Two million Israelis have reported a loss of income due to COVID-19, according to a new study by the Israel Democracy Institute (IDI).
These include almost 20% of business owners who had to close either temporarily (14.4%) or permanently (5.4%) and 53% of Israelis between the ages of 18-24 who suffered a decline in earnings. Overall, a third of Israelis have suffered a loss of income.
The study arrives on the heels of another one by Latet-Israeli Humanitarian Aid, which said middle-class Israeli families are two years away from poverty and that the real effects of the recession will only be felt in 2021. (Latet in Hebrew means “to give.”)
Some families might require food aid within seven months, the report said. Even in families where one breadwinner is able to maintain his or her job, poverty might be unavoidable, it said.
“It’s not possible to address basic needs when the main source of livelihood has been lost,” Latet CEO Eran Weintrob said.
Describing the “corona poor” as being in “free fall,” he said Israel might end up with a “much poorer middle class than Israeli society can maintain.”
Israeli consumption dropped 43.4% in the second quarter of 2020, the Central Bureau of Statistics reported Sunday. Prime Minister Benjamin Netanyahu and Finance Minister Israel Katz reacted to the report by approving NIS 8.5 billion in benefits as part of the Safety Net plan.
The plan is intended to create 10,000 new jobs and is part of a larger national effort to support business and consumption. To prevent the middle class from shrinking, many economists say there must be stable sources of steady income, and it is not enough to offer vacation benefits. The logic is that people usually save benefit money that is given from time to time, but they use dependable income to purchase goods and services.
One out of five Israelis has reduced their food expenditures during the coronavirus crisis, while requests for aid increased 116%, Latet reported.
The need to ask for food aid was seen as a mental breaking point, as people in such a situation find themselves on the verge of hunger despite their previous success or hard work, Latet reported.
In a social-media posting, Israeli model Michael Lewis wept and said he could not pay his taxes and would prefer to go to prison “because at least there they’ll give me something to eat.” Hunger “can happen to anyone,” Weintrob said.
Unless sources of income can be found to protect the middle class, paying unemployment until June 2021 will only delay recipients’ slide into poverty by six months, the Latet report said.
The crisis is cutting into the savings of many Israelis, with 27% saying they will have to use them up to cover expenses, the IDI report said. Among those who do have some money, 40% said it would only last until the end of September, the report said.
“There is no person in the Israeli government responsible for reducing poverty,” Weintrob said, and “there is no government goal to reduce it.”
In early August, it was reported that Netanyahu was considering offering former finance minister Moshe Kahlon the position of being an “employment czar” to oversee the recession and national efforts to pull Israel forward. The report was denied by both men.
Regarding hi-tech, 8% of workers in that sector lost their jobs, compared with the national average of 16%, the IDI reported. Those with formal education in technical studies suffered less loss of income (25%) than those with an average education (31%). Hi-tech workers also were the largest group with money to use (69%), the report said.
The dramatic news about the Abraham Accord and the expected increase in trade between Israel and the United Arab Emirates led some Israelis to hope that the hi-tech sector, with upcoming agritech and cybersecurity deals, might encourage a trickle-down effect to the rest of the country.
Thirty-five percent of Israelis expect the economy to bounce back to its pre-COVID-19 levels by the end of the year, according to the IDI study.
While such developments would be outstanding, Weintrob said the state should prepare for a dire situation, meaning that instead of lining up at Ben-Gurion Airport to close deals in Dubai, Israelis may be lining up at soup kitchens.