Growth Leaves the Working Poor Behind

The poverty report published by the National Insurance Institute (NII) on September 4, 2007 registered a slight improvement: Israeli households beneath the poverty line (NIS 5500 per month—$1341—for a family of four) declined from 20.6% of total households in 2005 to 20% in 2006.

A closer look reveals a mixed picture: the decline was achieved by a slight increase in old-age pensions, which brought thousands of elderly households just over the poverty line. On the other hand, among families with a single breadwinner, 7000 more became poor, and the number of those who became poor despite the presence of two working members grew by more than 2000. Today more than 40% of poor families in Israel are families who live on wages, not welfare. Their number is growing.

In short, the reduction in poverty was achieved among families that live on welfare payments, not among those that participate in the work force.

The adverse labor market, a result of the neoliberal agenda adopted by Israeli governments since 1985, produces poverty. This fact stands in clear contradiction to the central claim of the Finance Ministry, which holds that by moving from welfare to jobs—any jobs—workers will escape the poverty circle.

There are more than a million unorganized workers in Israel's labor force of 2.6 million. No collective agreement protects them. No union defends them. They work without basic rights.

In the Arab sector the situation is more severe. Here the report shows a large increase in the number of poor households: 9000 more Arab families fell below the poverty line last year. The rise in the number of poor households having one breadwinner—from 139,000 in 2004 to 162,000 in 2006—took place chiefly in the Arab sector.

Here are related points from the NII report, gleaned by Sever Plotzker, economics editor of Yediot Aharonot (September 5):

The number of poor Jewish families declined by 15,000 from 2004 to 2006, while the number of poor Arab families grew by 20,000.

Arabs, who make up almost 20% of Israel's population, are nearly 50% of the poor population, compared to 40% in 2004.

In 2004 Arab children were 47% of 714,000 poor children in Israel. In 2006 they were 52% of 800,000 poor children.

Plotzker writes: "As poverty in Israel has become increasingly more 'Arab,' it has also become the 'poverty of workers.' When a Jew finds employment, the remuneration for his work is enough to lift the family above the poverty line. This is reversed in the Arab sector. Those joining the workforce receive such pitiful remuneration that their income does not enable them to lift their families above the poverty line."

The present situation in the labor market lines up with these figures. Many Arab families could surmount the poverty line if both parents worked. Only 18% of Arab women work, compared to 55% of Jewish women. The reasons are not merely cultural. Among WAC's Arab female members who have recently gone out to work, we find that the grind of poverty overcomes the tradition that the woman's place is in the home. The impediment, rather, is government policy. Today agriculture could immediately provide jobs for tens of thousands of Arab women who want them. But despite much talk about bringing these women into the labor market, the government continues to permit the import of unorganized, exploitable foreign workers in agriculture.

The construction industry provides a different kind of example. Here government policy has significantly reduced the number of foreign workers, but they have been replaced by Israeli Arabs employed through subcontractors and personnel ("manpower") agencies. Such workers get no social benefits or safety protection, with the result that many have remained below the poverty line.

Government policy, which unfortunately receives the support of the Histadrut, perpetuates the exploitation of those who work under subcontractors and personnel firms. On the day following publication of the poverty report, the Finance Ministry and the Histadrut held talks toward postponing once again the implementation of a law, passed three years ago, which was intended to ensure the rights of people working for personnel agencies. Likewise, a government decision to raise the minimum wage has not been implemented.

In order to change direction and reduce poverty, four concrete steps are needed:

1. The government must set an example and stop employing a large proportion of its own workers through subcontractors and personnel firms. These workers, and all such workers, should be employed directly by their places of work. This step will result in higher salaries and full benefits.

2. There must be an end to the importation of foreign workers and equalization of conditions for those foreign workers who are already here.

3. There must be a significant rise in the minimum wage, which has become, in effect, the maximum wage in many fields.

4. Construction firms that bid for contracts should be required, as a precondition, to employ their workers directly and in accordance with the existing collective agreement for construction.

These changes can be accomplished quickly and with relative ease. As long as the government avoids them, its talk about a war on poverty is empty air.