it will be “essential to close these gaps.” 

Price per head

Toward this goal, Grinstein and the Reut Institute have set up a series of 3-D printing labs across the country, many of them housed inside existing school buildings in low-income areas. The labs are open to Israelis of all ages and backgrounds in an attempt to democratize high-tech training for the 21st century labor market. “The idea here is, there is an opportunity to educate people not in a traditional way, not in a classroom, but by doing projects,” Grinstein said. “When you do a technology project, when you build a robot, you need to master and understand multiple disciplines just to execute the project — math, electronics, chemistry.”

Electronics classrooms at an Israel Sci-Tech Schools campus in the small Bedouin village of Al-Saied draw their energy from on-campus generators, as the village is not hooked up to Israel’s electricity grid.

But Reut’s reach — at six labs and a few hundred participants — is still small. On a greater systemic level, in Grinstein’s opinion, funding inequalities between Israel’s public schools are making it near impossible to close the achievement gap.

“The biggest problem [in education] today is the way government money, both local and national, is allocated,” he said. “The pure capital investment in children is different from one place to another.”

Israeli schools are divided into four categories: 1) state secular schools; 2) state religious schools, which supplement core subjects with Judaic studies; 3) religious schools run by Israel’s Orthodox, which generally shirk core subjects; and 4) schools for Arab-Israelis.

In late November, the Israeli journal The Marker, the economic arm of Haaretz, revealed troubling disparities in Ministry of Education funding among these four types of schools. A sweeping examination of 210 sample high schools found that those for Arab-Israelis received significantly less money than those for Jews. 

Almost all of the schools on The Marker’s top 10 most-funded list were in the state-religious category (schools that combine core curriculum with Judaic studies). Meanwhile, all of the schools in the bottom 10 were Arab or Bedouin.

Campuses where more kids matriculate, and ones that offer more high-level math and science classes, the investigation showed, receive more money per pupil than low-performing schools. The Shevah Mofet high school in Tel Aviv, for instance, reportedly receives nearly $100 more per pupil per month than the Al Ahali high school in the Muslim city of Umm al-Fahm.

The Ministry of Education said in a statement to the Journal that it funds schools according to the amount and level of services they offer to students. For example, a school with better-qualified teachers putting in longer hours would receive more funds.

This reward-based funding system is similar to the No Child Left Behind Act in the United States in that it grants extra money to high-performing schools — the same ones that perhaps need the least help. Marker reporter Lior Dattel wrote of the self-fulfilling cycle in Israel: “According to the Ministry of Education’s own measures of success, better schools get higher budgets — and the schools that receive low budgets find it difficult to improve, and therefore continue to have low budgets.”

Dattel noted in his Marker report that there are some separate, specialized funds for disadvantaged students outside the ministry’s main funding system. However, he said, “The budget for classroom teaching is the central budget and the largest, and most influential on pupils.”

With full funding and a driven staff, various schools across Israel have shown that students from low socioeconomic backgrounds can thrive.

The Ulpana Bnei Akiva in Pisgat Ze’ev is a tidy, stone-built girls’ school perched on a hill in a relatively new East Jerusalem settlement — a low-income immigrant suburb beyond the green line. The students here take twice as many bagrut tests as students in the state’s secular school system, as they also must pass Judaic subjects to matriculate.

“It’s about 50-50,” said Reut Sifroni, a 16-year-old junior dressed in long sleeves and an ankle-length skirt, of the split between core and religious studies in an average school day. She currently takes level-five biology (the highest level available in Israel) and level-four math (the second-highest level available) in hopes of becoming a forensics expert like the ones on TV’s “CSI: Crime Scene Investigation.”

“I like biology, and I feel it will donate to my future,” she said.

More than 90 percent of the girls at Ulpana Bnei Akiva in Pisgat Ze’ev earn their matriculation certificates, well above the nationwide average of about 50 percent.

Sifroni has friends at the Ulpana who attended Charedi religious schools for their elementary years, but transferred to the state-religious system for high school, to open up choices for their future. “They felt out of place,” she said. “They were only learning religion. So they decided to move to a school where everybody can choose what they do.”

At the Pisgat Ze’ev girls’ school, more than 90 percent of students will matriculate, according to school officials.

The campus is run by the Bnei Akiva school operator — one of various independent networks in Israel, including Israel Sci-Tech Schools, which collects outside funds, many from American Jewish donors, to make up for fluctuations in funding from the Ministry of Education. Bnei Akiva also has deep ties to the Jewish Home party — so when former education minister Shai Piron, from the rival political party Yesh Atid, abruptly resigned in December, Bnei Akiva officials said they got a boost in the year’s funding from a member of Jewish Home who took over the books.

Stuck to one girl’s locker in Pisgat Ze’ev is a Jewish Home bumper sticker featuring a caricature of candidate Naftali Bennett, and the words: “Test didn’t go well? Bennett is your brother!”

The Bnei Akiva school network boasts an 82 percent matriculation rate across its 74 campuses (compared to the state average of about 50 percent). AMIT, another state-religious schools network — which brings in even more money from American donors —sees 80 percent of students matriculate. 

Privately run Christian schools, too, are some of the highest performing in the country. About 70 percent of Christian Israeli-Arabs matriculate — thanks in large part to extra funds from parents and tight-knit communities.

At the other end of the achievement spectrum are Arab schools in East Jerusalem, marked by extra-low matriculation rates because of their unique positioning: Many East Jerusalem students, considered “residents” but not citizens of Israel, study the Palestinian Authority curriculum instead of the Israeli one. And because they aren’t eligible to take Israeli matriculation exams, they’re also not eligible to attend Israeli universities.

The Jerusalem municipality is currently on a very public mission to change that. During a hectic tour in December for dozens of foreign reporters, Jerusalem Mayor Nir Barkat revealed a municipal “master plan that allows people to live peacefully, one next to the other.” His last stop was the picturesque Beit Hanina Girls’ School, located on the grassy edge of East Jerusalem and renovated earlier in the year to host advanced classes like physics, medicine, robotics and engineering. “We are working on a robot for a competition,” a Palestinian teacher told the reporters as students tinkered with the model. 

Barkat said he’d brought the press corps to the Beit Hanina school to “show you something that sometimes you don’t see — which is how we improve quality of life through the education system in Jerusalem.”

Jerusalem’s director of education, Moshe Tor-Paz, later told the Journal that if all goes as planned, within a few years every Arab school in East Jerusalem will offer its students the option of learning the Israeli curriculum — including potentially disputed subjects like history and culture. “We won’t convince anyone to do something he doesn’t want,” Tor-Paz said. “But if he asks for more opportunities, we can really help him do it.”

For Palestinian families, this choice — which many worry will eventually become a mandate — is steeped in symbolism. “[Israelis] don’t only want to occupy the land, they want to occupy the minds of the people — like a brainwashing,” the director of the East Jerusalem parents association told The New York Times for an extensive report on the issue last year. In the time since that article was written, the Jerusalem municipality has opened a new school in Beit Hanina — a boys’ elementary school that will be expanded to include a middle and high school, and that teaches the Israeli curriculum only.

“It’s in their best interest” to study Hebrew and other Israeli subjects, Barkat said on his tour, “and more and more parents understand that.”

The federal Ministry of Education has likewise tried in recent years to convince Charedi schools to include core studies by threatening to pull their funding if they didn’t. After one such attempt by then-Education Minister Piron, a member of United Torah Judaism, a Charedi political coalition, told the Jerusalem Post that Piron was “the most dangerous man in Israel for the Charedi community”

Ben-David, former head of the Taub Center, argues that these measures don’t go far enough. “We don’t like to think of Western countries as paternalistic, but they are,” he told the Journal. “In the U.S., you’re not allowed to prevent your kid from studying what the country believes they need to study. Israel is the only country which allows it. It’s unconscionable.”

Ben-Peretz, who received the Israel Prize for research in education and has served on many Knesset committees over the years, said that while she’s “not so optimistic” about convincing Charedis to educate their kids outside the synagogue, she’s come to be “very optimistic” about narrowing the gaps between Jews and Arabs.

However, she said, “schools in Israel have to be much more integrated” before a truly just system is possible.

That’s not a simple task: Giving Arab-Israeli students an equal education will mean desegregating a system that has been divided by race since the British Mandate era, before Israel was a state.

“When Ben-Gurion founded the State of Israel, I believe he should have made one unified school system,” Ben-Peretz said.

This would have been a logistical nightmare, as Jews and Arabs were grouped geographically with their own kind — and they’ve maintained this segregation into the 21st century. The latest Taub Center report on Israeli society found that because of severe segregation between communities, “it is no surprise that the separation in the education system is also severe.”

High-tech track

Eli Eisenberg, head of Israel Sci-Tech Schools’ research and development center on the outskirts of Tel Aviv, knows a lot about integration. He was previously tasked with overhauling South Africa’s post-apartheid education system under Nelson Mandela.

“Mandela told me, ‘If you want to be tolerant to the other, to understand the other, to work with the other, if you want to be inclusive, you have to be strong with your own identity,’ ” Eisenberg said. And in Israel, he said, this means strengthening each minority group’s own identity while at the same time integrating them into a national system.

This aim becomes trickier in practice. An Arab-Israeli student from an Israel Sci-Tech Schools campus in the north who accompanied a group of American donors for a tour of her neighboring Jewish school was confused when a Jewish student came out dressed as Theodor Herzl; she had never heard of the man. Construction-paper butterflies covering a classroom wall at the network’s campus in Um Batin, a Bedouin village in southern Israel, are scrawled with messages like “Love and Palestine.” Ameer Abu Kaf, a 16-year-old student at the school and resident of Um Batin, told the Journal: “I feel this is not my country. They give us this school, but then they destroy our homes. I don’t get it.”

“The biggest problem [in education] today is the way government money, both local and national, is allocated.”
— Gidi Grinstein, Israel’s Reut Institute president

Israel Sci-Tech Schools, which runs about 10 percent of all Israeli campuses, has made a strong push in the past few years to bring Bedouin kids, most of whom are destined for unemployment, into the fold by opening up more vocational tracks at their schools. At the network’s eight campuses in the Negev desert, Bedouin youth are training to be teachers, electricians, computer technicians and engineers.

But this career-track approach in low-income areas has reignited another debate that’s divided education reformers in Israel for years: whether vocational schooling may actually fuel the country’s devastating achievement gap.

On the evening of Dec. 2, the Israeli government was on the verge of collapse. A visibly flustered Piron, then the country’s education minister, rushed into the basement theater of Tel Aviv’s beachside Dan Hotel and stepped to a podium at the front of the room. “I have a feeling politicians forget they’re not the center [of the world],” he told the crowd.

Later that night, Piron and others from his Yesh Atid party officially announced their resignation from the 19th Israeli Knesset — a dramatic last step in a falling-out between political parties that eventually dissolved the government and that left the future unclear for many of Piron’s half-baked reforms.

But Piron had one last rant for the teachers, principals, administrators and supporters of the Israel Sci-Tech Schools network who had gathered at the Dan Hotel that night. He warned that it was not Israeli adults who would suffer most from the Knesset’s collapse, but their children. “We’re taking a large group of students in the State of Israel,” he said, with all the animation of his days as a rabbi, “and we’re sentencing them to frustration and missing out on developing their skills.”

(The approximate 2 1/2-year turnaround for education ministers is one of the “biggest barriers” to lasting reform, Piron’s fellow Yesh Atid member Ronen Hoffman later told the Journal. “It takes time to conduct reforms and implement them.”)

Before leaving the stage, Piron took a jab at the prime minister’s broken cabinet, which doubled as a promo for vocational schooling: “Too bad as part of a coalition, you couldn’t do better locksmith and welding work,” he said.

After the education minister rushed out, Uzi Tsuk, chairman of the board of Israel Sci-Tech Schools, which hosted the event, lamented: “Finally, there was someone in this education system that attributes importance to vocational education. We’ve never had that before, and now that we do, he has to leave.”

Two years earlier, Piron’s political party, Yesh Atid, had proposed that at least half of the country’s schools become “technological vocational schools.” But when Piron attempted to push this reform through, focusing on schools from lower-income areas, he was squarely blocked by fellow members of Knesset — specifically, those of Sephardic origin.

“You won’t bring back vocational education to the development towns,” politician Silvan Shalom reportedly replied. “If you want vocational education, by all means, but only if the ministers are ready to send their children and grandchildren to it. Only if vocational education is being returned everywhere will we agree: First North Tel Aviv, then Yeruham.”

Shalom was referring to a famous divide in the 1960s, ’70s and ’80s between Ashkenazic Jews, who had access to comprehensive, liberal-arts educations, and Sephardic Jews, who were funneled into vocational schools — forcing them to take blue-collar jobs without the opportunity for upward mobility. That reputation still lingers: Multiple Israelis who spoke to the Journal said Israel Sci-Tech Schools are seen as a last option for troubled kids who can’t do well in a mainstream school. “I remember who went to [vocational schools],” said Gal Fisher, educational director for Yad Hanadiv, a philanthropic foundation in Israel. “You could say on what streets they were living.”

And since then, Fisher said, he hasn’t seen “a model that convinced me it won’t happen again. Why not aim for [matriculation] for every student, and then think about vocational schools? To think of vocational schools as a replacement is a problem. … The system should aim higher.”

These days, however, the line between vocational and high-tech schools is blurred. At one Israel Sci-Tech Schools campus, located within the Israel Aerospace Industries base in central Israel, high-schoolers work alongside professional engineers and army experts to build drones and other aircrafts for use in Gaza.

High-school students based at the Israel Aerospace Industries campus in central Israel learn air-force skills well before army age. “It’s my first year here, and I’m already taking apart drone engines,” said one freshman.

Israel Sci-Tech Schools is looking to reflect this change by rebranding vocational schools as elite tracks into the skyscrapers of start-up nation. “Some vocations offered today in vocational schools are very sophisticated,” said Shai Lewinsohn, director of resource development and external affairs for Israel Sci-Tech Schools. “Today, if you’re talking about auto repair, you’re really talking about autotronics — because the cars today are computerized.”

The Reut Institute’s Grinstein, too, believes that vocational positions opened up by this second industrial revolution don’t, and shouldn’t, have the same stigma as the first. 

“In the coming revolution, all these distinctions are dead,” he said. “You’re talking about ancient views, and the world is changing.”

Israel, unions to start minimum wage talks as national strike looms

Israel's finance minister will start negotiations with the country's main labour union on Monday in a bid to avert a national strike over demands to sharply raise the minimum wage, the ministry said.

Israel's minimum wage stands at 4,300 shekels ($1,116) a month and the Histadrut – the umbrella organisation for hundreds of thousands of public service workers – is seeking a hike to 5,300.

Finance Minister Yair Lapid invited Histadrut Chairman Avi Nissenkorn and Zvika Oren, head of Israel's Manufacturers' Association for talks on Monday aimed at preventing a strike the Histadrut has set for Dec. 4 and would likely shut the airport, trains, seaports and government services.

National strikes cost Israel's economy an estimated 2 billion shekels a day.

Lapid, in a meeting with Nissenkorn on Friday, said he supports a rise in the minimum wage and helping those at the bottom of the wage scale.

He has said in the past that he would support a rise to 4,500 shekels a month. Economy Minister Naftali Bennett also has expressed support for a higher minimum wage.

According to the Organization for Economic Co-Operation and Development (OECD), Israel's real minimum wage was in the middle of the pack – 12th out of 25 countries in 2013. In dollar terms, it was $14,291 a year in 2013, just behind the United States' $15,080.

This placed Israel well behind Australia, with the highest annual minimum wage at $30,389, Luxembourg, the Netherlands, Belgium, Ireland, New Zealand, France, Canada, the UK and Japan.

But it was well above Mexico, the lowest at $1,285, Chile, the Czech Republic, Estonia, Hungary, the Slovak Republic, Poland, Turkey, Portugal, Greece, Spain, Korea and Slovenia.

Nissenkorn called Israel's minimum wage a “starvation wage” and said it was the country's main problem.

“I do not see government ministers or Knesset (parliament) members capable of surviving a month on 4,300 shekels,” he said, adding that he would not accept a monthly rise of 200 shekels.

Oren said he favoured a hike in the minimum wage as part of a comprehensive agreement that reduces the employers' tax and allows for more flexible working hours.

He said he opposed a strike “because it does not allow for real negotiations”.

The minimum wage was last raised by 200 shekels a month in October 2012.

1 US dollar = 3.8535 Israeli shekel / Editing by Raissa Kasolowsky

Israel launches a virtual coin

This story originally appeared on

A virtual currency called “Bitcoin” has become popular in the past few months. Traded digitally, it can be used instead of money. Today, the Bitcoin is trading at about $530.00.

“Every time I go to buy something the person behind the counter doesn’t have change,” Tzvi Ben Yakov, a Bitcoin service provider in Israel told The Media Line. “The Bitcoin can be divided into eight decimal places – that’s tiny tiny pieces of a Bitcoin.”

In some ways using Bitcoin is like using a credit card, but with lower fees.

“Here in Israel, there’s only one credit card clearing company and they decide what the fees are,” Ben Yakov said. “With Bitcoin, the fees are so small that you don’t even notice them. You can transfer Bitcoins for free.”

While Bitcoins are a universal virtual currency, some countries, including Iceland, Cyprus and Spain, also have their own particular type. Now Israel is set to join that club, with the launch of “Isracoins” this week.

“The idea is to create a currency for the citizens of Israel that will help the Israeli economy,” Amnon Dafni, one of the six founders of Isracoin told The Media Line. “There is no competition in the banking system here so fees are very high and every time you want to move money it costs a lot of money.”

Dafni is active in the social protest movement that began in the summer of 2011 when hundreds of thousands of young Israelis protested in Tel Aviv against the high cost of living. Those protests have fizzled out, but the cost of living remains a major issue for many here. Relative to average salaries, the cost of buying an apartment is higher in Israel than in any of the Organization for Economic Cooperation and Development (OECD) countries.

Like Bitcoins, Isracoins are cryptographic, meaning they are created by a computer that anyone can download. Once the system gets underway, 72,000 coins will be released daily up to a total of 4.8 billion over several years.

To encourage its use, Dafni says they will give away 100 coins to each of 2.8 million Israelis over the next few months. The first 50,000 businesses that agree to use the virtual currency will get 500 coins. He says “dozens” of businesses have already expressed interest and hundreds of Israelis have already gone online to download the necessary software.

Some are skeptical that the Isracoin will be able to break the strong banking monopoly in Israel. In Iceland, the alternative currency was used to bring down inflation. But the Israeli currency, the shekel, is the strongest it’s been in years.

“The developers of Isracoin are trying to create something new, but it’s a bit of a publicity stunt,” Orr Hirsachague, a technology reporter for the Ha’aretz newspaper told The Media Line. “But that doesn’t mean there is no chance that it will work.”

Israelis are well-plugged into technology and Israel has a large amount of high-tech start-ups. In the past year alone, there have been more than two dozen start-ups with tools to use Bitcoin. The idea of a digital currency could be accepted here faster than in many other countries.

At the same time, the Bitcoin has shown itself to be very volatile. In late 2013, it hovered around the $1,000 mark for one Bitcoin. In September it was $150, and is now about $530.

In a recent statement, Israeli monetary authorities warned the public that the Bitcoin is unsupervised, and could be used for fraud. Because it is transferred digitally and anonymously, they also warned it could be used for money-laundering and other fraudulent activities.

Keeping Start-Up Nation alive: Financing scale-ups by reinventing Israeli capital markets

This piece will appear in Hebrew in Globes Magazine on Dec. 7.

Tel Aviv Stock Exchange Liquidity

The historic 2010 dual graduation of Israel to developed country status both within the OECD and MSCI country indexes should have opened its markets to a much larger pool of foreign investors. Instead, there has been a real decrease in foreign portfolio investment and an increase in local portfolio outflows, reducing the future of the local capital investments and overall economic growth.

In the wake of the global economic crisis, Israel’s capital markets have suffered a decline in liquidity threatening its economic security and future growth.   Without capital market liquidity, Israel will never reach its growth potential to move from a start-up to a scale-up nation and global leader in new technologies that will contribute to global and, thereby, domestic growth. The liquidity in the Tel-Aviv Stock Exchange has declined by over 50 percent in the past year, ranking a low 30th among exchange turnover ratios.

The IPO market has collapsed.  Currently, IPOs are not an option for most Israeli firms because of the high regulatory costs in the NASDAQ and their very low valuations in the Tel-Aviv Stock Exchange (TASE).  From 2002 to 2012, only 9% percent of Israeli exits with an average IPO size of $32 million occurred through IPOs, versus over 20 % percent in United States with an average IPO size of $237 million.  According to the Israel Securities Authority, 95 percent of the country’s startups are sold through mergers or acquisitions to foreign entities. Fewer firms are listing in the Tel-Aviv Stock Exchange (TASE).  Regular delistings are costing the markets billions of shekels in investment opportunities that could drive growth.

Israel’s capital markets are chronically underperforming.   For example, earnings per share for the TA 100 has had growth of 2.0 versus 8.4 for the S&P 500;  PE (price to earnings ) ratios run seriously behind comparable benchmark indexes and on an aggregate basis as well.   Israel capital markets are failing to attract and retain foreign investors in its capital markets, and as a result, they lack breadth (diffusion of foreign investors) and depth (amount of portfolio and foreign direct investment flows).

It’s time to reinvent Israel’s capital markets.   Time is short to accomplish the following: increasing transparency and accessibility to foreign investors, creating new financial products such as Exchange Traded Funds to enable more exposure to foreign investors, fixed-income products that support economic expansion in Israel’s regions and new technologies,  expanding private equity through public markets such as venture trusts and business development corporations for underfinanced firms, and build a technology bridge to institutional investors for pre-IPO companies through new trading platforms.  In taking these measures, Israel can relaunch its capital market for its own expansion in disruptive technologies that will serve the world and also finance other nations’ start-up firms that seek to emulate Israel’s rise as the first start-up nation.

Israel now captures only a small portion—often limited to high-end R&D—of the global technology value chain. And while the country is known for its R&D, its startups have not been as successful commercializing the products and discoveries that would build more businesses, new sectors, and secondary markets, and gain for Israel a greater share of the product value chain. This hampers long-term growth.  If Israel could resolve the market-related financing gaps so that startups could overcome capital constraints, this would also strengthen the country’s position as a global incubator for companies at home and abroad.

How can Israel’s capital markets become active partners in the launch of new technologies to increase portfolio and foreign direct investment? Can instruments be designed that allow institutional investors access to the latest technologies without forcing companies into premature M&A activity or low IPO valuations? What are the regulatory, institutional, legal, tax, and market infrastructure requirements for building a sustainable financial services landscape to support new technologies?

Too many of the innovations and intellectual property created by Israeli R&D are expatriated.  Despite high levels of patent productivity relative to R&D spending, the transition from patent productivity to long-term value through capital formation and job creation isn’t occurring. In short, an Israeli company develops an innovative technological product or process, but it can’t yet commercialize that technological product or process and apply it to new sectors to repeat its success in information and communication technology in new sectors of food, health, water and energy.  That economic benefit is enjoyed by companies elsewhere in the global value chain and technological mojo moves on.

To build a global nation, it is not enough to incubate startups. Israeli venture capital and private equity are highly concentrated in the seed and early stages of business development (80 percent versus 52 percent in the United States), but little is available for later-stage growth.  Late-stage investing comprises only 20 percent of invested capital, compared to 52 percent in the United States.  Yet late stage is when the impact of a company’s development is most crucial—when the company should start monetizing its product to ensure sustainability.

The sold startups also have low value-at-exit.  Research on exit ratios, which measure pre-money valuation (prior to financing) divided by the total VC investment price (prior to exit) suggests that Israeli exit ratios are below those in the United States and Europe. Israeli companies are going to market too fast—without the opportunity to accumulate the value that would attract higher valuations. And they cannot accumulate that value because they cannot obtain later-stage venture or private equity capital, and they are not allowed to access the public markets for growth capital. When companies are forced to make premature exits, they lose the opportunity to realize full potential for economic growth.

In short, the lack of late-stage financing, along with human capital constraints, is leading Israeli startups to premature exits through mergers and acquisitions. Knowledge-based capital firms and their exports, the heart of Israel’s competitive advantage, require a longer financial runway to takeoff in building global companies.

Israel can increase the value of its capital markets by adopting financial policies that increase liquidity, and encouraging firms, through regulatory and tax regimes, to pursue more transparent disclosure policies and thereby attract new capital.

Prof. Glenn Yago is a Senior Fellow at the Milken Institute and Senior Director at its Israel Center where he leads its Fellows program of research and training for young Israeli economists.  He is also a visiting professor at the Hebrew University of Jerusalem Graduate School of Business Administration.

Karnit Flug, first female Bank of Israel chief, eyeing economic inequality

Andromeda Hill is a beachfront complex of luxury apartments connected by tree-lined pathways that features such amenities as a spa and business center. Five minutes down the road is Ajami, a low-income neighborhood profiled in the 2009 film of the same name that remains one of this city’s poorer districts.

Such gaps in income have been of mounting concern to Israelis and are high on the agenda of Karnit Flug, the newly appointed governor of the Bank of Israel and the first woman to hold the post.

In two recent presentations, Flug has drawn attention to income inequality in Israel and its potentially adverse impact on social cohesion.

“Our ability to continue existing as a society that is both multifaceted and socially cohesive depends, among other things, on how employment develops in Arab society in the next few years,” Flug said at a government conference on Israel’s minorities last month. “If we know how to maximize the potential for increased growth and how to reduce the gaps, we will all — Jews and Arabs — be able to enjoy the fruits of this process.”

The Occupy protests that swept the world in 2011, decrying the exploitation of the “99 percent,” demonstrated that Israel is not alone among developed countries in facing large inequities in wealth distribution. But among the 34 countries in the Organization for Economic Cooperation and Development, Israel ranked 30th in terms of wealth inequality.

A 2011 report from the OECD found that in 2008, Israel’s top 10 percent of earners earned 13 times more than the bottom tenth. The report recommended “creating more and better jobs that offer good career prospects and a real chance for people to escape poverty.”

Flug agrees. Israel’s high income inequality, she says, is a function of low educational attainment and high unemployment among Israel’s poorest communities — Arabs and haredi Orthodox Jews. The explosion of Israel’s high-tech sector in the mid-1980s created many jobs for highly educated employees but left behind the poor and unskilled.

“Inequality in disposable income distribution rose until 2006 before stabilizing at a very high level,” Flug said last week in a presentation at the Taub Center for Social Policy Studies in Israel.

Growing the job market while maintaining a social safety net have been twin goals for Flug, who holds a doctorate in economics from Columbia University. After a four-year stint at the International Monetary Fund, Flug joined the Bank of Israel in 1988 and became its deputy governor in 2011, serving under the well-regarded Stanley Fischer, who departed earlier this year.

After a lengthy selection process in which Flug was passed over multiple times, Israeli Prime Minister Benjamin Netanyahu appointed her to the bank’s top post in October.

Flug has served on government committees on the defense budget, market competitiveness and the National Insurance Institute. She also served on the Trajtenberg Committee, which was tasked with formulating a response to widespread protests in 2011 over the rising cost of living.

The protests were partly a reaction to nearly a decade of privatization and cuts in public benefits. Founded on socialist values, Israel in its early years had a strong safety net and lionized the collectivist ideals of the kibbutz movement. But in the mid-1980s, Israel began to embrace free-market policies and privatize key state-owned companies. The outbreak of the second intifada by the Palestinians led to an economic crisis that prompted the government to cut entitlement spending.

The 2011 demonstrations called on the government to restore the safety net. In its report, the Trajtenberg Committee recommended various measures, including raising the capital gains tax, increasing government aid for housing and free early childhood education.

In her presentation at the Taub Center, Flug recommended against direct government transfer payments to poor citizens, but she is in favor of Israel’s negative income tax, which provides a tax credit to low wage earners. Flug believes the measure incentivizes work.

As governor, Flug’s ability to implement such policies is limited. Like the U.S. Federal Reserve Bank, the Bank of Israel’s function is to set the country’s monetary policy. Taxes, subsidies and incentives for job creation are determined by the Israeli government.

But Flug could still have an impact. Jack Habib, director of the Myers-JDC-Brookdale Institute, a think tank that researches poverty in Israel, said Flug could advocate for reforms that bolster Israel’s minorities.

“There’s a lot more attention paid to social issues, social inequality, poverty and disadvantaged groups,” Habib said. The Bank of Israel plays “an important role in putting these issues on the agenda of the government.”

Social protest leaders hope to shake up Israel ballot

They are young and they are driven. They got half a million Israelis out on the streets demanding social justice. Now they want their votes.

The leaders of a grassroots social protest movement that swept Israel in 2011 have shot to the top of a rejuvenated Labor party that polls say will at least double its power in a January 22 general election that Prime Minister Benjamin Netanyahu's right-wing Likud is forecast to win.

“The next stage is to continue what started in the streets, to bring that to the ballot … so that we can translate it into achievements in budgets, laws and a change of policy,” said 32-year-old Itzik Shmuli, who as head of the student union was one of the most prominent leaders of the protest movement.

It began with a handful of youngsters who pitched tents along Tel Aviv's luxurious Rothschild Avenue to protest against high housing costs. Eventually, hundreds of thousands of Israelis demonstrated weekly across the country.

Inspired also by the Arab Spring that swept the region, the protesters, chanting “the people demand social justice”, dominated headlines in Israel in the summer of 2011, and posed a new challenge to the government.

Political parties soon saw potential vote magnets in the movement's leaders, who were often portrayed in the media as idealists with just the right mix of innocence and savvy to promote a message of hope and change.

Shmuli quit the student union this year to win the number 11 spot on Labor's list of parliamentary candidates, running a distant second to Likud in the upcoming election.

“The answer the government gave was a thin, cosmetic and cynical one. They did not want to truly deal with the problems raised by the protest,” Shmuli said.

Israel has a relatively low unemployment rate of 6.7 percent and a growing economy, but business cartels and wage disparities have kept many from feeling the benefit.

In parliament, Shmuli and his allies hope to push affordable housing, reform the education, welfare and health systems and to narrow the gap between rich and poor in Israel, which the Organization for Economic Cooperation and Development (OECD) has said is among the highest in developed countries.

In response to the protest, Netanyahu, a free market champion and fiscal conservative, vowed to revamp the economy and lower living costs. Some of the government's steps have eased the pain for the middle and lower classes.

But other measures are moving slowly or have had no major effect. With rising food and fuel prices, few feel significant change in the cost of living since the protest.

“It means that we were mistaken when, as a young generation, we thought we could avoid sitting in the places where we make the most important decisions,” said Stav Shaffir, 27, another of the movement's leaders.

Shaffir is now eighth on Labor's list. Polls show that like Shmuli, she will be a member of Israel's next parliament, with her party winning about 16 to 20 of the 120 Knesset seats.

“There is something pure and beautiful about a popular protest,” Shaffir told a group of students in December. “But the change it brings comes only after generations … and we don't have that time if we want to change policy.”


Shaffir lives with four roommates in a Jaffa apartment. Shmuli moved to the run-down town of Lod last year to set up a student community outreach program. Both say they have no intention of changing their dwellings after becoming lawmakers.

At the protest's peak, Shmuli addressed about half a million people at one of the biggest rallies ever held in Israel. He spoke to the cheering crowd about “The New Israelis”, who will fight for a better future and social equality.

But that was in September 2011. The question now is whether the “New Israelis” who cheered for Shmuli will turn up to vote for him.

The summer of 2011 marked one of the only times that social-economic issues consistently topped the agenda in a country whose population of 7.8 million is usually preoccupied with matters of war and peace.

Yariv Ben-Eliezer, a media expert at the Interdisciplinary Center Herzliya, a college near Tel Aviv, says those issues have once more taken a back seat.

In November, Israel carried out an eight-day offensive in Gaza with the declared aim of ending Palestinian rocket fire into its territory. The same month the Palestinians relaunched their statehood bid at the United Nations and won great support.

“Before the (Gaza) operation, Labor was rising in the polls and Likud was sliding. There was a feeling that the social protest should be moved into politics. But the main issue has gone back to being defense,” Ben-Eliezer said.

Shmuli disagrees. Called up to the Gaza border for reserve duty during the offensive, he took shelter with fellow soldiers under their tank when rockets from Gaza hailed down.

“While all these missiles were flying over us, we had to find a way to pass those 10 minutes under the tank – and what did we talk about? About housing and about the high living costs.”

Many of the protesters came from the middle class, which bears a heavy tax burden and sustains the conscript military.

“We will always be there for our country – whenever it needs us, but the big question is, when we are out of our uniforms, will the state be there for us?” Shmuli said.

Tamar Hermann at The Israel Democracy Institute, a Jerusalem think tank, said a Netanyahu election win would not spell defeat for the social protest movement.

“Now we see the social-economic issues taking a much more significant role in the discussion over the future of the country,” Hermann said. “All the parties feel obliged to relate to the issues that were raised by the protest movement.”


Israel's election had been set for late 2013 but the government failed to agree on a state budget, which it said would require harsh austerity steps.

Netanyahu called an early vote in what commentators said was an attempt by the prime minister and partners in his governing coalition to avoid the risk of going to the polls after imposing unpopular cuts.

Labor has focused its campaign almost entirely on social and economic issues, and its projected gains in parliament are largely attributed to the protest movement.

If Netanyahu, against the odds, chooses to include Labor in his next government, some of the movement's demands will undoubtedly be part of that deal, said Yossi Yonah, a Labor candidate who has advised social protest leaders.

Labor chief Shelly Yachimovich, an advocate of a welfare state, has not ruled out serving in a Netanyahu administration. But the option seems remote given their opposing economic views.

Looking ahead to likely budget cuts after the election, Yonah predicted such steps could revive and bolster the protest movement, if it combines civil action on the streets with a combative parliamentary opposition to Netanyahu.

“The protest's impact cannot be judged after only one year,” Yonah said. “Eventually something must give.”

Both Shaffir and Shmuli hope to draw young people who are disillusioned with politics to come vote.

“Our parents brought us up to believe that if we work hard, study and try then everything will be okay, we will succeed. But when we grew up, when we were released from the army, we looked around and this society we were told about was gone,” Shaffir said.

Instead, she said, they found corrupt politicians who were not looking out for young people's interests.

The tents that Shaffir helped pitch are long gone and life has returned to normal on Rothschild Avenue, which is lined with banks, shops and cafes.

“We need to make politics sexy again,” Shaffir said, sitting on a bench on the trendy avenue filled with people walking their dogs and riding bicycles.

Writing by Maayan Lubell; Editing by Jeffrey Heller and Janet McBride

Report: One-quarter of Israelis—and 37 percent of kids—live in poverty

The numbers tell a consistent storyline: Nearly one in four Israelis lives in poverty.

A report last week by Israel’s National Insurance Institute showed that 1.8 million of Israel’s 8 million people live below the poverty line.

In 2011, the year for which the report was issued, more than 36 percent of Israeli children were poor, a jump of 1 percentage point from the previous year. Poverty afflicts more than 400,000 Israeli families – including almost 7 percent of families with two working people.

Among developed countries, these numbers are unusually high. Israel has the second-highest poverty rate in the developed world, behind only Mexico, according to statistics from the Organization for Economic Cooperation and Development, or OECD.

“There’s a very large segment of the Israeli population that isn’t receiving tools they can use in the modern economy,” said Dan Ben-David, executive director of Israel’s Taub Center, a think tank that released its “State of the Nation” report last month — which analyzed Israeli socioeconomic policy. “It’s not only bad for them, it’s also become a huge problem for the country over time. They’re dragging down our productivity and growth.”

Israel’s relatively high poverty rate stems in large part from two sectors of the population that are especially poor: Israeli Arabs and haredi Orthodox Jews, who have poverty rates of 53 and 54 percent, respectively. Israeli Arabs constitute about a quarter of all Israelis, while approximately 10 percent of the country is haredi.

The Israeli government defines the poverty line as individuals who have expendable income of about $9,500 annuall after taxes – which is approximately 50 percent of the median Israeli expendable income. Exactly 24.8 percent of Israelis, or 19.9 percent of families, live in poverty.

By comparison, the United States is fourth-highest on the OECD’s list, with a family poverty rate of about 17 percent, according to the OECD's standard. Twenty-three percent of U.S. children live in poverty.

In Israel, poverty usually does not mean starvation. Unemployment in Israel is at 6 percent, and one of the country’s socialist legacies is a strong safety net for the poor, sick and elderly. Israeli economic policy has, however, turned more conservative in recent years.

Food line

People waiting in line for food packages at a distribution center for the needy in Lod, near Tel Aviv, September 2012. (Yonatan Sindel / Flash90)

Shlomo Yitzhaki, Israel’s government statistician, says higher-than-average birthrates among haredi and Arab Israelis is the principal reason for their high poverty rates.

“If you look at income by family size, as the families get bigger, from five members and up, total family income gets lower,” he said.

Arabs and haredim are also exempt from Israel’s compulsory military service, which makes it harder for them to find work in a culture where army service often serves as a career starting point, allowing people to network and in some cases gain specialized skillsets.

Ben-David says Israel’s problems aren’t limited to minorities and that the state needs to invest in education and transportation infrastructure.

In the summer of 2011, hundreds of thousands of Israelis took to the streets to protest the high cost of living and growing wealth inequality in the country, which were seen as hurting the middle class. Though the issue has gotten a lot of attention in Israel’s current election campaign, it does not dominate headlines the way it did during the 2011 protests.

Last month, Israeli Prime Minister Benjamin Netanyahu announced a new commission of government ministers to streamline socioeconomic reforms. He did not specify what those reforms would be.

Ben-David said Israel’s security needs often make it hard to find enough money to address the country’s other challenges. Defense spending makes up about one-fifth of the total budget, and social service spending adds up to about two-fifths.

“That we have such a high defense budget means we have to be judicious with the rest,” he told JTA.

Nonprofit groups here have stepped in to alleviate poverty in Isael, including many managed by haredim. But Yoram Sagi Zaks, founder of the Movement for the War on Poverty in Israel, says the government still needs to take primary responsibility for helping the poor.

“The nonprofits help people, but they need to supplement the state, not replace the state,” Zaks said. “Poverty is not a fate. This is not something we need to get used to.”

Irish pro-Palestinian group petitions OECD

An Irish activist group has lodged a formal complaint accusing Ireland’s largest company of “complicity” in what it said were violations of international law in Israel.

The Ireland Palestine Solidarity Campaign, which filed the complaint with the Organization for Economic Cooperation and Development, has asked the OECD to investigate building materials firm CRH for providing cement and equipment for the construction of what it calls the “illegal” separation barrier, settlements and checkpoints.

The complaint alleges that CRH, through its 25 percent stake in Israeli company Mashav, which owns the major cement producer Nesher, is directly contributing to the violation of Palestinian human rights.

In response to the accusations, CRH chairman Kieran McGowan told shareholders at the group’s annual general meeting Wednesday that the company was not in breach of international law.

“CRH is very aware of its responsibilities under international law,” he said. “We continue to act responsibly and in the interests of shareholders.
Israel is a very small investment for us.”

Meanwhile, artist Robert Ballagh, who designed the set for the Irish dancing company Riverdance, will not go on tour to Israel with the company, in observance of a cultural boycott in support of the Palestinians.

Ballagh said in an open letter that he will donate any royalties he receives for the Israel performances to a fund to support an Irish boat that is joining a flotilla attempting to break Israel’s naval blockade of Gaza, the Irish Times reported.