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The Coronavirus Crisis and Its Impact on Women in the Labor Market: Permanent Damage or a Short-Term Setback with Long-Term Potential?

Executive Summary

With the outbreak of the coronavirus and the shutdown of the economy, many workers were laid off or put on unpaid leave. This study looks at the impact of the crisis from a gender perspective, and shows that the economic shutdown resulted in higher rates of unemployment among women than among men; although women make up just under 50% of employees in the economy, they accounted for 56% of unemployment claims between March 1, 2020 and May 10, 2020. This result is likely to harm the progress made in women’s employment rates in Israel as well as their wages.

Before the coronavirus outbreak

Prior to the outbreak of the coronavirus, Israeli women worked at higher rates than the average in the OECD alongside having high fertility rates, and the hourly gender wage gap had been declining.

  • The average employment rate among Israeli women has risen by 20 percentage points over the last 30 years and stands at 75% (84% among non-Haredi Jewish women). This rate is higher than the OECD average (66%), and employment is growing at a faster rate than in the OECD.
  • Israel has the highest birth rate in the developed world, at 3.1 children woman, and employment rates among mothers of young children are high.
  • The hourly gender wage gap in Israel decreased from 17.3% in 2008 to 15.8% in 2017.
  • In 2018, about a third of Israeli women were employed part-time compared to 13% of men; even among people working full-time, women work about 10% fewer hours than men.

Job losses during the coronavirus crisis

Between March 1 and May 10 of this year (2020), 875,000 unemployment claims were filed by workers ages 20-67; about 487,000 (56%) of these were filed by women. More women losing their jobs seems to be a global phenomenon, yet in Israel this does not appear to be because of women’s tendency to work in vulnerable sectors of the economy (as proposed in other countries).

  • Israeli women have been hit harder than men across nearly all sectors: in 18 of the 19 industries in Israel (except for real estate), the share of women filing unemployment claims was higher than their share of positions in the industry.
  • For example, in the health field, 83% of unemployment claims were filed by women, while their employment share in the industry is 76%. In the information and communications industry, 54% of claims were filed by women while their employment share in the industry is only 41%.
  • Young women were particularly hard hit by the crisis – 60.5% of women ages 20-24 versus 39.5% of men of the same age.

Women may have been most harmed by the crisis – more likely to lose their job or be sent home on unpaid leave ­– because they tend to work fewer hours, hold part-time positions, be employed in less senior positions, earn less, and have more difficulty accruing tenure as a result of periods of maternity leave.

  • Among working parents, women average 23 weekly work hours while men work 36 hours.
  • In most households, women are the secondary wage earners.
  • With schools and daycares closed, many families may have chosen to sacrifice the woman’s employment to take care of children: 46% of unemployment claims were by households with at least one child under age 18; 18% by households with a child under 2 years old.
  • Single mothers have been particularly harmed by this situation.
  • Job losses seem to be more pronounced among Jewish women, with Haredi women hit particularly hard. The share of job seekers who are women in the Arab sector did not change much between the months leading up to the crisis and during the peak in March-April 2020.

Changing workplace and household norms during coronavirus – long-term opportunities for women:

The quick adoption of teleworking during this period is likely to revolutionize the labor market, allowing more flexibility and lessening the need for a physical presence in the workplace – work conditions that may draw more women to higher paying fields where teleworking was less acceptable in the past. Additionally, more men were exposed to the routine of childcare during this time as they shifted to working from home during the shutdown, which may lead to long-term changes in the gender norms around childcare and household tasks.

  • A CBS survey conducted at the end of April found that 61% of high-tech workers and 46% of workers in the finance and insurance industry – two of the highest paying sectors – were working from home on the day of the survey, versus 15% or fewer in other industries.
  • A third of high-tech companies expressed interest in widening the use of teleworking even after the crisis passes. In contrast, the finance industry – where the lack of workplace flexibility has been noted as a principal factor influencing the gender pay gap – expressed less enthusiasm about continuing telework; the share of employees working from home sank from 46% in late April to just 10% in early June.
  • In 2018, in dual-working households, women spent an average of about 43 weekly hours on childcare and household tasks while men spent only about 27, but initial studies in Israel and elsewhere show that men are spending more time on childcare during the crisis.

A major concern arising from these trends is the potential for long-term damage to both women’s employment rates and the gender wage gap, as previous recessions have shown that job losses during a downturn can cause a long-term reduction in future earnings.

At this stage, it is most important for policy makers to ensure that the unemployment period will only be temporary for as many workers as possible so that they do not withdraw from the labor market. For employees who cannot return to their jobs, it is important to create opportunities for improving skills, which will help these workers find better employment in the future. At the same time, it is important to encourage employers to continue allowing flexibility in the workplace and remote work.

Press Release: The Coronavirus Crisis and Its Impact on Women in the Labor Market: Permanent Damage or a Short-Term Setback with Long-Term Potential?

Click here for the full research

With the outbreak of the coronavirus and the shutdown of the economy, many workers were laid off or put on unpaid leave. In May, with the reopening of the economy, about 200,000 employees have returned to their workplace, but hundreds of thousands are still receiving unemployment benefits and a high share may never return to their former employer.

A new study by Taub Center researcher Liora Bowers looks at the impact of the crisis from a gender perspective, and shows that the coronavirus and the shutdown of the economy resulted in higher rates of unemployment among women than among men. Although women make up just under 50% of employees in the economy, they accounted for 56% of unemployment claims. This gender disparity is mainly seen in the Jewish sector – with Haredi women experiencing particularly high job losses. This result is likely to harm the progress made in women’s employment rates and wages in Israel. Policy makers must ensure that the unemployment period will only be temporary for as many workers as possible so that they do not withdraw from the labor market.

Before the outbreak of the coronavirus, Israeli women worked at higher rates than the average in the OECD (74% versus 66%) and had more children (an average of 3.1 children per woman). In the last decade, there was a slight decrease in the hourly gender wage gap (from more than 17% in 2008 to less than 16% in 2017). In addition, while a third of women worked part-time in 2018, among men, this figure was only 13% (and even among those who work full-time, women work on average 10% less than men).

Between March 1 and May 10 of this year, about 875,000 unemployment claims were filed by workers ages 20-67; 487,000 (56%) of these were filed by women. Young women were particularly hard hit by the crisis – 60.5% of women ages 20-24 versus 39.5% of men of the same age. This seems to be a global phenomenon, with studies by the Pew Research Center and NBER suggesting that more women in the U.S. will have lost jobs because the industries they tend to work in have been harder hit.

The Taub Center study finds that in Israel, across all industries (except for real estate), the share of women filing unemployment claims was higher than their share of positions in the industry. For example, 83% of unemployment claims in the health field were filed by women, while their employment share in the industry is 76%; and in the information and communications industry, 54% of claims were filed by women while their employment share in the industry is only 41%. It thus seems that in Israel there is little connection between the share of women losing their jobs in the crisis and women’s tendency to work in vulnerable sectors of the economy.
Capture2

Another explanation is that the weakest workers were harmed the most by the crisis. Women are more likely to work fewer hours, hold part-time positions, be employed in less senior positions, earn less and have more difficulty accruing tenure as a result of periods of maternity leave. All these factors heighten the likelihood of losing one’s job or being sent home on unpaid leave.

Among working parents, women average 23 weekly work hours while men work 36 hours, and in most households, women are the secondary wage earners. As schools and daycares were closed, the logical solution for many families was to sacrifice the woman’s employment to take care of their children. About 46% of unemployment claims were by households with at least one child under age 18, with 18% having a child under 2 years old at home.

Single mothers have been particularly harmed by this situation. Fears of a second wave of coronavirus may prevent many from returning to employment. With the opening of the economy and the return of some workers to employment, it is estimated that the unemployment rate will stand at around 10% at the end of 2020, with at least 20% of the newly unemployed not returning to their previous place of employment.

Still, alongside these dismal predictions, some long-term opportunities for women may emerge. The quick adoption of teleworking is likely to revolutionize the labor market, allowing more flexibility in scheduling as well as lessening the need for a physical presence in the workplace. In a survey conducted by the Central Bureau of Statistics at the end of April, it was found that 61% of high-tech workers and 46% of workers in the finance and insurance industry working the day of the survey were working from home, versus 15% or fewer in other industries.

These work methods are likely to draw women to these higher paying fields of work. A third of high-tech companies expressed interest in widening the use of teleworking even after the crisis passes. The finance industry, long identified as a significant remaining source of gender wage gaps, expressed less enthusiasm about continuing telework – and indeed a CBS survey in early June showed a steep drop with only 10% of finance workers working from home on the day of the survey.

An additional factor that is likely to impact and narrow gender inequity is the exposure of more men to the routine of childcare as many of them shifted to working from home during the shutdown. In 2018, in dual-working households, women spent an average of about 43 weekly hours on childcare and household tasks, while men spent only about 27.

However, initial studies in Israel and elsewhere show that men are spending more time on childcare during the crisis, both in general and particularly in cases where the man was laid off or on unpaid leave. In households where women are essential workers (such as doctors), some men became the primary caregivers. These experiences – as seen in previous studies on countries that have policies granting paternity leave also for fathers – may lead to long-term changes in the gender norms around childcare and household tasks.

“Although most of the newly unemployed were placed on unpaid leave and not laid off, it is unclear how many of them will be returning to their previous places of employment. There is a fear that the crisis will disproportionately harm women’s employment rates and increase gender wage gaps, and ultimately affect women’s pension savings and future earning power. Research has shown that workers who lose their jobs during economic downturns experience a large and continued decrease in wages.

It also appears that single mothers will be major losers. If employers in high wage industries such as high tech and finance will enable continued flexibility in work hours and teleworking after this crisis ends, I believe that more women will turn to these industries; and in the end, there is a possibility that gender wage gaps might even narrow,” says researcher Liora Bowers.

“Currently, with programs being enacted to incentivize employers to return workers from unpaid leave, it is important to examine policies from a gender perspective, since women lost their jobs disproportionately. At the same time, it is important to build training programs to improve employment skills looking towards the future for those workers who are unable to return to their previous places of employment. Now is the time to present a strategy for schools and daycare in the event of a second wave or a similar future crisis, and to encourage employers to embrace flexibility and teleworking practices” says Prof. Avi Weiss, President of the Taub Center.

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.

Orna Blondheim

Dr. Orna Blondheim was first appointed CEO of a hospital in Israel when she became CEO of Schneider Children’s Medical Center. Prior to heading Schneider, she had served as Deputy CEO of the Emek Medical Center. In 2003, she was appointed CEO of the Emek Medical Center, a position she held until her retirement in 2019.

 

She had many accomplishments during her tenure, some of the most important were building a new multi-purpose building, opening two internal medicine departments, and a rehabilitation ward. In addition, she established a human resources and training center and a well-equipped research center. Most recently she started the construction of a modern cancer center which will be named for Dr. S. Katzman.

 

The Emek Medical Center was the first Israeli hospital to be awarded an international certification (JCI) for quality and safety and to internalize a method for medical self-debriefing similar to the one used by the Israeli Air Force. Orna graduated from the Hebrew University Hadassah Medical School and decided to settle in the Galilee, guided by the ideology of a stronger periphery and the bridging of gaps in Israeli society. She is trained as a pediatrician and then specialized in neonatal and preterm intensive care in the United States.

Press Release: Expenditure Per Student and Per Class in Primary Education

Embargo until 2.6 (Tuesday) 6:00AM

For the full research

The Ministry of Education has two overarching goals that stand in opposition to each other: narrowing educational gaps and encouraging public education. The first goal it realizes through differential budgeting that takes into consideration students’ socioeconomic background factors, while the second it achieves through preferential budgeting of Official (public) education over Recognized but unofficial schools (with private education characteristics).

Increased inequality in budgeting along with previously instituted affirmative action measures has meant added support for weaker populations. On the other hand, narrowing the budget gaps between Recognized and Official education, which also expresses affirmative action on behalf of weaker populations, narrows the support for public education.

A new study by Taub Center researchers Nachum Blass and Haim Bleikh looks at the changes in primary education budgeting between 2014 and 2018, and finds that the biggest change has been in Recognized unofficial education (not including Haredi education – Independent and Ma’ayan Hahinuch Hatorani) where there has been an increase of 23% in both the per class and per student budget, while the increase in Official education has been only 7% per class and 11% per student.

At the same time, affirmative action per class and per student has grown to varying degrees in all primary school frameworks. In this way, the Ministry of Education reaches its first goal of narrowing gaps between students from different socioeconomic backgrounds, while at the same time, it gets further away from realizing its second goal of strengthening public education.

Most students in Hebrew and Arab education do not benefit from a long school day, while most Druze and Bedouin students do

Official education in Israel includes Hebrew State and State-religious schools, State Arab, Druze, and Bedouin schools. In Hebrew State schools, about 74% of students are in the Official education schools. About 13% of students go to the two Haredi Network schools – Independent and Ma’ayan Hahinuch Hatorani schools. An additional 13% of students are in Recognized (and unofficial) schools, which includes private Hebrew education, State-religious, some Arab education (primarily church schools), Haredi, and Exempt institutions.

The distribution of students in primary education by socioeconomic background shows a number of differences: in Hebrew State education, about 70% of students belong to the two highest socioeconomic quintiles. In Hebrew State-religious schools, about 61% are in this group, while in Official Arab education, there are almost no students who belong to the strong socioeconomic groups.

In Hebrew Recognized education (excluding Haredim), the majority of schools serve students from middle to strong populations. Among the Haredi students, those attending the Ma’ayan Hahinuch Hatorani schools are the weakest.

With regard to an extended school day, all Druze students and almost all students from the Bedouin sector benefit from a State-financed extended school day due to their weak socioeconomic status and their geographic location.

In all the other educational frameworks, only a small share of students enjoy this benefit: 26% in Arab State schools, 15% in Hebrew State schools, 32% in Hebrew State-religious, and 27% of those in Official Haredi schools. More than 85% of Arab educational institutions have special education classes, versus 63% of Hebrew State and 56% of Hebrew State-religious schools.

The education system encourages Official education based on the school’s Nurture Index, although there is obvious preference for Hebrew-State religious schools over Arab State schools

The Taub Center study looks at the overall budget per class allocated by the Ministry of Education (not including local authority budgets and expenditures by parents and private funding), and finds that, in general, the overall budget increases as the socioeconomic level of the institution declines (that is, as the Nurture Index rises).

In a comparison of educational frameworks as a whole, the average expenditure per class and per student in Official education is considerably higher than that in unofficial education; this is an expression of the Ministry’s policy to encourage public Official education.

Within Official education, the average expenditure is considerably higher in the Druze and Bedouin sectors, and lowest in the Hebrew State sector. In contrast, in a comparison by socioeconomic background quintiles, it is found that Hebrew State-religious education is budgeted at almost the highest level regardless of quintile, and Arab education at the lowest levels.

Classes have gotten smaller in those schools serving Jewish students from strong socioeconomic backgrounds, and in Arab schools that serve students of all socioeconomic levels

Between 2014 and 2018, the Ministry of Education returned to a differential budgeting practice that had been abandoned in 2008 and also incrementally lowered the maximum number of students per class based on the school’s socioeconomic ranking. At the same time, there were changes in the birth rate in different populations that impacted both the number of students and the budget per student.

A look at the demographic changes in those years shows that the share of students in Hebrew State education grew by 1 percentage point, while the share in State-religious and Haredi Network schools grew by one-half a percentage point each; the share in Arab education decreased by two percentage points.

The Taub Center researchers find that, in general, class sizes in primary schools declined by 0.6 students per class, although changes were not uniform throughout the system. The majority of those benefiting from smaller classes are students from stronger socioeconomic backgrounds, where classes were the largest.

In Hebrew State and State-religious education, in those schools serving weaker populations, classes actually increased in size, while in Arab education, classes decreased in size over all socioeconomic levels, although the number of Arab schools serving higher socioeconomic populations are almost non-existent.

Budgeting of Recognized schools went up most sharply, and in contrast to the goals of the Ministry of Education to strengthen State education

The Ministry of Education has two overarching goals that often stand in direct conflict with each other – narrowing education gaps and encouraging public education. The first goal is reached through differential budgeting that considers student socioeconomic background. The second is reached by differential budgeting of Official education over Recognized schools. Thus, an increase in unequal budgeting – when there was already affirmative action – means increasing preference for weaker populations.

In contrast, decreasing inequality between Official education and Recognized unofficial education, though it is also a form of affirmative action for weaker populations, decreases the advantage to public education.

The data indicate a large change between 2014 and 2018 in particular in Recognized education, with an increase of 23% in both the per student and per class budget, while the budget per class in Official education grew by 7% and per student by 11%. The researchers note that this promotes the goal of narrowing socioeconomic gaps at the expense of preference for public education.

The Taub Center research also looks at the impact of changes in budgeting per class and per student over time in three educational frameworks (Official, Recognized, and Haredi Networks), which enables a comparison of changes in inequality in overall budgeting by looking at changes within and between educational frameworks. The analysis shows the following major findings:

  • Overall inequality in budgeting declined. The reason for this is a rapid increase in budgeting of Recognized education versus other frameworks – a change that narrows gaps between educational frameworks. In contrast, a look within the frameworks indicates a rise in inequality in budgeting in Official and Recognized education, such that the increase in budgets for students from weaker backgrounds was greater than for stronger students. In Haredi Network schools, the data were less consistent.
  • A look at differential budgeting in Official education broken down into the three frameworks (Hebrew State and State-religious, and State Arab education including Druze and Bedouin) shows that the level of differential budgeting per class rises in each framework, although at different rates in each. This is not the case for inequality per student budgeting where the level of differential budgeting rises in Hebrew and Arab State education, but decreases in Hebrew State-religious schools. “From the perspective of budget per student, the data primarily reflect changes in class size – especially in Hebrew State-religious schools,” explains Haim Bleikh. He adds, “it seems that schools serving students from stronger socioeconomic backgrounds saw decreases in class size, while those schools serving weaker student populations saw increases in class size. As a result, the level of differential budgeting per student in Hebrew State-religious education declined.”

The analysis of changes in per class and per student budget shows that the greatest changes were actually in Recognized education. Educational Policy Program Chair Nachum Blass explains that: “It is possible that changes in the government coalition following the 2015 elections contributed to this, alongside agreements of the Ministry of Education with Recognized unofficial schools.” Inequality between frameworks decreased, although within each system, the inequality grew, lessening the effects of affirmative action.

The President of the Taub Center, Professor Avi Weiss, says “the optimal balance between encouraging the public education system and assisting weaker populations needs to be determined as a matter of policy, and the levels of budgeting set accordingly.”

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.

 

Expenditure Per Class and Per Student in the Primary School Education System

Executive Summary

The Ministry of Education has two overarching goals that often stand in opposition to one another – narrowing education gaps and encouraging public education. The first goal it realizes through differential budgeting that takes into consideration students’ socioeconomic background. The second it achieves through preferential budgeting of Official (public) education over Recognized but unofficial schools (with private education characteristics).

Thus, for example, narrowing budget gaps between Recognized (but unofficial) and Official education – where the Recognized schools are characterized by students from weaker socioeconomic backgrounds – is a form of affirmative action (supporting the first goal), yet weakens the advantage to public education (detracting from the second goal).

Keeping these goals in mind, the study evaluates changes in primary school budgeting between 2014 and 2018.

The primary school education system: characteristics and budgeting

In this study primary school students are divided into three educational frameworks that are distinguished by their legal status: Official education (74% of students), Recognized (but unofficial) education which includes Exempt schools (13%), and two Haredi Network schools (13%). Official education in Israel includes Hebrew State and State-religious schools, and Arab State education which includes Arab, Druze, and Bedouin schools. The study shows that characteristics vary across these educational frameworks.

  • In Official education, about 70% of students in Hebrew State education belong to the two highest socioeconomic quintiles, compared to about 61% in Hebrew State-religious schools and almost no students in Official Arab education.
  • Although there are only a few Hebrew State and State-religious schools in the Recognized (but unofficial) system, their students belong to the higher socioeconomic status quintiles. Similarly, while only a negligible number of students attending schools the Official Arab education system are in the two highest socioeconomic quintiles, 22% of the students in the Recognized Arab education system are in the second Nurture quintile (higher socioeconomic status).
  • All Druze students and almost all students from the Bedouin sector in Official education benefit from a State-financed extended school day, compared to 26% of students in Arab State schools, 15% in Hebrew State schools, 32% in Hebrew State-religious, and 27% of those in Official Haredi schools. Students in the Recognized (but unofficial) education system are not eligible for a long school day financed by the Ministry of Education (they may have a long school day, but do not receive a budget for it from the Ministry of Education).
  • More than 85% of Arab educational institutions in Official education have special education classes, versus 63% of Hebrew State and 56% of Hebrew State-religious schools. In the Recognized (but unofficial) schools, there are almost no special education classes.

The study finds that, in general, the overall budget increases as the socioeconomic level of the institution declines (that is, as the Nurture Index rises), yet there are differences between the education frameworks.

  • The average expenditure per class and per student in Official education is considerably higher than that in Recognized (but unofficial) education.
  • Within Official education, the average expenditure is considerably higher in the Druze and Bedouin sectors, and lowest in the Hebrew State sector.
  • In a comparison by socioeconomic background quintiles, the study finds that Hebrew State-religious education is budgeted at almost the highest level regardless of quintile, and Arab education at the lowest levels.
    graph1

Changes in primary school education between 2014-2018

The distribution of students by sector, supervisory authority, and legal status in primary education in 2018 was not significantly different from that in 2014, although there were some changes. In addition, there were changes in class size during this period, which has significant implications for allocation per class and per student.

  • The share of students in Hebrew State education (Official and Recognized but unofficial) grew by 1 percentage point, while the share in State-religious and Haredi Network schools grew by a little less than one percentage point each.
  • The share of students in Arab education decreased by 2.5 percentage points.
  • In general, class sizes in primary schools declined by 0.6 students per class, although changes were not uniform throughout the system.
  • The majority of those benefiting from decreasing class size were students from stronger socioeconomic backgrounds.
  • In Hebrew State and State-religious education, in those schools serving weaker populations, classes actually increased in size, while in Arab education, classes decreased in size over all socioeconomic levels.

Differential budgeting policy

The study analyzes changes in budgeting inequality between 2014 and 2018 both between and within different educational frameworks. At the start of the period, there was already preferential budgeting for students from weak socioeconomic backgrounds. An increase in budgeting inequality implies that the growth in budget per class and per student over time among students with weak socioeconomic backgrounds is higher than for students with strong socioeconomic backgrounds. That is, an increase in budgeting inequality, in essence, further strengthens affirmative action.

  • There is evidence of a drop in the level of budgeting inequality in the primary education system as a whole (across all three educational frameworks), as can be viewed by the “total inequality” in the graph below. However, this finding should be treated with caution.
  • The component of inequality between the three systems is significantly higher than that within education systems (purple vs. yellow bars in the graph). This reflects significant differences in average budgeting levels between the systems.
  • The inequality between the three education systems (purple bars in the graph) has declined substantially. This is largely due to the fact that in Recognized (but unofficial) education, where expenditure was lower to begin with, there was a large increase of 23% in both the per student and per class budget, while the budget per class in Official education grew by 7% and per student by 11%. This trend strengthens affirmative action but weakens the advantage of public education.
  • Budgeting inequality within the educational frameworks (yellow bars in the graph) has increased. There was a rise in inequality in budgeting both within Official and within Recognized (but unofficial) education, such that the increase in budgets for students from weaker backgrounds was greater than for stronger students.
  • Within Official education, there was a rise in inequality in budgeting – and thus a strengthening of affirmative action in favor of students from weaker socioeconomic backgrounds – in all three frameworks (Hebrew State, Hebrew State-religious, and Arab State education), but at different rates.
    graph2

 

Press Release: Picture of the Nation 2020

Embargo until May 20 (Wednesday) at 6:00am

To read the full publication, click here (password: taub2050)

A Picture of the Nation 2020, which was published today by the Taub Center for Social Policy Studies in Israel, presents up-to-date data on Israel’s society and economy in the midst of a challenging year whose implications are still largely unknown and will continue to unfold well into the future.

The booklet, generously supported by the Koret Foundation, presents findings that outline a complex picture of Israeli society, including Israel’s situation before the coronavirus crisis as well as its expected effects in the areas of health, macroeconomics, welfare, the labor market, and education.

The booklet was written by Prof. Avi Weiss, President of the Taub Center and Professor of Economics at Bar-Ilan University.

Health

The outbreak of the coronavirus pandemic reveals the strengths and weaknesses of Israel’s healthcare system in times of crisis, and it allows us to identify the changes needed for it to function properly on a regular basis as well as in a time of emergency. Israel’s young age structure and the relatively good health of the population have helped the country cope with the pandemic. Simultaneously, the health system’s weaknesses – shortages in budgets, infrastructure and manpower – posed a risk in fighting the virus. Beyond developing policies to contend directly with the virus, it is important to take actions in order to reduce indirect mortality because of delayed regular screening and treatments.

  • The coronavirus is more dangerous for older people, and Israel’s population is relatively young – only 25% of the population is over age 50, and 35% are under the age of 20. In addition, those infected in Israel have been relatively young; for example, 36% of infected individuals were ages 30 or younger, compared to 5% in Italy. This combination results in a very low mortality rate per capita from the coronavirus – 2.9 per 100,000 people by May 16 – about 5% of the mortality rate in Spain, less than 10% of the rate in Italy and France, and less than 20% in the U.S.
  • To examine the spread of the virus in Israel, a country characterized by a diverse population, the Taub Center examined confirmed infection rates in Jewish and non-Jewish regions, and found that infection rates were higher in Jewish areas. As of May 12, 22% of all infections in Israel were from Haredi (ultra-Orthodox) towns and 26% were from mixed cities with large Haredi populations (Jerusalem, Bet Shemesh, and Safed). Furthermore, 55% of the increase in the national infection rate between March 31 and May 12 came from these areas, which constitute only 19% of the total population. Arab and Bedouin localities contributed 9% to the increase in the national infection rate during this period.

Health EN

  • Israel’s healthcare system entered the coronavirus outbreak in a vulnerable state, with a public health expenditure that is low relative to the OECD average, and to the average in countries with similar healthcare systems (about 7.4% of GDP, compared to 8.9% and 11%, respectively), and thus there is a real risk of significant indirect collateral damage from the pandemic.
  • The acute care hospitalization system is in a dire situation, with a low number of acute care hospital beds per 1,000 population (2.2 as opposed to 3.6 in the OECD, and 4.1 in the similar countries – Germany, Belgium, the Netherlands, France, and Switzerland).
  • The bed occupancy rate is high (94% versus 75% in the OECD and the similar countries), and hospital stays are relatively short (5.2 days compared to 6.7 days in the OECD and 6.2 in the similar countries). This means that the hospitalization system is already working at full capacity in regular days, with limited ability to deal with emergencies. Israel’s relative success in “flattening the curve” and reducing the burden on hospitals can be partially attributed to its social distancing policies.
  • The pressure on the acute care hospitals is manifest also in the number of visits to emergency rooms in Israel, which is high relative to other countries, and the percentage of those admitted to the hospital who spent at least 5 hours in the emergency room increased by 152% between 2008 and 2018. This indicates an increase in the severity of cases arriving in emergency rooms, a decline in the emergency room’s ability to respond to arriving patients, and a decrease in the ability of the hospital departments to receive patients.
  • The pressure in the inpatient wards and emergency rooms is not only the result of a low ratio of beds to population, but also of a low cost of hospitalization due to a distorted inpatient cost mechanism (the “cap”) – regulated by the state – by which the cost of hospitalization (at the margins) is lower for the health funds than potential alternative community care, including nursing homes and home hospitalization. This indeed weakens community medicine which is preferable because of health aspects such as preventing infections, social aspects such as staying in the family and community, and economic aspects such as low costs.
  • Healthcare prices in Israel are relatively low: the level of healthcare prices in Israel is 53% higher than the OECD average and 26% higher than the average in countries with a similar healthcare system.

Macroeconomics

Israel’s economy was strong before the coronavirus crisis, but not as strong as might be expected – GDP has grown nicely, but the growth rate has been declining for the last decade, and when taking into account the growth in the population, GDP per capita has grown less than the average in OECD countries. Price levels have fallen but are still high. Inequality has fallen, but it remains high compared to most developed countries. The government’s decision to shut down the economy in the wake of the coronavirus pandemic led to unemployment (including those placed on unpaid leave) reaching 25% in mid-April, a fall in GDP and a deepening of the budget deficit.

  • Over the past decade there has been a steady decline in GDP per capita growth, which averaged 1.5% in the years 2017-2019, and a decline in the contribution of human capital to economic growth. Due to the new situation, GDP is expected to decline by 5.3% in 2020 (and by 7.2% in GDP per capita) and increase by 8.7% in 2021 (by 6.8% in GDP per capita).
  • Growth in labor productivity slowed in the early 2000s due, among other things, to the entrance of low-skilled populations into the labor market. The low level of productivity indicates a lack of private investment in physical capital in the economy – a situation that is expected to continue for a long time due to the corona crisis.
  • Public capital as seen in, among other things, infrastructure, transportation, and communications, has dropped to half the average OECD levels relative to GDP. Doubling public capital could erase the gap in productivity per worker. According to Taub Center President Prof. Avi Weiss, the crisis is likely to reduce the gap, due to large public investment expected in the health system. In addition, it appears that transportation investments will also accelerate.
  • Since 2014, the rise in prices has halted due to reforms to increase competition and ease import restrictions, and yet prices in Israel are still about 12% higher than would be expected in countries with a similar level of income. The effect of the coronavirus crisis on prices in Israel is dependent on the extent of the negative impact on supply and demand, competition, and competitive imports. The effect is expected to be relatively mild in the housing sector.
  • The increase in nominal wages in the past decade has largely been translated into an improvement in real wages; that is, in the purchasing power of workers. This trend is expected to halt as a result of the coronavirus crisis, which has already led to widespread unemployment. The entrance of second wage earners into the labor market and the rise in real wages at the lower end of the income distribution improved the situation of the weaker socioeconomic strata and thus reduced inequality, unlike in other countries where income increased among the stronger socioeconomic strata. The coronavirus crisis is likely to reduce wages, which will mainly harm workers who are new to the labor market, many of whom will be pushed out, accordingly resulting in increased inequality.
    Macro EN
  • When the coronavirus crisis struck, Israel’s deficit was higher than the targeted deficit level – standing at over 4% of GDP – and, due to the crisis, it is expected to reach about 11% of GDP in 2020. However, Israel’s low debt-to-GDP ratio – 60% – allows the government to turn to capital markets as a source of funding for the large deficit that will be created by the decline in tax revenues and the growing need to support the business sector and households. The debt-to-GDP ratio is expected to grow to about 75%.

Demography

  • By 2040 Israel’s population is expected to grow from its current size of about 9 million to about 12.8 million, over 1.4 million of whom will be over age 70. The growth rate of the older population in the Arab sector is expected to be much higher than in the Jewish sector, and the ratio of Jews over 70 to Arabs in this age group is expected to decline from 11.4 in 2017 to 6.2 in 2040.
  • A large group of working-age adults (18-64) is expected to enter the labor market, with the working-age population increasing from 4.8 million in 2017 to 7 million in 2040. This will pose a challenge to the Israeli economy in the areas of higher education, employment, and housing.
  • The number of students enrolled in higher education in Israel is already high, and if the current enrollment rates are maintained within each population sector, by 2040 this number will increase by 53% – from about 51,000 students in 2018 to about 78,000 in 2040.
  • In order to increase enrollment rates in some of the sectors, as proposed by many policymakers, there will need to be a substantial increase in the supply of learning slots – from a 54% increase in enrollment capacity if the enrollment rate of Arab students increases to two-thirds the rate of non-Haredi Jewish students to a 120% increase if all groups reach the enrollment levels of non-Haredi Jewish women.
    Pop Projections EN

Social Welfare

The coronavirus crisis has affected the well-being of many individuals and families in Israel. Over a million Israelis have been laid off or put on unpaid leave, and disadvantaged populations such as the elderly and disabled are suffering from social isolation, the cessation of certain treatments, and a lack of resources and support. The government has taken steps such as easing requirements to receive unemployment benefits and providing grants for self-employed and older workers, but solutions have not been provided for all who need them, and the burden on social services is increasing. Restoring Israeli society and the economy to normal will necessitate changes in welfare policy, including increasing the budget for social services, programs to aid integration into the labor market, and support systems.

  • Israel’s poverty rate in disposable income remains among the highest in the OECD, despite measures taken by the government to reduce it. Since 2000, social expenditure has grown from 16% of GDP to 18% – however, it remains lower than in all OECD countries except four that (like Israel) have low tax rates. Due to the coronavirus crisis, it is estimated that social spending devoted to creating a safety net for the unemployed will reach NIS 23.5 billion, equivalent to more than a quarter of social security expenditure in Israel last year.
  • The universal “Saving for Every Child” program does not encounter problems with benefit take-up, but the lack of focus on the population living in poverty or families with many children has implications for the program’s potential to seed future social mobility. The State allows parents to deposit a monthly sum equal to the sum deposited by the State, but fewer than a third of parents in the lowest quintile do so, compared to 65% of parents in the highest quintile. Also, families in the lower quintiles generally do not invest the funds in accounts with a higher expected return (that involve higher risk).

Welfare EN

  • Until 2018, 5,700 families from across the country participated in the Ministry of Labor, Social Affairs and Social Services’ “Families First program”, designed to improve the economic situation of families living in poverty, many of them from the Arab sector and the Northern region of the country. In most of the participant families, parents have 12 years of schooling, and about 40% have four or more children. Much of the aid in Haredi and Arab Israeli families was used towards employment, and Arab Israeli families used a large portion for meeting basic needs.

Labor market

The labor market before the coronavirus was strong, characterized by high labor force participation rates with the exception of Arab Israelis (especially women) and Haredi men. However, since the crisis, many have been laid off or put on unpaid leave – more than a million people have applied for unemployment benefits, and the unemployment rate (including those put on unpaid leave) climbed above 25%. Many businesses are facing bankruptcy and it seems that the implications of the crisis will be felt far into the future. It is estimated that at least 20% of the newly unemployed will not be able to return to their jobs. However, the crisis is also an opportunity to develop the infrastructure to allow for working remotely and create opportunities to do so for workers from the geographic periphery, such as Arab Israeli workers living in the north of the country, whose employment opportunities are limited.

  • Real wages continued to rise in 2019. The biggest increase was in the information and communications industry, which includes computer programming, where wages rose 7% in 2019. It is still unclear to what extent the crisis will reduce wages in the private and public sectors in 2020 and beyond.
  • Employment rates among non-Haredi Jews and Haredi women in Israel are high, despite the fact that Israel has the highest fertility rate of any OECD country. Non-Haredi Jews and Arab Israeli men also work many hours compared to the OECD, and the OECD has ranked Israel in the fourth lowest place in terms of work-life balance.

Labor market EN

  • In 83% of non-Haredi Jewish heterosexual coupled households with children, both parents work (more than half of them in full-time positions), compared with 39% among Haredim and 34% among Arab Israelis. In 43% of Haredi households, no parent is employed full time. “In recent years, until the outbreak of the crisis, the employment rate of Israeli mothers increased greatly, but the number of working hours declines as the number of children increases. Long working hours in Israel make it difficult to raise children, and it seems that women are still the main caregivers,” says Prof. Avi Weiss.
  • The achievements of the highest-skilled workers in the economy – 95% of them non-Haredi Jews – are similar to the average achievements of the highest-skilled workers in the OECD, but lower than the achievements of this group in the most developed countries. Among skilled Arab Israeli workers, the picture is more bleak, and their skill level matches the achievement level of the 60th skill percentile in the Jewish population.
  • The salaries of Israel’s most highly skilled workers are similar to those of their OECD peers, but it seems that “outstanding” Israeli workers manage to integrate into higher-wage fields more than their counterparts in other countries. In contrast, low-skilled workers earn about 50% less than their OECD counterparts, and their skill level is also lower.
  • The labor market is changing due to new automation processes and technologies and, in a number of tasks, humans are being pushed aside. At the same time, the importance of skills that are irreplaceable by technology has grown. The group of workers most at risk of losing their jobs because of automation are Arab Israeli men, half of whom are employed in high-risk occupations (such as construction and machine operation). In terms of gender, in the non-Haredi Jewish population, there is a higher share of high-risk jobs among women than among men, while among Arab Israelis and Haredim, the gender gap tends to favor women.
  • Labor market demand and supply are affected, among others, by external policies and factors. As demonstrated by the coronavirus crisis, some of the jobs that were defined as essential and where work continued as normal during the economic closure, such as supermarket cashiers and shelf-stockers, are actually classified as being at high risk of disappearing from the labor market in the future. If technology had been more developed, fewer people would have been required to put themselves at risk and go to work. “In the aftermath of the crisis we can expect to see various effects on demand, such as an increase in the need for employment advisors and employment agencies, in light of the many workers who were pushed out of the labor market” explains Taub Center President Prof. Avi Weiss.
  • Required skills in the future labor market include complex problem-solving, the ability to teach others and to plan for them, the ability to influence and advise others, and the ability to use a computer. The latter became particularly evident during the crisis when many were asked to work from home and to expand their use of digital resources. “Many businesses and workers without computer skills were left behind,” says Prof. Avi Weiss, adding: “It is still too early to assess how the crisis will affect workers from different sectors and different population groups, but it is likely that the harm to workers who have not acquired computer skills will be more severe.” Although the State offers a number of training opportunities to workers, though fewer than are offered in other countries, those most in need of skills do not acquire them mainly because of high costs and lack of time. The current crisis has provided an opportunity – which the government has indeed taken advantage of – to offer virtual training to workers stuck at home because of the situation.

Education

Israel’s education system is in deep crisis following the coronavirus outbreak, and it may be undergoing a serious revolution. It seems that digital resources will become essential teaching tools, while the classroom and school playground will be focal centers for social contact. The revolution presents opportunities but also risks, such as widening gaps between students and the loss of a “safe space” for some. Prior to the crisis the education system benefited from an increase in resources, but not all population groups benefited equally. There are mixed signs regarding achievement gaps between Arab and Jewish students.

  • Since 2010 the education budget has increased and the number of students per classroom has decreased. In the coming years these developments are expected to slow substantially due to cuts in public service budgets that will be necessary to finance the extensive damage from the coronavirus pandemic.
  • Between 2012 and 2018, the Hebrew education budget in secondary schools grew by 42% while in the Arab education stream it grew by 38%. The gap in average budget between the two sectors stands at 29%. Per-student spending in elementary school is comparable to the OECD average, but in secondary school the gap is large.
  • Teachers’ wages in Israel are very low compared to the OECD at all education levels, especially among new teachers in elementary schools. A starting teachers’ salary is about $21,000, compared to about $32,000 in the OECD, and in secondary education it is about $23,000, as compared to $36,000 in the OECD. Among veteran teachers there is almost no difference in salary between Israel and the OECD.

Education EN

  • An examination of PISA exam results shows that, after rising for a number of years, there has been a decline in the achievements of Arab Israeli students since 2015 while, among Jewish students, achievements increased and then stabilized. This growing gap between Jewish and Arab students is at odds with the corresponding decreases in gaps in budgeting, dropout rates, and Meitzav and bagrut exam performance, and requires further investigation.
  • Children growing up in poverty during the first two years of life suffer from very low educational achievements in the fifth grade. This is in comparison to children who did not experience poverty at this age, and controlling for family income during later childhood and for other socio-demographic variables, such as parental education and family size. It is interesting to note that poverty during ages 3-5 does not affect future achievements to the same degree.

To read the full booklet, click here.

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.

 

 

 

The coronavirus trajectory in Israel: planning, luck, and unintended consequences

The first wave of the spread of coronavirus in Israel has, in many respects, been viewed as a success. Compared to other OECD countries, the number of infections per capita in Israel after the first two months of the outbreak has been relatively low, falling well short of countries like Spain, Belgium, Italy, and the US. However, reference group matters. As of May 12, 21 (of 38) developed countries had a lower per capita infection rate than Israel, placing Israel squarely below average of the developed-country pack.

Where Israel has proven more successful is in its low number of COVID-19 deaths. Its (per capita) mortality rates are lower than any country in North America, Western Europe or Scandinavia, including Germany, Finland and Iceland – whose responses to the pandemic have all been praised in the international media. Here, too, however, reference group matters. Israel’s mortality rate is still higher than 13 other developed countries, all of which are in Eastern Europe, Asia or Australasia.

Over time, the growth in confirmed coronavirus cases in Israel began to slow: while the growth was in the 20%-30% range during March, by early April it declined below 10%. By early May it had fallen below 1%, and by May 10 below 0.2% per day.

Another positive sign is that, while during March the percentage of people testing positive for coronavirus increased alongside the number of tests, in April the number of tests continued to climb, but the percentage of people testing positive declined. Since mid-April, there has also been a decline in “active cases” in Israel (all cases that have not yet resulted in recovery or death) and the ratio between new confirmed cases and recoveries flipped such that there are now about 10 recoveries for each new confirmed case.

These trends are not being experienced equally across the country. Throughout April, the most rapid increases in the infection rate took place in seven Haredi (ultra-Orthodox) towns and in the three large mixed Haredi/non-Haredi cities: Jerusalem, Bet Shemesh, and Tzfat.

In our estimates—based on Ministry of Health information—we have shown that although the seven Haredi towns are inhabited by only about 5% of the national population, they accounted for 23% of all new infections nationally between March 31 and May 12. A further 32% of all new infections nationally came from the three mixed Haredi/non-Haredi cities, which contain less than 14% of the national population.

Taking a look at the overall picture, Israel has been relatively successful thus far in its public health response to the coronavirus. What are the factors that have driven these outcomes? In terms of the preparedness of Israel’s hospital system, the situation is complex. Israel falls below the OECD average on some key medical resources including curative hospital beds and nurses per capita.

However, at the same time, Israel has a relatively high number of doctors per capita. Israel also put in early and strict closures and quarantine restrictions which, though not immediately enforced everywhere, contributed to stemming the spread of the virus. In this regard, Israel was helped by the fact that it is a small, centralized country with non-fluid borders. It shares this advantage with other “good” performers like New Zealand, Australia, Iceland, Taiwan, and South Korea.

Another factor in explaining Israel’s relative success is its “demographic good fortune.” As we see around the world, mortality from COVID-19 is higher among the elderly (a fact that is not historically true for all epidemics; for example, the Spanish Influenza outbreak, around the end of WWI, disproportionately killed people between their teens and age 40). The first element of Israel’s good fortune is that its population is relatively young: those ages 65 and older make up about 10% of the population, compared to about 23% in Italy and about 17% in the U.S.

The second aspect of Israel’s good fortune is that the infection in Israel has disproportionately spread among the young – particularly the 20-29 age group. In Italy, by contrast, the population is not only generally older, but coronavirus infections also disproportionately spread among the elderly.

Eng graph 2

Finally, the unintended consequences of Israel’s other country characteristics, even beyond its small size and relative isolation, might contribute to Israel’s success. For example, a major risk factor for mortality from COVID-19 is cardiovascular disease. Yet Israel has much lower mortality from cardiovascular disease than the U.S. and other developed countries.

Furthermore, the additional resources and quick mobility of Israel’s security forces and a population familiar with times of national struggle, as well as institutional nimbleness and skilled professionals in a variety of fields, have helped to bolster the country’s response to the coronavirus outbreak.

Much of the coronavirus response is still ahead of us. However, it seems that in Israel, at least, some combination of planning and responsive policy, the age structure of the population and those infected, and other country characteristics, has allowed it to come out of the first couple of months of the outbreak in a relatively good position.

A Picture of the Nation 2020

The War on Coronavirus and Its Financing by the Israeli National Health Insurance

This study evaluates the willingness of Israeli society to make economic sacrifices to prevent deaths from coronavirus. How much should Israel invest in the war on the coronavirus? Answering this question is important not only because of the size of the investment but also due to the intergenerational division of its burden in light of the virus’ mortality profile.

Employing the accepted approach for making Health Basket Committee decisions, Taub Center researchers use the price of adopting new medical technologies (including medications) as an estimate of the value of a “year of life,” which currently stands at NIS 340,000 (2019 prices).

Estimated value of loss of life as a share of GDP

Given Bank of Israel growth estimates, the damage to the economy as a result of the economic shutdown to prevent the spread of the coronavirus is estimated to cost about 4.2% of Israel’s GDP.

The researchers compare this to the potential cost of mortality from the virus. Using the health basket valuation for a year of life, the researchers evaluate the GDP value of the loss of years of life as the result of mortality from coronavirus according to different scenarios. Another way to understand this is as the GDP value of saved years of life as a result of preventing mortality from coronavirus.

  • Under an extreme scenario, in the absence of preventive measures, the coronavirus infection rate could reach about 60% of Israel’s population. If the mortality rates were similar to those in the Hubei Province of China, Israel would expect 84,000 deaths and a cumulative loss of life valued at more than 24% of the 2019 GDP.
  • Decreasing the pressures on the health system and lowering the mortality rates to the level of South Korea, while leaving infection rates at 60%, would save lives at a rate equivalent to about 14.9% of GDP, which is about NIS 210 billion or 1.8 months of labor across the economy.
  • Every 1 percentage point reduction in the infection rate translates into a reduction of about 580 deaths, which is valued as a savings of about NIS 2.2 billion, or about 0.15% of GDP.

Intergenerational social tension

In general, due to the way it is structured, the Israeli healthcare system transfers income between differing risk groups. Under normal circumstances, the main transfer is from those of working-age (20-59) to children and the elderly, whose consumption of healthcare services is particularly high. However, during the coronavirus pandemic, the transfer goes almost solely to the elderly.

Under normal circumstances

Even before the coronavirus outbreak there was an intergenerational transfer of income as a result of the National Health Insurance Law.

  • The capitation mechanism, by which public health expenditure is allocated to the health funds, does take into account health fund members’ age and gender, which reflects the expected cost of healthcare in each group.
  • In contrast, the health tax that finances public health spending does not depend on age or gender, but rather on income.
  • Therefore, Israel’s healthcare system transfers income not only from high earners to low earners, but also between various risk groups according to age and gender.

During the coronavirus outbreak

  • Due to the large-scale effect of the epidemic on the older community, the intergenerational transfer is significantly greater than the transfer during normal times.
  • In normal times, the intergenerational transfer can also be viewed as “insurance” by the young, since they can expect to reap the same benefits in the future when they are elderly. In contrast, the coronavirus epidemic is assumed to be a rare event that those of working-age are paying for now with little expectation of reaping future benefits, which can lead to significant intergenerational tension.

Conclusions

The economic damage from coronavirus predicted from Bank of Israel growth estimates – a loss of 4.2% of GDP – is significantly less than the value of the lives saved under extreme scenarios, which could reach up to about 24% of GDP in the worst-case scenario.

However, if the level of infection reaches only 10% of the population (instead of 60%, as in the worst-case scenario), the human life lost would be valued at about 3.8% of GDP – lower than the 4.2% loss as a result of the economic closure.

Assuming the mortality rate experienced in the Hubei Province of China, any intervention-free infection rate above 10-12% of the Israeli population would render the economic costs of containing the coronavirus a “worthwhile” investment in terms of GDP.

Additionally, minimizing the cost to the younger population is important not just in order to increase GDP, but also to reduce intergenerational tensions in society.

Press Release: The War on Corona and Its Funding in View of the National Health Basket

Click here for he full research in Hebrew

The issue of the price of the war on the coronavirus to the Israeli public becomes more and more urgent daily. The price paid – the brunt of which is borne by the young adult population – is expressed in lost employment and wages and in significant changes in individual behavior and in the social order.

A new study by Taub Center researchers Prof. Dov Chernichovsky and Prof. Benjamin Bental evaluates the willingness of Israeli society to make economic sacrifices to prevent deaths, based on principles of solidarity embodied in the National Health Insurance legislation and on the economic criterion used for adopting new medical technologies into the Health Basket.

The principles of the National Health Insurance Law entail the subsidization, through taxes, of the non-working population – both children and elderly – by those who do work. Using the Health Basket Committee decisions, Taub Center researchers used the price of adopting new medical technologies (including medications) as an estimate of the value of a “year of life,” which currently stands at NIS 340,000 (2019 prices).

The Taub Center study uses these principles to deal with the complex and unavoidable moral and ethical question: how willing are we in financial terms to invest in the fight against the coronavirus? The answer is related to two perspectives: the value of a life potentially saved through extreme measures, and the intergenerational division of the economic burden in light of the coronavirus mortality distribution and the cost of its prevention by age groups.

The potential savings in lost life is calculated by the researchers according to the remaining years of life by age discounted appropriately. From these calculations, for instance, it is found that Israeli society is ready to invest more than NIS 10 million to save the life of a 5-year-old child, versus only NIS 2 million to save the life of an individual over 80 years-old.

If the worst case scenario were realized, the cumulative loss of life would be equivalent to 24% of Israel’s GDP

In order to estimate the expected mortality rate in the absence of any intervention, Taub Center researchers used two information sources regarding coronavirus-related death rates by age: those from Hubei province in China, and those from South Korea. “On the basis of these evaluations, we can also use updates to the Health Basket to estimate the equivalent financial value of preventing deaths,” explains Prof. Dov Chernichovsky. “With regard to the coronavirus, we assume that this value is derived from the loss of output due to economic closures on the one hand, and a decrease in mortality rates resulting from lowering infection rates and reducing the number of patients requiring intensive treatment on the other hand.”

According to the worst case scenario, in the absence of preventive measures, the infection rate reaches about 60% of the population. If the mortality rates were at the level of Hubei province, Israel would expect 84,000 deaths and a cumulative loss of life valued at more than 24% of the 2019 GDP. That is, Israel must be willing to invest up to 24% of GDP to prevent such an apocalyptic scenario.

Steps that will decrease the pressures on the health system and lower the mortality rates to the level of South Korea, while leaving infection rates at 60%, would save lives at a rate equivalent to about 14.9% of GDP, which is about NIS 210 billion or 1.8 months of labor across the economy. Every 1 percentage point reduction in the infection rate translates into a reduction of about 580 deaths, which is valued at a savings of about NIS 2.2 billion, or about 0.15% of GDP.

Using Bank of Israel estimates for estimated growth rates between 2020 and 2021, the damage to the economy as a result of the economic shutdown enacted to prevent a disastrous spread of the coronavirus is estimated to ultimately cost about 4.2% of GDP.

Thus, the claim that if no steps were taken the infection rate would be higher by about 10-12% and the mortality rate would be similar to that in Hubei province, must understand that the cost of the preventive measures taken stands at the criterion for the potential value of a life saved used in calculations of the price of adding new treatments into the Health Basket.

The young and healthy finance the elderly

The policy of social isolation to prevent the spread of infection lowers the mortality rate especially among the elderly, while the economic cost of lay-offs and loss of income is primarily borne by the working-age population. This situation is termed “intergenerational income transfer.”

Under normal circumstances, public financing of healthcare is about 4.5% of GDP, and includes budgets that are transferred to the health funds. The health funds receive their allocations according to the “capitation formula” which takes into account the anticipated cost of treatment on the basis of expected morbidity rates within each health fund’s insured population according to their age and gender composition.

The health tax that underwrites this is dependent on income and not on age or medical status. Thus, the healthcare system transfers revenues from those who have to those who don’t and between differing risk groups. The main transfer is between those of working-age (20-59) to children and the elderly, whose share in service use is particularly high.

In contrast, in the fight against corona, the bias of the subsidy benefits primarily the elderly and is the opposite of the norm where the major subsidy goes towards healthcare for the very young.

Thus, although there is an intergenerational relationship, in economic terms, the connection between those who pay and those who reap the benefits is not direct or immediate. This is likely to create a level of societal tension. It is important to minimize the damage the current crisis is causing for young adults not only in order to grow the GDP, but also in order to diminish this tension to the extent possible.

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis. 

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.
 

Population Projections for Israel, 2017-2040

In demographic terms, Israel is a unique country: it is characterized by an unusual combination of high fertility rates, low mortality rates, and positive migration. All of these factors lead to a rapid rise in population. In honor of Israel’s Independence Day, a new Taub Center study by Professor Alex Weinreb forecasts Israel’s population through 2040, using realistic assumptions regarding future fertility, mortality and migration patterns among the Jewish and Arab Israeli populations.

According to Taub Center projections, the country’s population will reach about 12.8 million in 2040, but with distinct patterns of growth in different age groups and subpopulations. Until 2027, the expectation is of a rapid rise in the number of Arab Israeli children; until 2035, there will be a sharp increase in the over-70 population; and in the coming two decades, the large cohorts currently in their 30-40s will age into their peak period of productivity and income.

Accordingly, appropriate measures should be taken to invest in growing educational sectors, and to integrate larger numbers into higher education and the labor market; and preparations should be made for old-age pensions and long-term care services. Understanding future growth patterns for each segment of the population will help policy planning for growing populations in Israel.

Mortality rates are trending down, and fertility rates among Arab Israelis will fall far below 3.0 births per woman by 2040

Mortality rates in all age groups – an important component in demography – differ by gender and between sectors. The Taub Center has found that mortality rates have been decreasing over the past decade in every group and in almost every age group (until age 89) – an indication of an overall improvement in the health of the population.

Nevertheless, there are differences: among Jews, the decline in mortality rates among men is greater than among women in every age group under age 55. Mortality rates among Arab Israelis – both for men and women – have decreased less than among the Jewish population in most age groups.

Another main factor influencing demographic forecasts is fertility rates. Births are the main component contributing to population growth in Israel. The number of births in Israel is very high relative to mortality rates and in comparison to other developed countries, and explains about 80% of the annual population growth.

Taub Center projections predict that the trends from 2000 will continue – a decline in fertility among Jewish women up to age 25, stability in the rate in women aged 25 to 29, and a marked increase in rate among those aged 30 to 44, although a certain slowdown in the rate of the increase is expected in the coming decade. Among the 35 to 39-year-old age group, the Taub Center expects a rise in fertility rates as women’s age at first birth increases alongside single-parenting.

Since 2000, fertility rates among Arab Israeli women have declined in every age group, principally among women under age 30. The forecasts project a continuation of this trend, with additional slowing, in view of the rising higher education levels among them and their increased participation in the labor market. The expectation is that these women will also begin to delay starting their families until an older age with a possible concomitant rise in fertility rates among the 30 to 44-year-old age group.
Age specific fertility rates

Forecasts show a sharp decline in fertility rates among women in their twenties, relative stability in fertility rates among Jewish women in the coming decade and then a decline, such that by 2030, the total fertility rate will dip below an average of 3 children per woman. Among Arab Israeli women, the decline in the fertility rate is expected to continue, such that by 2040, it will be an average of 2.75 children per woman.

Even if the rate remains stable in the coming 20 years, changes in the age structure of Jewish and Arab Israeli women below age 50 will result in differences in the number of births. As a result, the number of Arab Israeli women aged 20 in 2037 is likely to be the same as the number in 2017, while the number of Jewish women in 2037 is likely to be much higher than their number in 2017.

Migration is a difficult demographic component to predict since it may occur several times in an individual’s lifetime and may be influenced by historical events that are difficult to predict. The overall migration balance in Israel is positive and rising. Between 2002 and 2017, 184,000 net people immigrated to Israel, the vast majority below the age of 40.

This means that they contributed or will contribute to Israel’s population through births as well. What is more, due to Israel’s good economic situation relative to many OECD countries and worldwide, over the past few decades Israel has become an attractive destination for asylum seekers and for labor migration. Add to this rising antisemitism rates in the world, and the observed 20% rise in immigration in 2019, it is reasonable to assume that the flow of immigration will continue to be greater than the emigration rate.

The projection assumes that 20,000 immigrants and returning residents will enter Israel annually; 1,000 of them will be Arabs. In addition, 1,400 immigrants who enter annually for marriage, work, tourism, or to seek asylum, will succeed in becoming legal residents and will remain in Israel.

Forecasts for 2040: more than 12 million people, double the number of elderly, and a large group that will enter the labor market and institutions of higher education

The age structure of the population, that is the relative size of age groups, reflects past demographic events and also influences its demographic future. Israel’s population is relatively young – in the Jewish sector there are 140,000 infants versus 60,000 70-year-olds, and in the Arab Israeli sector, 42,000 versus only 5,300, respectively.

In both sectors, among younger people, there are more men, and the relation reverses in the older age groups, such that there are more older women, primarily among Jews. This also stems from higher mortality rates among men.

The Taub Center research indicates three essential differences in the population structure between Jews and Arab Israelis. One difference is that the Jewish population has grown slowly but consistently, such that every cohort is larger than the previous one, while among Arab Israelis the significant decline in fertility since 2004 has made younger cohorts similar in size.

A second difference is the fluctuating age structure among the Jewish population. Approximately every 30 years, an echo of the previous cohort can be identified (for example, the baby boom following a war or a large wage of immigration), while among Arab Israelis the structure stays relatively stable.

A third difference is the impact of aging processes: in 2017, among Jews, 8% of men and more than 10% of women were over the age of 70, as opposed to 2.5% of Arab Israeli men and almost 3.5% of Arab Israeli women.

Based on the Taub projections, the population of Israel is expected to grow from about 9.05 million in mid-2019 to around 12.8 million in 2040 (the principal scenario). The annual growth rate will fall across this period from 1.87% to 1.52%, driven by the reductions in fertility.

Other scenarios, which assume a slower reduction in mortality or fertility, change the final estimate. But across all scenarios, the projected final population in 2040 will range from 12.4 to 12.8 million, and the proportion that is Jewish/other will fall to 78%, where it will stabilize.
proportionate growth in the number of children aged 0-2, by sector

According to Taub Center predictions, a substantial increase in the number of over 70-year-olds is expected – from 669,000 in 2017 to about 1.41 million in 2040. This group is likely to have a majority of women, while a predicted decrease in mortality rates for men is expected to gradually decrease the ratio of women to men from 1.34 to 1.3 in the Jewish sector, and from 1.23 to 1.18 in the Arab sector.

The rate of aging in the Arab Israeli sector will be higher than in the Jewish sector: in the Jewish sector, the number of those over the age of 70 is predicted to increase by 88% (from 615,000 to 1.21 million), in the Arab Israeli sector, it is predicted to increase four-fold – from 54,000 to 197,000. This change has implications for employment and welfare among adults in general, and in the Arab Israeli sector, in particular.

In contrast, among children, there will be a decline in rates of growth in the Jewish sector: with the assumption that fertility rates will not change, this expected slowdown in the number of children born will occur because of the relatively low number of women in their early to mid-twenties. This trend is expected to change by 2030 – at which time, there is a predicted sharp increase in the number of annual births in the Jewish sector due to the number of girls reaching childbearing age.

Among Arab Israelis, the forecasts differ: although the fertility rate is declining, since large age groups have begun to enter peak fertility ages , this is likely to generate a notable rise in the number of births in the sector. This rise will stop when the next incoming age group, which is considerably smaller than the previous one, reaches ages 20 and 30.

In the middle section of the age pyramid is the large group of 30-40-year-olds who will age into their 50s within the next 20 years. This is where productivity and income tends to reach its maximum.

“On the one hand, the large number of people currently in their 30s embodies immense potential in terms of a rise in consumption and economic growth,” explains researcher Alex Weinreb, “but on the other hand, there is also a large group of 5 to 19-year-olds who will be entering the labor market and institutions of higher education in the coming years, and we should prepare for this.”

Growth rate predictions for 25 to 29-year-olds between 2017 and 2040 show a sharp increase from a current annual rate of 1%, to more than 2% in 2025 and 2.5% in 2035. These growth rates are likely to place substantial challenges before the Israeli economy.

Relating to the latest developments in the “coronavirus” outbreak, Prof. Weinreb adds: “It doesn’t seem as though the current Covid-19 pandemic (“coronavirus”) will have a large effect on mortality rates in Israel, or on life expectancy. Remember, every year, more than 45,000 people die in Israel, about 17000 of them from heart disease and cancer, so coronavirus is not, on its current trajectory, going to change any of the assumptions used to shape these projections.

What we know so far is that the average age of death is 82, and most of those people have had other serious health conditions. So it’s more an important test for the healthcare system, and for the political class than a demographically significant event in the population. That will be the case even if, God forbid, deaths head into the 1000s.”

“Israel is a unique country demographically. Its high fertility, low mortality, and positive migration all contribute to a rapid rate of population growth. It is important to understand how this growth is expected to manifest itself in the various population groups in order to determine the steps required to help Israel deal with the anticipated changes,” says Professor Avi Weiss, president of the Taub Center.

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749; 02 567 1818 ext. 110.

 

 

 

Population Projections for Israel, 2017-2040

In demographic terms, Israel is a unique country: it is characterized by an unusual combination of high fertility rates, low mortality rates, and positive migration. All of these factors lead to a rapid rise in population.

Mortality

Mortality rates have been decreasing over the past decade in every population group and in almost every age group (until age 89) – an indication of an overall improvement in the health of the population.

  • Among Jews, the decline in mortality rates among men is greater than among women in every age group under age 55.
  • Mortality rates among Arab Israelis – both for men and women – have decreased less than among the Jewish population in most age groups.

Fertility

The number of births in Israel is very high relative to mortality rates and in comparison to other developed countries, and explains about 80% of the annual population growth.

  • Trends from 2000 are expected to continue: a decline in fertility among Jewish women up to age 25, stability in the rate in women aged 25-29, and a marked increase in the rate among those aged 30-44 (with a slowdown in the rate of increase).
  • In the 35 to 39-year-old age group, fertility rates are expected to rise as women’s age at first birth increases, pushing subsequent births to older ages. An increasing number of these women will be single parents.
  • Among Arab Israelis, it is predicted that the decline in fertility rates observed since 2000 will continue, though at a slower pace.
  • Relative stability is expected in the overall fertility rate of the Jewish population in the coming decade, followed by a slight decline – by 2030 the total fertility rate is expected to be below 3 children on average per woman.
  • At the same time, a decline in overall fertility is expected in the Arab Israeli population – by 2040, the total fertility rate in Arab Israeli society is expected to be 2.75 children per woman, on average.
  • Due to changes in the number of births over the last 20 years, the number of Arab Israeli women aged 20 in 2037 is likely to be the same as the number in 2017, while the number of Jewish women is likely to be much higher than their number in 2017.

Migration

The overall migration balance in Israel is positive and rising. Over the past few decades Israel has also become an attractive destination for labor migrants and asylum seekers.

  • Between 2002 and 2017, 184,000 net people immigrated to Israel, the vast majority below the age of 40.
  • Given the 20% rise in immigration in 2019, it is reasonable to assume that the flow of immigration will continue to be greater than the emigration rate.

Population age structure

Israel’s current population is relatively young, both in the Jewish and the Arab sector: In the Jewish sector there are 140,000 infants versus 60,000 70-year-olds, and in the Arab Israeli sector, 42,000 versus only 5,300, respectively. In both sectors, there are more men among younger people, and more women among older age groups. However, there are three essential differences in the population structure between Jewish and Arab Israelis.

  • Putting aside the effects of migration, the Jewish population has grown slowly but consistently, while among Arab Israelis a significant decline in fertility since 2000 has made younger cohorts similar in size.
  • In the Jewish population the age structure has predictable waves and dips every 30 years, while among Arab Israelis the structure has remained relatively stable.
  • Among Jews, 8% of men and more than 10% of women were over the age of 70 in 2017. Among Arab Israeli men and women, the equivalent shares were 2.5% and almost 3.5%.

Projections for 2040

The Taub Center study makes the following forecasts of Israel’s population by 2040 using a range of realistic assumptions regarding future fertility, mortality and migration patterns.

  • The country’s population is projected to reach between 12.4 and 12.8 million people in 2040.
  • The proportion of the population that is Jewish/other is expected to fall to 78%, where it will stabilize.
  • A substantial increase in the number of over 70-year-olds is expected – from 669,000 in 2017 to about 1.41 million in 2040, with a higher rate of aging in the Arab Israeli sector.
  • In the Jewish sector, the number of births will grow at a decreasing rate during the 2020s because of the lower number of Jewish women in their early to mid-twenties (relative to those aged 30-34). By 2030, the number of births will increase sharply as a large number of women reach childbearing age. Though the fertility rate is declining in the Arab sector, large age groups have begun to enter peak fertility ages, which is likely to generate a notable rise in the number of births in the sector. Together, these two population dynamics will change the ratio of Jewish:Arab births, first reducing it, then increasing it to its current level.
  • A large group of people will age into their 50s in the next two decades – a high point for individual productivity and income, and therefore tax income and consumption for the state.
  • There is a large group of 5 to 19-year-olds who will be entering the labor market and institutions of higher education in the coming years, much larger than the group that entered these institutions in the last 15 years.
    pic1

Implications

Given the above projections, appropriate measures should be taken to integrate large numbers into higher education and the labor market; preparations should be made for old-age pensions and long-term care services; and timing investment into the education system is imperative. Understanding future growth patterns for each segment of the population will help policy planning for growing populations in Israel.

Can Israel’s coronavirus response protect a neglected healthcare system?

As of this article’s publication, Israel has been doing relatively well in the war against COVID-19 in comparison with other countries. This success has to do, in part, with Israel’s age structure, geography, overall health situation, ‘emergency culture’, and the state of the economy.

Israel’s population, about 9 million people spread over a small land mass, is relatively young: those ages 65 and older make up about 10% of the population, compared to about 23% in Italy and about 17% in the U.S. This unique age structure and the country’s high standard of living also translate into a population in relatively good health. This means that underlying risk factors and old age, both of which appear to affect the severity of COVID-19, are less prevalent in Israel than in other countries.

In addition, Israel’s experience with other emergency situations results in the ability of officials and the population to adapt quickly while security resources, including advanced technology, help the country battle the spread of the virus. Israel’s high standard of living and developed social safety net help cushion the blow from the virus.

As in the rest of the world, Israel’s healthcare response thus far encompasses two central approaches: social distancing and direct medical care when necessary. Social distancing and lockdowns are intended to reduce the spread of the virus – that is, to “flatten the curve” – so as not to overwhelm hospitals’ capacity to care for those with the virus.

As such, social distancing is intended to protect vulnerable segments of the population and the healthcare system itself. At the same time, direct medical care is provided to protect patients already ill with the virus.

Indeed, protecting the healthcare system itself is more critical in Israel than in other developed countries because of the system’s shortcomings in the years leading up to the outbreak. Before coronavirus, Israel’s hospitalization system was already overburdened due primarily to insufficient infrastructure and funding, combined with a distorted incentive system.

While Israel’s medical staff and technology are among the very best in the world, its infrastructure has been in a state of neglect for some time. The number of hospital beds per 1,000 population in Israel is relatively low: 2.2 versus 3.6 in the OECD. Even when adjusting for the young age structure, the number of beds reaches 2.5, insufficient to make up the gap between Israel and these other countries.

The relative shortage is even more acute in the country’s periphery (1.32 and 1.55 beds per 1,000 population in the North and South, respectively, compared to 2.36 in Jerusalem).

beds per pop ENG

With regard to funding, Israel’s national expenditure on healthcare stands at about 7% of GDP, lower than the OECD average of about 9%. The share of hospitalization spending out of the national expenditure on healthcare is declining worldwide. Nevertheless, in Israel the decline is especially sharp, and the expenditure is consistently low relative to the average in other countries. What is worse, the disparity between Israel and other countries continues to widen.

In addition to inadequate infrastructure, the mechanism by which health funds in Israel pay hospitals (the “Cap mechanism,” which is regulated by the State) incentivizes use of hospital services while disincentivizing provision of care in the community, whether in health clinics or nursing homes. This incentive structure results in limited investment in community-based infrastructure for provision of medical care, which further increases the strain on Israel’s hospitals.

As a result of these systemic shortcomings, treatment and service quality are in danger in Israel’s healthcare system, specifically in its hospitalization system. Israel’s hospital bed turnover rate is particularly high, reflecting relatively short hospitalizations on the one hand, and particularly high bed occupancy rates on the other hand.

The average bed occupancy rate in Israeli hospitals is exceptional at about 94%, versus an average of 75% in the OECD. This means that, at the outset, Israel has little slack in the hospitalization system. The crowding out of regular patients by coronavirus patients would be accompanied by a serious risk of high ‘collateral mortality.’

Thus, it appears that Israel’s fight against the coronavirus outbreak is particularly reliant on not overwhelming a healthcare and acute care hospital system that are already under-equipped, underfunded and overburdened.

Anticipating the Total Mortality Impact of Coronavirus in Israel

The study’s authors do not expect the number of deaths from the virus to exceed several hundred. However, they highlight the risk of a significant increase in Israel’s overall mortality due to the increased diversion of medical resources – which are limited to begin with – to deal with the virus.

There is a great deal of uncertainty surrounding both the levels of coronavirus infection and its case fatality rate (that is, the number of people infected with coronavirus who die).  In addition to the direct mortality from the virus, it will almost certainly also have indirect “collateral” mortality effects, due to the reallocation of medical resources, which are limited to begin with, to address the outbreak. Despite their inherent uncertainty, mortality estimates are an important tool for policymaking.

A new Taub Center study, conducted by demographer Prof. Alex Weinreb and health economist Prof. Dov Chernichovsky, lays out the direct and indirect effects of mortality from the coronavirus pandemic in Israel. The assessment includes a number of possible scenarios based on the virus mortality rates in China and Italy and mortality rates for from other causes in Israel and the EU.

Israel’s relatively young age structure means that the mortality rate from the virus is expected to be significantly lower than the rate in Italy or the Hubei Province in China

Mortality from the coronavirus is low for young people, and increases with age. Because some of those diagnosed with the virus do not show any symptoms, estimates based on the number of deaths among confirmed cases overstate mortality. On the other hand, the fact that there is still not long-term tracking of infected people might result in an underestimation of mortality rates. In Italy, where a large share of the population is elderly, the virus mortality rate up to age 70 is lower than the rate in China but, above age 70, is 15% higher.

Therefore, the crude mortality rate in Italy is more than twice the rate in China’s Hubei Province – 5.8% compared to 2.4%. In general, Israel’s young age structure (meaning a large percentage of the population is under 65, and a much larger share than in China or Italy is under 30) indicates that the mortality rate from the disease will be lower in Israel than in China and Italy.

A series of projections apply the age-specific mortality data from China to the Israeli population in order to forecast the number of coronavirus deaths in Israel under a number of different scenarios. The range of scenarios cover:

  • Infection rates in the population as a whole of 0.1%, 0.5%, 1%, 2%, 5%, 10%, 20%, and 30%.
  • Coronavirus mortality rates that range from the same as the adjusted rates in Hubei Province to 50% and 75% reductions in those rates. These reductions reflect the anticipated improvements in dealing with the virus as time passes and as the basic ability of the Israeli medical system to cope with emergencies increases.

The scenarios posit infection rates from coronavirus ranging from a minimum of 9,300 infected people (0.1%) to 2.79 million (30%). The Taub Center study presents three mortality scenarios according to the different infection rates: at an infection rate of 0.1% with the same mortality rate as in Hubei, Israel could expect to have zero deaths among those ages 20 and younger and up to about 100 deaths among those ages 70 and older, resulting in approximately 150 virus-related deaths total across all age-groups.

The higher the infection rate, the higher the expected number of deaths: at the infection rate of 10% at the Hubei mortality rate, the number of deaths is expected to reach up to 15,400 Israelis, and at an infection rate of 30%, up to 46,000.

In each scenario, significant medical successes reducing the mortality rate to a quarter of the rate observed in Hubei Province would cut the number of deaths accordingly. But it would still result in 39 deaths at a 1% infection rate and 11,000 deaths at a 30% infection rate.

By comparison, in 2016 there were 43,964 deaths from other causes in the country. About 11,000 of these deaths were from cancer and 6,800 from heart disease – the two most common causes of death in Israel. In the worst-case scenario (infection rates about 8% with Hubei mortality rates), coronavirus could become the leading cause of death in Israel.

However, Taub Center researchers Weinreb and Chernichovsky warn of the indirect effects that may result from the fight against the virus: “The coronavirus could potentially affect other types of mortality. We expect mortality rates from other causes to rise as hospitalization of coronavirus patients increases. The Israeli hospital system is deficient to begin with, as shown by another Taub Center study published a few months ago.”
Fig ENG top
Fig ENG middle
Press Release: Anticipating the Total Mortality Impact of Coronavirus in Israel March 29, 2020

Worst case scenario – coronavirus will itself become the leading cause of death in Israel, but it will also increase deaths from other causes: this will be the indirect mortality effect of the virus

In addition to the direct effect of coronavirus on mortality rates, the indirect effects on mortality rates from other causes must also be taken into account. This is due to the poor state of Israel’s hospital system. In Israel, there are 2.2 beds for general care per 1,000 residents (compared to 3.6 in the OECD and 4.1 in countries with a similar health system to Israel). The hospital bed occupancy rate is 94% (compared to 75% in the OECD), and the average length of stay in hospitals is relatively short – 5.2 days per patient (compared with 6.7 in the OECD).

The number of visits to hospital emergency rooms in Israel is twice that of countries with similar healthcare systems. In addition, even before the outbreak of the pandemic, Israel’s general hospitals were operating at full capacity, with almost no emergency reserves, and no alternatives to hospitalization available in the community or nursing homes.

Another reason for the expansion of indirect mortality is damage the virus has inflicted on Israel’s medical personnel, causing a reduction in available medical staff (about 3,000 had been sent into quarantine by March 22, 2020), which was limited to begin with due to a lack of positions. The current situation inevitably leads to medical resources being diverted to cope with the coronavirus and is expected to come at the expense of other life-saving treatments such as heart catheterization and cancer detection.

In Italy, the burden on the hospital system has resulted in the indirect mortality of “normal” patients whose treatments have been disregarded due to the virus, and in England millions of operations have been postponed due to increasing pressure on the health system.

The authors estimate that in Israel, a moderate 2% increase in mortality rates from other causes would increase the overall number of deaths over a six-month period by about 460. At that time, a 20% increase in mortality from causes other than the coronavirus would result in an increase of about 4,600 deaths.

Both these estimates assume that the pandemic will end within six months. If it were to continue beyond that, the number of deaths from other causes would be higher yet.

 

The sharp increase expected in the number of deaths alongside the possible increase in infection rates bolster the Israeli government’s social distancing and economic shutdown policies – policies that should slow the spread of the virus and “flatten the curve.”

Slowing down the rate of transmission will make things easier for the hospital system’s weak infrastructure and provide the system with time to add hospital beds and other essential equipment, and for its staff to hone their clinical skillset in relation to this virus.

However, similar efforts should also be invested in protecting against mortality from other causes. Minimizing mortality from coronavirus at the cost of higher levels of indirect mortality should not be used to evade responsibility for long-term neglect of parts of the Israeli medical system.

Press Release: Anticipating the Total Mortality Impact of Coronavirus in Israel

In light of the outbreak of the coronavirus pandemic and the unprecedented effort to curb the number of people infected, the Taub Center has published an assessment of the effect of the pandemic on direct mortality from the virus and indirect mortality as a result of the likely reduction in the treatment of other diseases.

The study’s authors, experts in demography and healthcare economics, do not expect the number of deaths from the virus to exceed several hundred. However, they highlight the risk of a significant increase in Israel’s overall mortality due to the increased diversion of medical resources – which are limited to begin with – to deal with the virus.

There is a great deal of uncertainty surrounding both the levels of coronavirus infection and its case fatality rate (that is, the number of people infected with coronavirus who die).  In addition to the direct mortality from the virus, it will almost certainly also have indirect “collateral” mortality effects, due to the reallocation of medical resources, which are limited to begin with, to address the outbreak. Despite their inherent uncertainty, mortality estimates are an important tool for policymaking.

A new Taub Center study, conducted by demographer Prof. Alex Weinreb and health economist Prof. Dov Chernichovsky, lays out the direct and indirect effects of mortality from the coronavirus pandemic in Israel. The assessment includes a number of possible scenarios based on the virus mortality rates in China and Italy and mortality rates for from other causes in Israel and the EU.

Israel’s relatively young age structure means that the mortality rate from the virus is expected to be significantly lower than the rate in Italy or the Hubei Province in China

Mortality from the coronavirus is low for young people, and increases with age. Because some of those diagnosed with the virus do not show any symptoms, estimates based on the number of deaths among confirmed cases overstate mortality. On the other hand, the fact that there is still not long-term tracking of infected people might result in an underestimation of mortality rates. In Italy, where a large share of the population is elderly, the virus mortality rate up to age 70 is lower than the rate in China but, above age 70, is 15% higher.

Therefore, the crude mortality rate in Italy is more than twice the rate in China’s Hubei Province – 5.8% compared to 2.4%. In general, Israel’s young age structure (meaning a large percentage of the population is under 65, and a much larger share than in China or Italy is under 30) indicates that the mortality rate from the disease will be lower in Israel than in China and Italy.

A series of projections apply the age-specific mortality data from China to the Israeli population in order to forecast the number of coronavirus deaths in Israel under a number of different scenarios. The range of scenarios cover:

  • Infection rates in the population as a whole of 0.1%, 0.5%, 1%, 2%, 5%, 10%, 20%, and 30%.
  • Coronavirus mortality rates that range from the same as the adjusted rates in Hubei Province to 50% and 75% reductions in those rates. These reductions reflect the anticipated improvements in dealing with the virus as time passes and as the basic ability of the Israeli medical system to cope with emergencies increases.

The scenarios posit infection rates from coronavirus ranging from a minimum of 9,300 infected people (0.1%) to 2.79 million (30%). The Taub Center study presents three mortality scenarios according to the different infection rates: at an infection rate of 0.1% with the same mortality rate as in Hubei, Israel could expect to have zero deaths among those ages 20 and younger and up to about 100 deaths among those ages 70 and older, resulting in approximately 150 virus-related deaths total across all age-groups.

The higher the infection rate, the higher the expected number of deaths: at the infection rate of 10% at the Hubei mortality rate, the number of deaths is expected to reach up to 15,400 Israelis, and at an infection rate of 30%, up to 46,000. In each scenario, significant medical successes reducing the mortality rate to a quarter of the rate observed in Hubei Province would cut the number of deaths accordingly. But it would still result in 39 deaths at a 1% infection rate and 11,000 deaths at a 30% infection rate.

By comparison, in 2016 there were 43,964 deaths from other causes in the country. About 11,000 of these deaths were from cancer and 6,800 from heart disease – the two most common causes of death in Israel. In the worst-case scenario (infection rates about 8% with Hubei mortality rates), coronavirus could become the leading cause of death in Israel.

However, Taub Center researchers Weinreb and Chernichovsky warn of the indirect effects that may result from the fight against the virus: “The coronavirus could potentially affect other types of mortality. We expect mortality rates from other causes to rise as hospitalization of coronavirus patients increases. The Israeli hospital system is deficient to begin with, as shown by another Taub Center study published a few months ago.”
Fig ENG top
Fig ENG middle

Worst case scenario – coronavirus will itself become the leading cause of death in Israel, but it will also increase deaths from other causes: this will be the indirect mortality effect of the virus

In addition to the direct effect of coronavirus on mortality rates, the indirect effects on mortality rates from other causes must also be taken into account. This is due to the poor state of Israel’s hospital system. In Israel, there are 2.2 beds for general care per 1,000 residents (compared to 3.6 in the OECD and 4.1 in countries with a similar health system to Israel). The hospital bed occupancy rate is 94% (compared to 75% in the OECD), and the average length of stay in hospitals is relatively short – 5.2 days per patient (compared with 6.7 in the OECD).

The number of visits to hospital emergency rooms in Israel is twice that of countries with similar healthcare systems. In addition, even before the outbreak of the pandemic, Israel’s general hospitals were operating at full capacity, with almost no emergency reserves, and no alternatives to hospitalization available in the community or nursing homes.

Another reason for the expansion of indirect mortality is damage the virus has inflicted on Israel’s medical personnel, causing a reduction in available medical staff (about 3,637 had been sent into quarantine by March 22, 2020), which was limited to begin with due to a lack of positions. The current situation inevitably leads to medical resources being diverted to cope with the coronavirus and is expected to come at the expense of other life-saving treatments such as heart catheterization and cancer detection.

In Italy, the burden on the hospital system has resulted in the indirect mortality of “normal” patients whose treatments have been disregarded due to the virus, and in England millions of operations have been postponed due to increasing pressure on the health system.

The authors estimate that in Israel, a moderate 2% increase in mortality rates from other causes would increase the overall number of deaths over a six-month period by about 460. At that time, a 20% increase in mortality from causes other than the coronavirus would result in an increase of about 4,600 deaths. Both these estimates assume that the pandemic will end within six months. If it were to continue beyond that, the number of deaths from other causes would be higher yet.

“There is a great deal of uncertainty,” says Professor Weinreb. “We don’t know what the overall infection rate will be and if the Hubei and Italy rates can be applied to Israel. There is room for hope, but given that only a month has passed since the first cluster of patients were diagnosed in Israel, close to the average duration between infection and death in China, it’s fair to say that we have a long way still to go.”

Professor Chernichovsky adds: “There are also uncertainties about the healthcare system’s resources, and those of general hospitals in particular, and the impact of their being diverted to deal with the pandemic on mortality rates from other causes. The estimates we present here are important for outlining policy considerations and clearer guidelines regarding the allocation of medical resources between corona patients and other patients. We might find ourselves in a situation where saving lives from corona comes at a huge cost – the loss of life from other medical causes.”

The sharp increase expected in the number of deaths alongside the possible increase in infection rates bolster the Israeli government’s social distancing and economic shutdown policies – policies that should slow the spread of the virus and “flatten the curve.”

Slowing down the rate of transmission will make things easier for the hospital system’s weak infrastructure and provide the system with time to add hospital beds and other essential equipment, and for its staff to hone their clinical skillset in relation to this virus. However, similar efforts should also be invested in protecting against mortality from other causes. Minimizing mortality from coronavirus at the cost of higher levels of indirect mortality should not be used to evade responsibility for long-term neglect of parts of the Israeli medical system.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.

 

Why do Israeli parents struggle to find work-life balance?

This past week witnessed the rollout of additional measures mandated by the Israeli government to prevent the spread of the coronavirus in Israel, including the closure of all schools and kindergartens and a shift to working from home for all non-vital industries. These measures make it an even bigger challenge than usual to be a working parent in Israel, where fertility and labor market trends make it difficult to juggle family and career even during normal times.

First of all, fertility in Israel is exceptionally high. Israel’s birth rate stands at 3.1 children per woman, on average, which is far higher than the rate in any other developed country. Though fertility is especially high in the Haredi community (7 children per woman), the rise in Israel’s fertility over the past two decades has actually been largely driven by the secular and traditional Jewish populations, whose combined fertility rate is greater than 2.2.

This means that secular and traditional women alone have more children, on average, than the general population in any other developed country.

Furthermore, fertility rates in Israel remain similar to their level during the 1980s despite significant improvement in the education levels of Israeli women and their large-scale entry into the labor market, and despite a rise of close to three years in women’s average age at first birth since the turn of the century.

In addition to having more children to care for than their peers in other developed countries, which also means more children running around the house in the coming weeks while school is cancelled, Israeli parents also have very high employment rates. Employment rates among Israeli women have risen significantly in recent decades, and in particular among mothers of young children.

In 2018, mothers of children ages birth to 4-years-old had similar employment rates to those among mothers of older children or women without children. Furthermore, Taub Center researchers found that among non-Haredi Jewish women employment rates are similar for women without children and mothers with 1 to 3 children. In other words, non-Haredi Jewish women with up to 3 children remain in the labor market after the births of their children.

It’s not just the mothers who are working a lot, but the fathers as well. The majority of households with children under the age of 18 (71%) are coupled households. As employment among women increases, the gender division between work and home is changing in Israel, and households are becoming more egalitarian from an employment perspective.

Thus, the share of households with children in which both parents are employed full-time rose from 30% in the population at-large in 2002 to 40% in 2017.

Still, there are large differences between population groups with respect to household employment structure. About 51% of non-Haredi Jewish households have two parents working full-time, as compared to 25% of Arab Israeli households and only 13% of Haredi households.

In contrast, in 43% of Haredi households neither partner works full-time, compared with 15% of Arab Israeli households, and just 11% of non-Haredi Jewish households. It is important to note that the two population groups in Israel characterized by the lowest employment rates are Haredi men (52%) and Arab Israeli women (37%).

In general, the average number of combined weekly work hours of two parents with children is 59, yet here too there are major differences among population groups. Non-Haredi Jewish couples work an average of 67 collective hours, while Arab Israeli couples work an average of 50 hours and Haredi Jewish couples work an average of 34 hours.
work hours for parents with children 2017
Non-Haredi Jewish couples also spend more time on the road commuting to work. Only 22% of non-Haredi Jewish couples both work within their residential area, as compared to about 50% of Haredi households and 36% of Arab Israeli households. Among women, non-Haredi Jewish women report a longer commuting time than Arab Israeli and Haredi women.

Given the combination of many children, long works hours, and lengthy commutes, it is perhaps not surprising that Israel ranks fourth from last in the OECD with respect to work-life balance. Work-life balance satisfaction was found to be higher among Israelis without children under the age of 18 than among those with children and, by sector, satisfaction was found to be the lowest among non-Haredi Jews.

Israel’s unique characteristics make it difficult for many parents today to attain an adequate work-life balance even under normal conditions, let alone in the extremely unusual conditions we find ourselves in today. We at the Taub Center wish all Israelis good health and all working parents good luck in the coming weeks!

 

Carmel Blank

Dr. Blank is a faculty member in the Behavioral Sciences Department at the Ruppin Academic Center and a researcher in the Taub Center Initiative on Early Childhood Development and Inequality. She has a BA in sociology and communication (with high honors), an MA in sociology (with honors), and a doctorate in sociology from Tel Aviv University.

In addition, she did her post-doctoral work at the University of Durham in England. Her central area of research is in educational inequality and her doctorate dealt with the link between disciplinary infractions in class and student achievement. Among other things, she looked at how different classroom disciplinary climates contribute to achievement gaps between students. Today, in addition to her work on inequalities in early childhood, she investigates gender gaps in learning the STEM subjects at the bagrut level and the way in which strong students are able to use the “second chances” tracks (like pre-university mechinas) to their advantage in gaining higher education.

Investing in the future – Israel’s approach to social welfare

In the past decade, welfare state scholars have begun to distinguish between welfare programs providing “social protection” (e.g., income support and old age pensions) and those focused on “social investment” (i.e., development of individuals’ abilities and skills so they can better integrate into the labor market).

Israel has been putting more of an emphasis in recent years on social investment; that is, there appears to be a government effort to increase its focus on enhancing human capital over programs intended to address social distress and deprivation.

Israel’s preference for social investment programs can be seen from its spending patterns. Though Israel’s overall level of social expenditure is low compared to other welfare states, its share of expenditure on social investment within this spending is relatively high and similar to the share in social democratic welfare states like Sweden and Denmark.

Expenditure on social investment, social protection and other spending

A main objective of any welfare state is to reduce the incidence of poverty among its citizens. Israel’s poverty rate before transfer payments and taxes (in terms of market income) stands at 23% and is lower than the average for other OECD countries (28% on average).

However, when the poverty rate is examined in terms of disposable income – what people actually have in their pocket after taxes and transfer payments – Israel tops the chart at a poverty rate of 18%, versus an average of 12% in other welfare states.

Even when taking the elderly out of the picture and looking only at the working-age population, poverty in terms of disposable income is significantly higher in Israel than in other welfare states. One reason for this is that poor households with a working-age head of household in Israel are much larger in size than similar households in other developed countries and, therefore, the amount of income and/or assistance required to lift such a family out of poverty is much larger.

Another explanation is that among the working-age population, the generosity of social protection programs like income support and child benefits is limited. Despite a rise in the average monthly wage and in the poverty line over the past decade, the sum total of these two benefits (in real terms) has remained stable, and its distance from the poverty line has increased, thus limiting their capacity to assist people living in poverty.

This may indicate a concern among policy makers in Israel that overly generous benefits for families with a working-age head of household may serve as a disincentive to labor force participation.

Income support and child allowance relative to the average wage and poverty line

Instead of focusing on the social protection programs described above, Israel has witnessed an expansion in recent years of programs that invest in future skills or capabilities, including the Saving for Every Child program and the expansion of daycare services.

The Saving for Every Child program, which was launched at the beginning of 2017, ensures that a lump sum of money will be available to every child in Israel at the beginning of their adult life. From birth, an amount of NIS 51 is deposited monthly into the child’s account, and this money becomes available to the child at the age of 18 or 21. Thus, the program does not provide immediate assistance to poor families, but rather ensures that even children from poor families begin their adult lives with some savings.

Nonetheless the program’s effectiveness at reducing the incidence of poverty and enabling social mobility – a main goal of the welfare state, as mentioned above – has been called into question by some experts because of the specific characteristics of the program.

Every Israeli child, rich or poor, receives this money. The parents of the child have the option of choosing the investment channel for the money, whether in a bank (lower risk, but provides lower expected returns)­ or a provident fund (higher risk, but returns are expected to be greater). Parents also have the possibility of matching the amount through an automatic deduction from their universal child allowance.

In reality, less than a third of parents in the lowest income quintile add money to the state contribution, versus 65% of parents in the highest quintile, who also choose to put the money in the higher-yield provident funds. Thus, it appears that children from well-off families are benefiting more from the program than children from lower-income families, which could inhibit social mobility.

Daycare services for young children, another major component of Israel’s social investment welfare policy, have expanded since the 2011 social protests. Nonetheless, the conditions of eligibility for subsidization of daycare, which is limited to working mothers, and the limited supply of daycare centers leads to a restricted and differential accessibility to daycare.

This is reflected in the large differences in daycare users across Israel’s various population groups: only 8% of Arab Israeli households with children of the relevant ages use daycare services, while the rate is 16% among the non-Haredi Jewish population and 41% among Haredim.

Does the Saving for Every Child program increase social mobility? Are daycare services reaching all of Israel’s population groups? Israel’s welfare officials will need to contend with these challenges as they continue to shape Israel’s welfare system and its commitment to social investment policies.

 

Achievements and Gaps: The Education System in Israel – A Status Report

This study examines educational achievement gaps by nationality and socioeconomic background. Findings indicate a continuous improvement – although the past few years have seen a slowdown – in student achievement for both Jews and Arabs, as well as a narrowing of the gaps between the national sectors, especially within similar socioeconomic groupings. Nevertheless, the gaps between strong and weak students remain great, and in an international comparison, Israel ranks low for student achievement and high for achievement gaps.

The education system attempts to allow parents and student a certain amount of choice between frameworks to meet their varied needs, while trying to maintain equality. In some instances, variety causes segregation and a widening of gaps.

Preschool education

  • The gaps between attendance rates of 3–4-year-olds in Hebrew and Arab education have drastically declined over the past few decades: in the Arab education sector, attendance rates for 3-year-olds increased from 15% in 1982 to 72% in 2018 and for 4-year-olds from 30% in 1982 to 89% in 2018.
  • In the upper income quintiles, private expenditure on preschool education is much higher than in the lower ones, indicating the emergence of stratification. This did not change substantially after the implementation of the Compulsory Education Law for ages 3-4 in 2013.

Primary and middle school education

  • The share of those seeking private frameworks within the Hebrew system is low, while the share is more than 25% within the Arab system.
  • There has been a rise in the number of Arab Israeli parents who choose to send their children to schools in the Hebrew education system.
  • In middle school there is also grouping along educational criteria (which quite often coincide with socioeconomic background), creating differentiation along socioeconomic lines.

High school education

  • There are almost no Ministry of Education restrictions on admissions requirements and parents’ payments in high school, leading to more parent freedom and creating differentiation reflected in the socioeconomic composition of schools’ student bodies.
  • Within schools, differentiation is expressed for the most part in tracking into academic and technological education tracks.

Achievements and educational gaps

Scores have been improving and gaps narrowing since the start of international testing in the early 2000s and in the Meitzav exams since 2007. The trend is especially notable among Arab Israelis, although gaps remain large.

Primary school education

  • Between 2008 and 2017, student scores in the 5th grade Meitzav exams rose by about 13% in mathematics and about 8% in English, with the greatest gains in the Arab education system – 22% and 13% respectively.
  • Gaps between students in schools serving the most affluent population and those serving the weakest population have narrowed substantially – across the Hebrew and Arab education systems and within each system, in math and in English.
  • On the PIRLS exam, Israel ranks relatively low – 29 out of 50 countries, and relatively high in terms of student gaps – 13. The main reason is the large gap between students in Hebrew versus Arab education.

Middle school education

  • Achievement gaps on the 8th grade Meitzav exams are large between the Hebrew and Arab sectors in English, math, and science, although they have narrowed in all cases. Among those with similar socioeconomic backgrounds, gaps between the sectors are smaller and narrowing.
  • The gaps have narrowed most substantially in the sciences: the average score rose by 110 points in Arab education and by 79 points in Hebrew education.
  • On the TIMSS exams, scores increased at a faster rate than the average in other countries until 2011. This increase has since halted.

High school education

  • Bagrut qualification rates still rose substantially between 1990 and 2015.
  • For bagrut qualification that fulfills requirements for admission to higher education, student achievement gaps grew between students from different socioeconomic groupings among Jews, but did not change and even narrowed between Arab Israeli students.
  • Israel’s students’ PISA exam scores are lower than the overall OECD country average and the gaps between the strongest and the weakest students are the greatest.
  • Hebrew speaking students’ scores on the 2018 PISA exams were higher than the OECD average (506 versus 487), while the achievements of Arab speakers was much lower (362) and declined by almost 40 points between 2006 and 2018.

 

Press Release – Achievements and Gaps: The Education System in Israel – A Status Report

Embargo until Monday (February 10), 17:00

Following the public storm over the disappointing achievements of Israel’s students relative to students from other OECD countries on the latest international PISA exams, and considering the large gaps between Jewish and Arab students, the Taub Center is publishing a new study by senior researcher Nachum Blass on the education system in Israel.

The study examines educational achievement gaps by sector and socioeconomic background. Gaps in enrollment rates and academic achievements are based on data from Israel as well as the results of international exams for students in formal education (ages 3-18). Findings indicate a continuous improvement – although the past few years have seen a noticeable slowdown – in student achievement for both Jews and Arabs, as well as a narrowing of the gaps between the sectors, especially within similar socioeconomic groupings.

Nevertheless, the gaps between strong and weak students remain great, and in an international comparison, Israel ranks low for student achievement and high for achievement gaps. Enrollment rates for all students are close to the maximum, although in the youngest age groups (ages 3-4) and in the 17-year-old cohort, there are still notable differences between rates in the Jewish and Arab sectors, and in particular, within the Bedouin sector.

Existing educational frameworks allow choice and variety, but create segregation and a widening of gaps

The education system attempts to allow parents and student a choice between frameworks to meet their varied needs, while trying to maintain equality. In some instances, variety causes segregation and a widening of gaps.

In preschool (ages 3-5), enrollment is by catchment areas set by the local authorities. For children in Hebrew education (for the most part Jewish children), there is a choice between State preschools, State-religious, Haredi, and private preschools. It appears that many parents of 3-4-year-olds use the freedom of choice to choose a framework outside of their catchment area. Evidence of this is the amount of private expenditure on preschool especially among those in the highest income quintile. That is, even after the implementation of the Compulsory Education Law for Ages 3-4 in 2013, parents of preschoolers seek preschool frameworks for their children that result in stratification. Similar opportunities exist in the Arab educational sector, although due to the overall weaker socioeconomic status of this population, the numbers seeking private preschool frameworks are considerably lower.

In primary school, the share of those seeking private frameworks (recognized but unofficial education) within the Hebrew system is low, while within the Arab system, the share is more than 25%. Students in these frameworks are in the most affluent deciles. Their choice shows, among other things, the dissatisfaction with official education, and it is likely to increase inequalities in this sector.

Stratification in primary schools stems from the fact that many schools are considered “special” (like those for the arts) as well as from the elimination of catchment areas and the creation of combined catchment areas for specific schools. Studies in special schools most often include additional costs, sometimes quite high, as well as entrance exams. Geo-political realities are the main reason for the separation between Hebrew and Arab schools.

A phenomenon worth mentioning is the rise in the number of Jewish residential areas with Arab Israeli residents and the number of Arab Israeli parents who choose to send their children to schools in the Hebrew education system. This brings up issues like should there be Arab schools in Jewish localities? Does the number of Arab Israeli students in Hebrew schools impact the school environment or culture?

With regard to middle schools, the same factors at work creating differences between primary schools are also at work here. An added factor is ability grouping. Although grouping is along educational criteria, in practice, it creates differentiation along socioeconomic lines.

In high school, the restrictions that the Ministry of Education has placed on admissions requirements and parents’ payments are disappearing and parents and schools have complete freedom in a way that creates differentiation that is noted in the socioeconomic composition of their student body, as well as in the study majors offered by the school and the prestige attached to them. Within schools, the differentiation is expressed for the most part in tracking into academic and technological education tracks.

A notable improvement in student achievements, especially among Arab Israelis, although gaps persist

The primary goal of education is seen as gaining skills and content as measured by various tests. Taub Center data indicate a trend towards improving achievement scores and a narrowing of gaps since the start of international testing in the early 2000s and in the Meitzav exams since 2007. The trend is especially notable among Arab Israelis, although gaps are still large. In international comparisons, Israel ranks low in terms of achievements and high in terms of gaps.

In primary schools. Between 2008 and 2017, student scores in the 5th grade Meitzav exams rose by about 13% in mathematics and about 8% in English, with the greatest gains in the Arab education system – 22% and 13% respectively. (The Ministry of Education has reservations regarding the results of the 2018, and the 2019 Meitzav exams were changed and so they were not included in this study.) The data indicate a narrowing of achievement gaps between the two sectors. In an international comparison, the improvement in student scores in Israel exceeds those in other countries.

Looking at the achievement gaps between students in math and English – both between and within sectors – while controlling for the socioeconomic status of the school (Nurture Index), findings show large differences between the achievements of students at the highest status and those at the lowest. Looking at student achievements within the same socioeconomic group shows that between sector gaps in 5th grade have narrowed, especially in English, and in 2017, scores in Arab education at every socioeconomic level were actually higher than those of students in Hebrew education. What is more, gaps between students in schools serving the most affluent population and those serving the weakest Nurture Index decile actually narrowed substantially – across both systems and within each system, in math and in English.

Looking at the individual (as opposed to the school), clearly indicates a strong link between student characteristics and Meitzav achievement, and that achievements of students in Hebrew education are superior to those in Arab education. The data also show that the gap between Hebrew and Arab educated students narrowed greatly when socioeconomic background is controlled (as opposed to gaps between all students in Hebrew education and all students in Arab education).

In an international comparison, on the PIRLS exam (testing 4th grade reading literacy), Israel ranks relatively low – 29 out of 50 countries, and relatively high in terms of student gaps – 13. The main reason is the large gaps between students in Hebrew versus Arab education (96 points, when each system is tested in its mother tongue). A look within each socioeconomic grouping reveals that gaps have narrowed, although they remain large (65 for the lowest level socioeconomic group).

“There are considerable gaps between Jewish and Arab student achievement and between students from high and low socioeconomic groups, both at the national and international levels. At the same time, there are also notable improvements in the level of achievement and in the narrowing of these gaps,” says Taub Center researcher Nachum Blass.

In middle schools. A look at 8th grade Meitzav scores between 2008 and 2017 shows a similar picture to primary school. Achievement gaps are large between sectors in all subjects, although the gaps have narrowed in all cases. In English and math, the decrease in gaps was more moderate, while in the sciences, the narrowing was substantial: the average score in Arab education went up by 110 points, while in Hebrew education, it rose by 79 points. It seems that the rising trend within Arab Israeli society to join the medical and engineering professions has served to increase the motivation among their students to invest more in these subjects.

When examining the data by socioeconomic background, the Taub Center findings paint a clear picture: when background variables are the same, gaps between the sectors are smaller and narrowing. The gap in math between Arab Israeli and Jewish students in the low socioeconomic grouping which in 2008 was 19 points, narrowed in 2017 to 1 point, and in English, the situation is much the same.

Among students from high socioeconomic groups, the gap narrowed from 16 to 9 points. In science, the data changed drastically: scores of students in Arab education rose higher than those of students in Hebrew education, at all socioeconomic levels.

In an international comparison, on the TIMSS exams, there is a rise in scores over the years in both sectors, with the greatest increase in the Arab education sector (63 points versus 51 in Hebrew education); the increase is also at a faster rate than the average in other countries. The improving trend stopped in 2011, though.

In high schools. Bagrut qualification – which is the key to socioeconomic mobility – is perceived by the public as the central criteria of success or failure of the education system (this is not necessarily the case among educators). The Taub Center study examined bagrut qualification rates and found that among the overall cohort and using the most stringent method for testing success (that is, including Haredim and Arab Israelis from East Jerusalem where many or most do not take the exams), qualification rates still rose substantially between 1990 and 2015.

The Taub Center study also looked at those students with a bagrut qualification that fulfills requirements for admission to higher education. Results show that the student achievement gaps grew between students from different socioeconomic groupings among Jews, but did not change and even narrowed between Arab Israeli students. In addition, as mother’s years of education increase and the socioeconomic status of the residential locality rise – the bagrut qualification rates also rise .

In an international comparison, according to PISA exam scores, Israel’s students’ scores are lower than the overall country average and the gaps between the strongest and the weakest students are the greatest. These findings are not surprising considering the size of Israel’s GDP, per student expenditure, class size, and the poverty rate among Israel’s students.

Nevertheless, the average score in Israel has improved since 2006 versus an overall decline in the OECD average (although since 2012 the improvement in Israel’s scores has stopped and even reversed somewhat, and the gaps have grown).

In a breakdown by population groupings, the scores of Hebrew speaking students on the 2018 PISA exams were higher than the OECD average (506 versus 487), while the achievements of Arab speakers was much lower (362) and declined almost 40 points between 2006 to 2018. Keeping in mind the other data indicating improvements in Arab student achievements and a narrowing of between sector gaps, this is a surprising finding.

“The persistence of gaps, and the lack of improvement in student achievement and narrowing of gaps, demand that the education system and those at its top take immediate action, especially following the disappointing results of the PISA exams,” says senior researcher Nachum Blass.

The President of the Taub Center, Prof. Avi Weiss, adds, “There is a rising need to examine the gap between the improvement in student achievements seen in national exams in Israel and the relatively low results relative to the OECD, and to understand why improvements in Israeli students test scores have come to a halt. The notable improvement in Arab Israeli scores is blessed, but we need to continue to work to narrow gaps between the sectors.”

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749; 02 567 1818 ext. 110.

 

 

 

The problem that won’t go away – Israel’s growing deficit

As we transition into a new year and new decade, there are many indications that Israel’s macroeconomic situation is relatively strong. Israel’s GDP growth rate is high, though GDP per capita growth lags behind other OECD countries because Israel’s population is also growing rapidly. Israel’s labor market is doing quite well with high employment and labor force participation rates – standing at 78% and 80%, respectively – and a historically low unemployment rate (3.3%).

There is also growing evidence that Israeli prices are slowly nearing those in other developed countries. While prices in Israel are still higher than expected of an economy with Israel’s per-capita income level, Israeli consumer prices have fallen by about 5% compared with the G7 nations since 2014.

Another positive development is the steady decline in income inequality in Israel (as measured by the Gini coefficient) over the past decade. Though inequality remains high relative to other developed countries, the extent of this decline has been quite exceptional in international comparison.

Remarkably, while in many other developed countries income growth was concentrated among households in the upper part of the income distribution, Israel has witnessed a steep rise in the income of households in the middle and lower portions of the income distribution. During the period 2012-2017, the net income of households in the middle and lowest quintiles rose at an average annual rate of 4%, versus just 2.6% for the highest quintile.

These improvements are the result of the rapid rise in labor income of the lower income quintiles due to both increased wages and employment rates. The latter stem from increased incentives for workers to join the labor market, on the one hand (due, in part, to an increase in the minimum wage), and to a high demand for labor, on the other.

Nonetheless, against these positive developments there is a problem that Israel cannot seem to shake off, and that is its growing budget deficit.

According to accepted economic theory, it makes sense for governments to take advantage of periods of growth, when there are higher revenues from taxes, to increase national savings. That is, the government can use these increased revenues to reduce the budget deficit or even produce a surplus. Just as individuals save during good times so that they have additional resources should they need them during periods of difficulty, reducing the deficit during a time of plenty frees up resources that will need to be used by the government during an economic downturn.

Despite the fact that Israel currently finds itself in one of the “times of plenty,” the deficit has not, as we might have expected, gone down. In fact, after declining for a number of years at the beginning of the past decade, in recent years Israel’s fiscal policy has consistently caused the country to surpass its legally-mandated deficit and spending limits.

The deficit target for both 2018 and 2019 was set at 2.9% of GDP. While the actual deficit in 2018 was right on target, the deficit reached 3.7% of GDP in 2019 according to reports by the Ministry of Finance and, under current policies, are expected to reach 4.5% by 2022.
The deficit also has an impact on the future level of civilian and social spending. To reduce the deficit, the government would need to increase revenues by raising taxes or decrease government spending. However, notwithstanding the rising deficit, in response to growing geopolitical threats, there are plans to increase defense spending to 6% of GDP.

As a result, there are concerns that civilian spending, which is already low by international standards, will have to be significantly reduced in the coming years. Thus, the country’s deficit is an extremely important issue, especially in light of the political stagnation of the past year, and should be placed high on the agenda of the next government.

Yael Navon

Dr. Yael Navon is a researcher in the Taub Center Initiative on Early Childhood Development and Inequality, and deputy head of the Research Authorityat the Mofet Institute. Yael completed her second and third degrees in the Department of Sociology and Anthropology, and her first degree in economics and philosophy, from Tel Aviv University. Her doctorate, under the supervision of Prof. Yossi Shavit, dealt with the relationship between sibling characteristics and academic achievement of children in Israel. The findings from her research indicate the social and cultural context role in these relations, and point to the uniqueness of these correlations in blended families.

Yael has worked as well on applied research for the Cyber Education Center established by the Rashi Foundation. The Center has a goal of narrowing social gaps in Israel through advancement of cyber and technological education and training.

Currently, Yael researches various perspectives of teacher training and teachers’ dropout.

The Singer Series: State of the Nation Report 2019

It is our pleasure to present the Taub Center for Social Policy Studies in Israel’s 2019 State of the Nation Report, the latest in the Herbert M. Singer Annual Report Series. The book contains five overview chapters in health, education, welfare, labor markets, and macroeconomics showing the main issues and trends in each field. In addition, the book contains eight research papers, some new and some released earlier this year.

Returns to Skills in the Israeli Labor Market

This study focuses on workers identified in the OECD Survey of Adult Skills (PIAAC) as highly skilled and examines their employment characteristics, wages, and the degree to which they are employed in occupations demanding high skill levels.

Wage gaps between Israel and the OECD countries

 

The income of Israel’s highly-skilled workers is similar to the income of their counterparts in the other comparison countries, but the income of low-skilled workers is much lower than their peers.

  • The average hourly wage gap between workers at the lowest skill levels in Israel and in selected OECD countries, as measured by PIAAC, reaches 50% while at higher skill levels it drops to only about 15%.
  • The returns to skills in the upper part of the distribution are higher in Israel than in other countries, particularly among men: the gap between a worker with very high skills and a worker with lower skills is 33% among men and 27% among women – a rate almost twice as high as the gaps in the OECD (16% and 17%, respectively).

The characteristics of highly-skilled workers compared to low-skilled workers

 

The successful utilization of human capital for high-skilled workers in Israel points to the need to focus attention on low-skilled workers.

  • About 95% of Israel’s higher-skilled, “exceptional” workers are non-Haredi (non-ultra-Orthodox) Jews – a sector that constitutes less than 70% of the total population.
  • The skill level and level of formal education of the highest-skilled workers in Israel are not high relative to other OECD countries, yet it is evident that they are integrated into higher-wage jobs to a greater extent than outstanding workers in other countries among both men and women.
  • The skill level of low-skilled workers is much lower than their counterparts in all other OECD countries (except Turkey and Chile), despite the fact that their education levels are relatively high.
  • For the weaker half of workers, the return to academic studies is close to zero, an unusual finding in international comparison.

The Returns to Skill and Experience in the Arab Israeli Population

 

A particularly concerning picture emerges from the findings on returns to skills in the Arab Israeli population.

  • While the Israeli labor market compensates Jews well for their skills, the Arab Israeli population is characterized by low returns to skill.
  • Arab Israeli workers appear not to be remunerated in accordance with their experience: among non-Haredi Jews, each additional year of experience translates into an average wage increase of 2.5% (women) or 2.8% (men), while in the Arab Israeli sector the return amounts to only 0.1% (women) or 1.3% (men).
    Wage development by experience on the job

 

The Risk of Automation in the Israeli Labor Market

This study maps out the Israeli labor market using data from the OECD’s Survey of Adults Skills (PIAAC). It focuses on identifying the population that is at highest risk of automation and further identifying their specific skill weaknesses that make them less fit for the future labor market.

Automation in the Israeli and global labor markets

A mapping of the Israeli labor market shows that the share of jobs at risk of automation is not so different from other OECD countries, and that jobs that require skills such as creativity and social intelligence are at lower risk.

  • About 15% of existing jobs in Israel are at high risk for automation, 54% at moderate risk, and 31% at low risk (a higher percentage than the OECD average).
  • A large percentage of the jobs at high risk are in the construction and manufacturing sectors, transportation and storage services, postal and courier services, and food and lodging services.
  • In sectors such as the arts and entertainment, information and communication, education, and security, a low percentage of jobs were found to be at great risk of automation.

The workers at risk of automation

 

There are differences in the frequency with which workers use skills required for the future labor market. Accordingly, workers’ level of risk differs across age group, education level, gender and population group.

Age group:

  • A higher percentage of young people ages 16-24 work in jobs at high risk of automation.
  • Among Jewish males there was a decline in the percentage of at-risk jobs for men of prime working age, 25-54, versus an increase for the age range approaching retirement, 55-65.
  • Arab men in all age groups hold the highest percentage of higher-risk jobs, compared both to Jews and to the OECD average.

Education level:

  • When controlling for sociodemographic variables, the study finds that the higher the education level, the lower the automation risk.
  • A high school education reduces the risk of automation by 5 percentage points compared to below-high-school education.
  • Higher education reduces the risk by 15 percentage points compared with below-high-school education.

Gender and population group:

  • Women, especially non-Haredi Jewish women, are at higher risk than men, and when controlling for occupation the gaps widen to women’s disadvantage.
  • About half of Arab Israeli men are employed in manufacturing, construction, and machine operation – fields characterized by high automation-risk levels.
  • Arab Israeli men and women have relatively high employment rates in unskilled occupations that do not require high skill levels or training.
  • The Haredi population has a notably large share of occupations requiring academic training – mainly in the field of education, where automation risk is low.

Frequency of using skills identified as ones required by the future labor market:

  • For the Arab Israeli population, the frequency with which a worker uses these skills is low compared to Jews and to the OECD average.
  • Non-Haredi Jewish males use these skills more than do men and women from all the population groups, and more than do men and women in the OECD – especially skills related to solving complex problems and planning for others.
  • The frequency with which these skills are used increases with age, peaking in the 36-54 age range.
  • Only about 43% of the Arab Israeli population use a computer for their work (an important skill for the future labor market), compared with 77% of non-Haredi Jews.

Tools for dealing with the expected changes

 

Relative to the OECD, Israel has a high share of people who are interested but do not participate in relevant studies or training because of prohibitively high costs. One of the main policy tools for accessing and acquiring skills, particularly among vulnerable populations, is the array of state-run vocational training courses. In order to create an effective training system, there is a need for reliable information about the required skills; in addition to the skills survey, employer surveys indicating employer needs are necessary to complete the picture.

 

 

 

 

 

 

 

The Labor Market: An Overview

In 2019, labor force participation and employment rates were high (81% and 78%, respectively) and similar to their 2018 levels. The real wage continued to climb, although at a slower rate than in previous years.

Arab Israeli and Haredi employment

Among Arab Israelis, employment rates remain low and there is potential for growth, among both men and women; the same is true for Haredi men.

  • The employment rate of Arab Israeli women remained nearly unchanged in 2019 after years of rising, but is expected to continue rising given this population’s improved education levels and enrollment in higher education.
  • The employment rate of Arab Israeli men has declined since 2017. The largest decrease occurred among those ages 20-24: from 67% in 2017 to 61% in 2019.
  • Haredi women are employed at high rates, despite their high fertility rates, and the rates are similar among married and unmarried women.
  • The employment rate of Haredi men (51%) is lower than it was in 2015, and for Haredi men who have studied in kollel (full-time Torah study frameworks) the figure is 31% lower than for those who have not.

Employment in Israel compared to the OECD

Compared with the OECD countries, Israeli men’s and women’s employment rates are close to the median employment rates, but with large differences between sectors.

  • The employment rates of non-Haredi Jewish women and men rank high in comparison to the OECD, but Arab Israeli men and women are near the bottom of the employment-rate scale.
  • Employment rates are particularly high among non-Haredi Jewish women (82%) and Haredi women (74%), despite relatively high fertility rates (2.6 and 7 children per woman, respectively).
  • The OECD ranks Israel as fourth from last with respect to work-life balance: high employment and fertility rates among non-Haredi Jews seem to make it difficult for them to combine work, family, and leisure.

Family and work in Israel

Half of Israelis between the ages of 25 and 64 live in households with children under the age of 18; 71% of these households are headed by couples. The share of single-parent households is small (8%).

  • As of 2017, in 40% of couple-headed households both partners were employed full-time, while in 37% of these households the father worked more hours than the mother.
  • In 51% of non-Haredi Jewish households both parents work full-time, versus 25% in Arab Israeli households, and only 13% in Haredi households. In 43% of Haredi households neither partner works full-time, compared with 15% of Arab Israeli households, and just 11% of non-Haredi Jewish households.
    • Only 56% of female workers and 59% of male workers expressed satisfaction with their work-life balance. Overall, work-life balance satisfaction levels of people without children under the age of 18 were found to be higher, while those of non-Haredi Jews were the lowest.
      labor 1

    Employment by age

    Employment rates for those ages 25-40 in the population as a whole rise, and fall thereafter.

    • The employment rate of non-Haredi Jewish men increases up to age 39, then drops, especially around retirement at ages 65-69. The employment rate of Arab Israeli men drops across the entire age range, while that of Haredi men rises to age 50.
    • The employment rate of non-Haredi Jewish women is stable until around age 54, while among Haredi and Arab Israeli women, the decline begins from a relatively younger age, with a sharp drop from age 50.

 

The Education System: An Overview

Since 2010, Israel’s education budget has grown faster than the number of teachers; the number of teachers has grown faster than the number of classes; and the number of classes has grown faster than the number of students. These developments have made it possible to increase per-class and per-student allocations, improve student achievements, and bridge gaps within the system.

The demographic composition

The past twenty years have witnessed demographic shifts in Israel’s education system, most strikingly in the Arab Israeli sector.

  • Following a decline in the share of students enrolled in the Jewish (secular) state-education system, the share increased during the past decade from 37% to 40%.
  • The state-religious education system maintained its share of students, despite high birthrates, while the Haredi sector’s rapid student-population growth rate decelerated.
  • The Arab Israeli sector’s share in the primary education system dropped from 28% in 2010 to 24% in 2019 following a decline in Arab Israeli women’s fertility rates.
  • An interesting process taking place in Arab Israeli society (still limited in scope) is Arab Israeli citizens sending their children to Jewish educational institutions, in Jewish or mixed localities: as of 2018, there are 24 Jewish schools in which over 10% of the student body is Arab Israeli.

The resources available to the education system

During the years 2015 to 2018, the Ministry of Education’s budget increased by 21%. An examination of the budget implementation indicates that few programs grew in 2018 more than the general budgetary increase.

  • The program that showed the highest growth rate was the long school day program (229%), followed by computer, technology and science programs (64%), informal education and Jewish culture (45% each), and Ma’ayan HaTorah education (that serves the Haredi Sephardic population – Shas – 37%).
  • Between 2014 and 2017, the per-student budget grew by 17% at the primary school level, by 24% at the middle school level, and by 30% at the high school level.
  • The percent increase in the Arab education system budget was higher than in the Hebrew system, but the per-student budget in a school in the Hebrew education system remains substantially larger than the per-student budget for a school with the same Nurture Index in the Arab education system. Students in the state-religious system enjoy the largest budgets.
  • Israel’s rate of increase in per-student expenditure since 2005 was higher than that of the OECD (25% versus 9%). Israel’s per-student expenditure is equal to, or even slightly greater than, that of the OECD in primary education, but still considerably lower at the secondary level.
    Total budgets, june 2015 prices

Teachers

The study examines teacher wages and quality, presents data indicating that, except for in specific localities or subject areas, there is no teacher shortage.

  • The average monthly salary rose by 63% and the hourly wage by 34% (there was a hike in the number of teacher work hours).
  • Compared with other academic degree holders, teachers’ wages are low (for example, preschool teacher wages stand at about 85% of the average wage for other degree holders).

Teacher characteristics:

  • While the percentage of bachelor’s and master’s degree holders rose among teachers, the average teacher psychometric exam score remained low.
  • In recent years there has been a rise in both number and share of teachers who are general college graduates and a decline in the number of university graduates, but there is no evidence that one type of teacher training institution has qualitative advantage over the other.

No shortage in teachers, and the shortages that do exist appear to be limited to specific subjects and places:

  • Between 2010 and 2018, the number of teachers increased at twice the rate of the increase in the number of students, and by 50% more than the increase in the number of classes.
  • The percentage of non-certified teachers dropped from 18% in 2009 to 6% in 2018, while the average education level rose.
  • The average number of hours of employment has remained unchanged; the number of students per class dropped; and the number of teacher work hours per class climbed from 52.5 hours in 2006 to about 76 in 2019.
  • The percentage of math and English teachers teaching “outside their subject areas” also dropped, though the percentage of Hebrew teachers teaching outside their subject areas actually rose.

 

 

The Acute Care Hospitalization System in Israel: From a Vision of Decentralization to a Centralized and Out-of-Control Reality

The acute care hospitalization system in Israel is in a state of crisis, due to large gaps between the system’s needs and the public resources allocated to meet those needs, and due to the deepening involvement of the State in the system’s day-to-day management, which goes against the spirit of the National Health Insurance Law.

The study deals with the regulation of the hospitalization system and government involvement in it. The researchers conclude that the deficiencies in the regulation and the over involvement of the State impact negatively on the efficient use of resources and their accessibility to the public.

These deficiencies cast doubt on the value of investment in additional hospital beds, budget, and implementation of special programs led by the State (like the program to shorten waiting times), as long as these deficiencies have not been addressed.

The Healthcare System: An Overview

The Israeli population is relatively healthy compared to other developed countries; life expectancy has continued to rise over the past decade and is higher than the OECD average and similar to the average in Belgium, Germany, the Netherlands, and Switzerland – countries that have similar healthcare models to Israel (“similar countries”).

Life expectancy, though, is not sufficient to tell us about function levels and quality of life. Indices of loss of function due to premature death and disease burden paint a more complex picture. Although Israelis fare relatively well with regard to heart disease, stroke, and dementia, with regard to the disease burden due to chronic pain and diabetes, Israelis are at a relative disadvantage.

Funding the healthcare system

Israel’s national expenditure on healthcare remains lower than in other developed countries.

  • In 2018, national expenditure on healthcare out of GDP stood at about 7.45% – lower than the OECD average and lower still than the average in those countries with similar healthcare systems (11%). Even after adjusting for Israel’s relatively young population, expenditure is still low at about 8.4%.
  • In monetary terms, average health expenditure per capita (age-adjusted) in similar countries is $5,700, versus $3,300 in Israel.
  • The public portion out of all health spending is relatively low in Israel – about 64% versus about 78% in countries with similar systems.
  • Expenditures on voluntary insurance coverage continue to rise, primarily due to an increase in the share of commercial insurance and, since 2014, at the expense of supplementary insurance through the health funds.
  • The majority of insured individuals, primarily those with private commercial insurance and multiple insurance providers, indicate that they use insurance to cover surgeries and their choice of physician (mostly to shorten waiting times) as well as the financing of medicines not available in the healthcare basket.
  • The relatively high share of healthcare that is privately financed and the rise in the share of private commercial health insurance expose the system to increased disparities, including between the center and periphery of the country, as well as to market failures that manifest themselves in a rise in healthcare prices relative to other prices.

The price of medical care

Rising medical prices exacerbate health gaps and indicate a decline in the efficiency of the system.

  • In the current decade, per capita expenditure on healthcare rose faster than GDP per capita by about 4 percentage points. This increase has compensated for demographic changes – an increase in life expectancy (population aging) and high fertility rates. However, when taking into consideration the rise in medical prices relative to GDP price rises, the adjusted per capita rise is about 13 percentage points less than the increase without this consideration: the real adjusted expenditure on healthcare per capita has fallen in the current decade.
  • The OECD ranked Israel in fifth place in terms of level of healthcare prices – with prices that are 10% more than the US level, 26% more than the average in similar countries, and 53% more than the OECD average.
    index of healthcare basket prices in 2017
    Long-term care

Israel continues to face a challenge in the field of long-term care.

  • As of October 2019 commercial insurers in Israel decided to stop offering long-term care policies outside of those offered by the health funds.
  • According to Taub Center research, based, among other things, on international experience, commercial long-term care insurance is not viable because the client base is insufficiently large to accommodate paying out claims and there is actuarial difficulty in predicting the rise in long-term care needs.

The Welfare System: An Overview

Despite the persistent severity of social problems facing Israel over the past two years, including high rates of poverty and the large number of people in need of social services, Israel’s social spending – which amounts to 17.5% of GDP – has not increased, and remains lower than that of other welfare states. Moreover, this period was characterized by a dearth of new social policy initiatives in the sphere of social security and in social service agencies.

Social investment in Israel

An analysis of social spending according to the division commonly used by researchers in the past decade – social protection (e.g., income support and old age pensions), social investment (e.g., development of individuals’ abilities and skills), and “other expenditures” (such as healthcare system spending) – provides insight into Israel’s approach to social policy.

  • Social spending grew in all three categories over the past two decades. Social investment expenditures increased since 2015, particularly for early-childhood daycare centers and the Savings for Every Child program.
  • Israel is similar to social democratic welfare states, such as Sweden and Denmark, which emphasize social investment.
  • Still, Israel’s spending in this sphere is relatively low, ranging from 6.5% to 8% of GDP, versus over 11% in Denmark and Sweden. The explanation for this is Israel’s low taxes, alongside high expenditures in other areas, such as defense, which translate into relatively low social spending.

 

Poverty in Israel in international comparison

 

Israel’s pension income structure and demographic makeup make it difficult for people to get out of poverty. The incidence of poverty has been reduced to a lower degree in Israel than in most other OECD states.

  • Israel’s poverty rate, calculated in terms of market income, is lower than the average for other OECD countries (23% versus 28%). However, when the poverty rate is examined in terms of disposable income, Israel tops the chart (together with the US) at 18%, versus 12% for other welfare states.
    • A larger share of the decline in poverty in other developed countries can be attributed to the senior population: while Israel succeeded in lowering the percentage of seniors living in poverty between 2015 and 2017 only from 42% (per market income) to 20% (per disposable income), the percentage of seniors living in poverty in the OECD dropped from 69% to 13% during the same period.
    • Among the non-elderly population, the generosity of social security programs like income support and child benefits is limited. Despite a rise in the average wage and in the poverty line over the past decade, the sum total of these two benefits has remained stable, and its distance from the poverty line has increased.
      Share of individuals below the poverty line 2015-2017National Insurance Institute payments


In 2018, National Insurance benefit spending grew in real terms by nearly 5% compared with the previous year.

  • The general disability benefit rose by 8 percentage points during the period 2017 to 2019. Spending on this benefit increased by 16% in real terms, even while the change brought about no increase in the percentage of benefit recipients.
  • The fact that the universal Savings for Every Child program, which has been in operation since 2017, does not focus specifically on people living in poverty could potentially weaken its contribution to social mobility: less than a third of parents in the lowest income quintile add money to the state contribution, versus 65% of parents in the highest quintile, who also choose to put the money in higher-yield investment channels.

Daycare

  • In 2018, Israel passed the Supervision of Daycare Centers Law, which sets standards and conditions for operating daycare facilities, but the conditions for subsidy eligibility and the limited supply of daycare centers leads to a restricted and differential accessibility to daycare.
    • Spending on this item dropped in 2018 after growing over the last decade.
    • If it continues, the limited participation of children, especially Arab Israeli children, in the country’s early childhood education systems will likely have negative consequences for the development of Arab Israelis’ human capital and future prospects for social mobility.

The Israeli Economy: An Overview

In recent years, the Israeli economy has displayed relatively stable growth and a tight labor market. However, the country’s per-capita GDP is growing relatively slowly and the fiscal system is subject to increasing pressure. At the same time, there are signs that domestic competition is intensifying, and that Israeli price levels are approaching those in other developed countries.

Growth in Israel’s economy

  • Israel’s GDP per person employed has, for the last several years, stood at 65% of the comparable US figure, and at 85% of the OECD average.
  • Israel’s poor labor productivity is also related to its low level of public capital (including transportation, education, and healthcare infrastructure) which has steadily eroded from a ratio almost equal to that of the OECD countries half a century ago to a ratio half that of the OECD average today.
  • Based on the assessment methods commonly employed in economic research, had Israel’s public-capital-to GDP ratio been similar to that of the OECD countries, its GDP per person employed (and, as a result, its wage levels) would have been about 16 percentage points higher, reaching the OECD average.
  • Israel’s fiscal policy in recent years has caused the country to surpass its legally-mandated deficit and spending limits. Compared to a deficit of 2.9% of GDP in 2018, according to reports by the Ministry of Finance, the deficit is expected to reach 4% of GDP in 2019, and 4.5% by 2022.
    GDP per worker in Israel relative to other countries

    Household income and inequality

    Recent years have witnessed a steep rise in the income of households in the middle and lower portions of the income distribution. At the same time, there is growing evidence that Israeli prices are slowly converging to those in other developed countries.

    • During the period 2012-2017, the net income of households in the middle and lowest quintiles rose at an average annual rate of 4%, versus just 2.6% for the highest quintile. This indicates that growth is “trickling down” to the weaker socioeconomic strata, in contrast to other developed countries.
    • The past decade saw a steady decline in income inequality in Israel as a result of rapid increases in labor income in the lower income deciles, owing to a rise in wages and an increase in employment rates. Yet, income inequality is still high relative to other developed countries.
    • Since 2014, Israeli consumer prices have fallen by about 5% compared with the G7 nations. Still, the prices in Israel are still about 12% higher than what would be expected of an economy with Israel’s per-capita income level.
    • Up until 2015, foreign price increases raised domestic prices within a few months’ time, while price reductions lowered Israeli prices to only a limited degree, and with a substantial delay. However, since 2015-2016, this asymmetry seems to have disappeared and domestic prices appear to adjust relatively quickly to foreign prices whether they rise or fall.

     

 

Press Release: State of the Nation 2019

Embargo until Monday (30.12), 6:00 am

For full chapters, click here (password: tc2019)

The Taub Center’s Herbert M. Singer Series Annual Report, being published today, offers a socioeconomic snapshot of Israel for 2019. The report contains seven new researches addressing topics in the fields of macroeconomics, employment, education, health, and social welfare – providing an overview of Israel’s present status, policy changes, and challenges – alongside other studies published by the Center over the past year.

The editor of the Report is Professor Avi Weiss, President of the Taub Center and Professor of Economics at Bar-Ilan University.

Selected findings from the State of the Nation Report 2019, by chapter

The Israeli Economy: An Overview
Professor Benjamin Bental and Gilad Brand

In recent years, the Israeli economy has displayed relatively stable growth and a tight labor market. However, the country’s GDP per capita is growing relatively slowly, the fiscal system is subject to increasing pressure, and the budget deficit amounts to nearly 4% of GDP. At the same time, there are signs that domestic competition is intensifying, and that Israeli price levels are approaching those in other developed countries.

In 2019, Israel’s gross domestic product (GDP) is expected to climb by 3.2% – an increase reflecting per capita growth of 1.2%. This is a slightly lower growth rate than in previous years; it reflects low labor productivity and does not allow Israel to bridge gaps vis-à-vis other developed countries.
GDP per worker in Israel relative to other countriesFor the last several years, Israel’s GDP per person employed has, for the last several years, stood at 65% of the comparable US figure, and at 85% of the OECD average. Israel’s poor labor productivity is also related to its low levels of public capital, reflected in a dearth of transportation, education, and healthcare infrastructure.

Half a century ago, Israel’s public capital relative to GDP was almost equal to that of the OECD countries, but it has steadily eroded over the years, and the ratio is now half that of the OECD average. Based on the assessment methods commonly employed in economic research, if Israel’s public-capital-to-GDP ratio were similar to that of the OECD countries, its GDP per person employed (and, as a result, its wage levels) would be about 16% higher, reaching the OECD average.

Israel’s fiscal policy in recent years has caused the country to surpass its legally-mandated deficit and spending limits. The deficit is expected to reach approximately 4% of GDP, a high level that increases the debt-to-GDP ratio at a time when the economy is in good shape and there is no economic justification for a deficit or debt increase.

“The deficit increase and the deviation from spending rules entail budgetary adjustments. However, there are indications of an opposite trend, stemming from the intention to increase defense spending to 6% of GDP. Accordingly, there are concerns that the government’s civilian and social spending will be reduced significantly in the coming years,” says Professor Benjamin Bental, Chair of the Taub Center’s Economics Policy Program.

Recent years have witnessed a steep rise in the income of households in the middle and lower portions of the income distribution. During the period 2012-2017, the net income of households in the middle and lowest quintiles rose at an average annual rate of 4%, versus just 2.6% for the highest quintile.

This trend indicates that growth is “trickling down” to the weaker socioeconomic strata, in contrast to other developed countries, where income growth is concentrated in the upper portion of the distribution. This is due to a rapid increase in labor income in the lower income deciles, owing to a rise in wages and an increase in employment rates. As a result, the past decade saw a steady decline in income inequality in Israel. The creation of vocational training courses and other tools would promote continued labor-market integration and expand employment options, thereby helping to bridge economic gaps.

There is growing evidence that Israeli prices are slowly nearing those in other developed countries. Since 2014, Israeli consumer prices have fallen by about 5% compared with the G7 nations. There also seems to have been a welcome reversal in the way global price level changes manifest in Israeli prices. Up until 2015, price increases abroad raised domestic prices within a few months’ time. By contrast, price reductions abroad lowered Israeli prices to only a limited degree, and quite slowly.

Such asymmetry characterizes many countries, but is more pronounced in Israel. Since 2015-2016, we can discern a change in this pattern; domestic prices now appear to be reacting relatively quickly to foreign prices, with no evidence of asymmetry. “Apparently, the trend reversal stems from growing competition in the economy, following reforms implemented in recent years. However, Israeli price levels are still about 12% higher than what would be expected of an economy with income levels similar to Israel’s,” researcher Gilad Brand explains.

Returns to Skills in the Israeli Labor Market
Gilad Brand

This Taub Center study considers the question of where to focus efforts to improve Israeli labor productivity. Should the aim be to enhance the capabilities of lower-skilled workers, or to realize the potential of higher-skilled workers, for example by promoting high-tech training? International comparison suggests that higher-skilled Israelis are already using their skills to a great extent and are well compensated. In contrast, for those at the lower skill levels, the situation is different: their skill level is very low relative to their peers in other countries, and their integration into the labor market is also less good.

When we compare the hourly wage gap between workers in Israel and in selected OECD countries, we find that, at the lowest skill levels as measured by the PIAAC, the disparity reaches 50%, while at the highest levels it drops to about 15%. That is, the income level of highly-skilled workers in Israel is closer to that of their counterparts in the other comparison countries, while the income of less-skilled workers is very low compared to that of less-skilled workers in other countries.

The smaller disparity at the higher skill levels stems from the fact that Israel’s labor market compensates workers with particularly strong skills (both in high-tech and outside it) to a greater degree than do other countries. For example, the income gap between a very highly-skilled worker and a worker with lower skills in Israel is 33% for men and 27% for women – nearly twice the OECD disparity (16% and 17%, respectively).

About 95% of Israel’s higher-skilled, “exceptional” workers are non-Haredi (non-ultra-Orthodox) Jews – a sector that constitutes less than 70% of the total population. Although the skill and education levels of exceptional Israeli workers are not high in international comparison, these workers are employed in high-paying jobs to a greater degree than exceptional workers in other countries – women and men alike.

Among low-skilled workers the situation is different: their skill level is much lower than that of their counterparts in all other OECD countries (except for Turkey and Chile), despite the fact that their education rates are relatively high – that is, despite their education levels their skills are very low, relatively speaking. For the lower-skilled half of Israeli workers, the return on academic education is close to zero, an unusual finding in international comparison. According to Brand: “This indicates the difficulty of bridging income gaps by expanding access to higher education. The problem probably lies in gaps that emerge at earlier stages of education, meaning that skills need to be improved at younger ages.”
Wage development by experience on the jobWhile the Israeli labor market compensates Jews well for their skills, the Arab Israeli population is characterized by low returns to skill. Beyond that, Arab Israeli workers appear not to be remunerated in accordance with their seniority in the labor market. For example, among non-Haredi Jews, each additional year of seniority translates into an average wage increase of 2.5% (women) or 2.8% (men), while in the Arab Israeli sector the return amounts to only 0.1% (women) or 1.3% (men).

Possible partial explanations may be: the opportunities to obtain skills in occupations that are common in the Arab population are limited, hence their wages do not rise substantially over the years; the Arab population is not appropriately compensated for their skills; the measurement for the returns for experience may be downward biased due to a cohort effect – an ongoing improvement in the employment characteristics of the Arab population which may be masking the true returns for experience. In any case, these findings raise considerable concern that the Arab population is not realizing their skills in the labor market

“The high degree to which the potential embodied by Israel’s higher-skilled workers is realized indicates that attention should be directed toward the country’s less-skilled workers, and to the Arab Israeli population, which does not seem to be fully using its skills  in the labor market – though the fact that Arab Israeli women seem to be integrating more extensively into higher education and employment is cause for cautious optimism,” says Brand.

The Labor Market: An Overview
Hadas Fuchs and Professor Gil Epstein

In 2019, labor force participation and employment rates were high (81% and 78%, respectively) and similar to their 2018 levels and the real wage continued to climb, although at a slower rate than in previous years.

The employment rate of Arab Israeli women has risen in recent years, but in 2019 it remained nearly unchanged. Given this population’s improved education levels and enrollment in higher education, its employment rates can be expected to rise in the coming years. By contrast, the employment rate of Arab Israeli men has remained relatively low, partly because these men retire from the labor market at a relatively young age, and there was an additional decline since 2017.

Haredi women are employed at high rates as well, despite their high fertility rates, and the rates are similar among married and unmarried women. The employment rate of Haredi men (51%) is lower than it was in 2015, and for Haredi men who have studied in kollel (full-time Torah study frameworks) the figure is 31% lower than for those who have not.

Compared with the OECD countries, Israeli men’s and women’s employment rates are close to the median, but with large differences between sectors. Non-Haredi Jewish women and men rank high, but Arab Israeli men and women are near the bottom of the employment-rate scale. Particularly striking are the high employment rates of non-Haredi Jewish women (82%) and of Haredi women (74%), despite relatively high fertility rates (2.6 and 7 children per woman, respectively).

“Women’s employment rates have risen in recent years, especially among mothers of young children. The high employment rate and long work hours of non-Haredi Jews, alongside their high birthrate, make it very hard for Israeli parents to balance work, family, and leisure. Israel ranks fourth from last with respect to work-life balance,” notes researcher Hadas Fuchs.
Average cumulative weekly work hours of parents with children, 2017 Half of Israelis between the ages of 25 and 64 live in households with children under the age of 18; 71% of these households are headed by couples. The share of single-parent households within the population as a whole is small (8%). As of 2017, in 40% of couple-headed households both partners were employed full-time, while in 37% of these households the father worked more hours than the mother.

When we look at the breakdown by sector, we find that in 51% of non-Haredi Jewish households both parents work full-time, versus 25% in Arab Israeli households, and only 13% in Haredi households. In 43% of Haredi households neither partner works full-time, compared with 15% of Arab Israeli households, and just 11% of non-Haredi Jewish households. In Haredi households, the average number of work hours of both parents combined amounts to less than one full-time job, while in non-Haredi Jewish households the number of work hours of both partners combined is nearly double that in Haredi households.

Commuting times also add to the burden borne by working parents; in 2017, the percentage of men who worked outside their localities of residence was 64%, while for women it was 48%.

Given the combination of large numbers of children, long work hours, and lengthy commuting times, only 56% of female workers and 59% of male workers expressed satisfaction with their work-life balance. Overall, work-life balance satisfaction levels of people without children under the age of 18 were found to be higher, while those of non-Haredi Jews with young children were the lowest.

When we look at the age breakdown, employment rates for those ages 25-40 in the population as a whole rise, and fall thereafter. The employment rate of non-Haredi Jewish men increases up to ages 35-39, then drops, especially around ages 65-69, close to retirement age.

Arab Israeli men, many of whom engage in physical labor, leave the labor market at younger ages; their employment rate drops across the entire age range, while that of Haredi men rises to age 50. The employment rate of non-Haredi Jewish women is quite stable until around age 54, while the employment rates of Haredi and Arab Israeli women begin to decline at earlier ages, with a sharp drop from age 50.

The Risk of Automation in the Israeli Labor Market
Shavit Madhala

A mapping of the Israeli labor market shows that, as in other OECD countries, about 15% of existing jobs are at high risk for automation, 54% at moderate risk, and 31% at low risk (a higher percentage than the OECD average). Computers have trouble with certain tasks: ones that require an ability to perceive and manipulate, creativity, and social intelligence.

A large percentage of the jobs at high risk of automation are in the construction and manufacturing sectors, transportation and storage services, postal and courier services, and food and lodging services. By contrast, in sectors such as the arts and entertainment, information and communication, education, and security, which generally require creativity and the ability to solve complex problems, a low percentage of jobs were found to be at great risk of automation.

An assessment by age group reveals that a higher percentage of young people ages 16-24 work in jobs at high risk of automation. This, apparently, is due to the fact that most people in this age range hold temporary jobs. Among Jewish males there was a decline in the percentage of at-risk jobs for men of prime working age, 25-54, versus an increase for the age range approaching retirement, 55-65. Arab men in all age groups hold the highest percentage of higher-risk jobs, compared both to Jews and to the OECD average.

When controlling for sociodemographic variables, we find that the higher the education level, the lower the automation risk. A high school education reduces the risk of automation by 5 percentage points compared to below-high-school education, and higher education reduces the risk by 15 percentage points compared with below-high-school education.

This inverse relationship also holds true when controlling for occupations. Regarding gender, women, especially non-Haredi Jewish women, are at higher risk than men, and when controlling for occupation the gaps widen to women’s disadvantage. This may indicate that women tend to make less use of the skills required for the future labor market than do men in the same occupations.

The employment distribution by occupation indicates large disparities between Arab Israeli and Jewish men; about half of the Arab Israeli men are employed in manufacturing, construction, and machine operation – fields characterized by high automation-risk levels. Also, Arab Israeli men and women were found to have relatively high employment rates in unskilled occupations that do not require high skill levels or training. The Haredi population stood out for its large share of occupations requiring academic training – mainly in the field of education, where automation risk is low.
For the Arab Israeli population, the frequency with which a worker uses skills identified as ones required by the future labor market is low compared to Jews and to the OECD average. Non-Haredi Jewish males use these skills more than do women from all population groups, and more than do males in the OECD and in other Israeli population groups – especially skills related to solving complex problems and planning for others. It was also found that the frequency with which skills required by the future job market are used increases with age, peaking in the 36-54 age range.

There are also gaps between Arab and Jewish Israelis in the propensity to use a computer, an important skill for the future labor market. Only about 43% of the Arab Israeli population use a computer for their work, compared with 77% of non-Haredi Jews.

Present trends and anticipated changes place less-educated and lower-wage population groups, as well as employed persons in the Arab Israeli sector, women, and employed persons in Israel’s southern district, at risk of job loss. One of the main policy tools for accessing and acquiring skills, particularly among vulnerable populations, is the array of state-run vocational training courses.

“In order to create an effective vocational training course system, reliable information is needed on the required skills. The skills survey helps provide a current snapshot from the workers’ point of view; but to complete the picture we need employer surveys that will indicate employer needs, with an emphasis on identifying the skills required by the market,” says Taub Center researcher Shavit Madhala, adding, “Learning new skills is important across the life cycle, but it’s even more crucial at the early stages, through the education system. That’s the optimal point in time when we can work to bridge future gaps and implement policies aimed at preparing human capital for the future labor market.”

The Education System: An Overview
Nachum Blass

Since 2010, Israel’s education budget has grown faster than the number of teachers; the number of teachers has grown faster than the number of classes; and the number of classes has grown faster than the number of students. These developments have made it possible to increase per-class and per-student allocations, improve student achievements, and bridge gaps within the system. In the latest PISA exams there was a decline in the achievements of Arab Israeli students. However, since this result is in direct contrast to other positive developments, the reasons for this decline need to be closely examined.

The past twenty years have witnessed demographic shifts in Israel’s education system: following a decline in the share of students enrolled in the Jewish (secular) state-education system, the share increased during the past decade from 37% to 40%. This was due mainly to a rise in the birthrate and to secularization processes in the religious population.

The state-religious education system maintained its share of students, despite high birthrates, while the Haredi sector’s rapid student-population growth rate decelerated. However, the most striking changes occurred in the Arab Israeli sector, whose share in the primary education system dropped from 28% in 2010 to 24% in 2019 following a decline in Arab Israeli women’s fertility rates.

According to Taub Center researcher Nachum Blass, “The changes point to the difficulty of predicting demographic developments in the education system, and indeed all forecasts have proven to be wrong. In every forecast there is an element of uncertainty, in this case – school choice. Movements of members of the four main groups that make up the system from more to less religious institutions appears to be the principal factor behind the gap between the forecasts and what has actually occurred.”

Another interesting process taking place in Arab Israeli society (still limited in scope), is Arab Israeli citizens sending their children to Jewish educational institutions, in Jewish or mixed localities. As of 2018, there are 24 Jewish schools in which over 10% of the student body is Arab Israeli. The reason for this is a combination of it being difficult for young Arab Israelis to find housing in the Arab Israeli localities, due to a lack of building plans, and their desire to give their children what they perceive to be a higher-quality education.
Total budgets, june 2015 pricesDuring the years 2015 to 2018, the Ministry of Education’s budget increased by 21%. An examination of the budget implementation indicates that few programs grew in 2018 more than the general budgetary increase. The program that showed the highest growth rate was the long school day program (229%), followed by computer, technology and science programs (64%), informal education and Jewish culture (45% each), and Ma’ayan HaTorah education (that serves the Haredi Sephardic population – Shas – 37%).

Between 2014 and 2017, the per-student budget grew by 17% at the primary school level, by 24% at the middle school level, and by 30% at the high school level. The percent increase in the Arab education system was higher than in the Hebrew system, but the Jewish sector budget remains substantially larger.

Students in the state-religious system enjoyed the largest budgets. Israel’s rate of increase in per-student expenditure was higher than that of the OECD (25% versus 9%), and the result is that in primary education, Israel’s per-student expenditure is equal to, or even slightly greater than, that of the OECD. However, it is still considerably lower at the secondary level.

Between 2010 and 2018, the number of teachers increased at twice the rate of the increase in the number of students, and by 50% more than the increase in the number of classes. The average monthly salary rose by 63% and the hourly wage by 34% (there was a hike in the number of teacher work hours). Compared with other academic degree holders, teachers’ wages are low (for example, preschool teacher wages stand at about 85% of the average wage for other degree holders).

Regarding teacher quality, while the percentage of bachelor’s and master’s degree holders rose, the average teacher psychometric exam score remained low. In recent years there has been a rise in both number and share of general college graduates and a decline in the number of university graduates, but there is no evidence that one type of teacher training institution has qualitative advantage over the other.

An important issue examined in the Taub Center study is whether there is a teacher shortage. The data indicate that, except for in specific localities or subject areas, there is no such shortage. The number of teachers increased at a higher rate than the number of students and classes; the percentage of non-certified teachers dropped from 18% in 2009 to 6% in 2018, while the average education level rose; the average number of hours of employment has remained unchanged; the number of students per class dropped; and the number of teacher work hours per class climbed from 52.5 hours in 2006 to about 76 in 2019.

The percentage of math and English teachers teaching “outside their subject areas” also dropped, though the percentage of Hebrew teachers teaching outside their subject areas actually rose.

The Welfare System: An Overview
Professor John Gal and Haim Bleikh

Despite the persistent severity of social problems facing Israel over the past two years, including high rates of poverty and the large number of people in need of social services, Israel’s social spending – which amounts to 17.5% of GDP – has not increased, and remains lower than that of other welfare states. Moreover, this period was characterized by a dearth of new social policy initiatives in the sphere of social security and in social service agencies.

An analysis of social spending according to the division commonly used by researchers in the past decade – social protection (e.g., income support and old age pensions), social investment (e.g., development of individuals’ abilities and skills), and “other expenditures” (such as healthcare system spending) – provides insight into the government’s approach to social policy.

Social spending grew in all three categories over the past two decades, with social investment expenditures showing an increase since 2015, particularly for early-childhood daycare centers and the Saving for Every Child program. This highlights the government’s orientation toward long-term measures aimed at preventing future social ills, rather than merely addressing the current situation.

A comparison conducted by Taub Center researchers between Israel and other countries found that Israel is similar to social democratic welfare states, such as Sweden and Denmark, which emphasize social investment. The Israeli welfare state has a greater tendency than others to invest in improving citizens’ skills, with the aim of improving their situations in the future.

However, an international comparison of social investment spending as a percentage of GDP suggests that Israel’s spending in this sphere is relatively low, ranging from 6.5% to 8% of GDP, versus over 11% in Denmark and Sweden, resulting in a low Israeli ranking. The explanation for this is Israel’s low taxes, alongside high expenditures in other areas, such as defense, which translate into relatively low social spending.
Share of individuals below poverty line, 2015-2017An analysis of the incidence of poverty in Israel shows that the poverty rate, calculated in terms of market income, is lower than the average for other OECD countries (23% versus 28%). However, when the poverty rate is examined in terms of disposable income, Israel tops the chart (together with the US) at 18%, versus 12% for other welfare states. It is clear that Israel’s tax and social security systems keep people out of poverty and reduce the incidence of poverty to a lower degree than in most other OECD states.

Differences in Israel’s financial structure and demographic makeup is a possible explanation for the gap between it and other countries in the degree to which the incidence of poverty is being reduced. In most developed countries, the percentage of senior citizens in the population is high, and pensions depend mainly on public funding, while Israeli seniors’ incomes encompass both public and private components, such as occupational pension funds.

Thus, while Israel succeeded in lowering the percentage of seniors living in poverty between 2015 and 2017 only from 42% (per market income) to 20% (per disposable income), the percentage of seniors living in poverty in the OECD dropped from 69% to 13% during the same period. “These findings, in conjunction with the high percentage of seniors in the population, indicate that, compared to Israel, a larger share of the decline in poverty in the developed countries can be attributed to the senior population,” Taub Center researcher Haim Bleikh explains.

Among the non-elderly population, the generosity of social security programs like income support and child allowance benefits is limited. Despite a rise in the average wage and in the poverty line over the past decade, the sum total of these two benefits has remained stable, and its distance from the poverty line has increased. “The gap between the standard of living of people living in poverty who receive benefits, and the standard of living enjoyed by society as a whole is growing,” says Professor John Gal, Chair of the Taub Center’s Welfare Policy Program.

In 2018, National Insurance benefit spending grew in real terms by nearly 5% compared with the previous year. In the wake of public outcry, the general disability benefit rose by 8 percentage points during the period 2017 to 2019. Spending on this benefit increased by 16% in real terms, even while the change brought about no increase in the percentage of benefit recipients.

Another major change is the universal Saving for Every Child program, which has been in operation since 2017. However, a failure of this program to focus on people living in poverty could potentially weaken its contribution to social mobility among those who grew up in low-income families. Less than a third of parents in the lowest income quintile add money to the state contribution, versus 65% of parents in the highest quintile, who also choose to put the money in higher-yield investment channels. This could perpetuate inequality between the populations and suggests that changes be made to the program.

In 2018, Israel passed the Supervision of Daycare Centers Law, which sets standards and conditions for operating daycare facilities, but the conditions for subsidy eligibility and the limited supply of daycare centers leads to a restricted and differential accessibility to daycare. Even so, spending on this item dropped in 2018 after growing over the last decade.

According to the researchers, this translates into the limited participation of children, especially Arab Israeli children, in the country’s early childhood education systems. If this investment continues to decrease, it will likely have negative consequences for the development of Arab Israelis’ human capital and future prospects for social mobility.

The Healthcare System: An Overview
Professor Dov Chernichovsky

The Israeli population is relative healthy; life expectancy has continued to rise over the past decade and is higher than the OECD average and similar to the average in Belgium, Germany, the Netherlands, and Switzerland – countries that have similar healthcare models to Israel (“similar countries”).

Life expectancy, though, is not sufficient to tell us about function levels and quality of life. Indices of loss of function due to premature death and disease burden paint a more complex picture. Although Israelis fare relatively well with regard to heart disease, stroke, and dementia, with regard to the disease burden due to headaches and diabetes, Israelis are at a relative disadvantage.

In 2018, national expenditure on healthcare out of GDP stood at about 7.45% – lower than the OECD average and lower still than the average in those countries with similar healthcare systems (11%). Even after adjusting for Israel’s relatively young population, expenditure is still low at about 8.4%. In monetary terms, average health expenditure per capita (age-adjusted) in similar countries is $5,700, versus $3,300 in Israel. The public portion out of all health spending is also relatively low – about 64% versus about 78%.
index of healthcare basket prices in 2017The relatively high share of healthcare that is privately financed and the rise in the share of private commercial health insurance expose the system to increased disparities and market failures that manifest themselves in a rise in healthcare prices relative to other prices. “We see a rise in expenditures on voluntary insurance coverage of about 3 percentage points, most of it commercial insurance, alongside a decline since 2014 in the share of supplementary insurance through the health funds,” says Professor Dov Chernichovsky, Chair of the Taub Center’s Health Policy Program.

The majority of insured individuals, primarily those with private commercial insurance and multiple insurance providers, indicate that they use insurance to cover surgeries and their choice of physician (mostly to shorten waiting times) as well as the financing of medicines not available in the healthcare basket. This translates into better health for those who hold voluntary, especially commercial, insurance coverage as well as greater health gaps between those in the center of the country and those in the periphery.

Rising medical prices exacerbate this reality and indicate a decline in the efficiency of the system. In the current decade, per capita expenditure on healthcare rose faster than GDP per capita by about 2 percentage points. This increase compensated for the aging of the population as well as the high fertility rates such that the rise in adjusted per capita healthcare expenditure was about the same as the growth rate in GDP per capita.

Nevertheless, when taking into consideration the rise in medical prices relative to GDP price rises, the adjusted per capita rise is about 13 percentage points less than the increase without this consideration. That is, in real terms, the real adjusted expenditure on healthcare per capita has fallen. The OECD has ranked Israel in fifth place in terms of level of healthcare prices – with prices that are 10% more than the US level, 26% more than the average in similar countries, and 53% more than the OECD average.

“The data break the myth that healthcare prices in Israel are low and present a challenge to policy makers facing systemic failures in the public-private mix,” says Professor Chernichovsky.

In addition, Israel faces a challenge in the field of long-term care. Contrary to the Ministry of Finance’s stance that long-term care insurance can be managed through the commercial market, but in line with earlier research by the Taub Center, as of October 2019 commercial insurers in Israel decided to stop offering long-term care policies outside of those offered by the health funds.

According to this research, based, among others, on international experience, commercial long-term care insurance is not viable because the client base is insufficiently large to accommodate paying out claims and there is actuarial difficulty in predicting the rise in long-term care needs.

“Israel’s achievements in health are impressive, especially in terms of mortality and longevity, but they are likely linked to past investments. The portion of healthcare expenditure is low, with a problematic public-private mix that requires fundamental treatment. The healthcare system in its current situation presents challenges to the national priorities, primarily due to the aging of the population, increasing fertility rates, and a slowdown in the rate of resource allocation by the state,” says Chernichovsky.

The Taub Center for Social Policy Studies in Israel is an independent, nonpartisan, socioeconomic research institute. The Center provides policymakers and the general public with studies and data on some of the most important issues facing Israel with regard to education, healthcare, social services, the labor market, and economic policy. The Center aspires to influence Israeli decision-making processes and to improve the wellbeing of all Israeli citizens.

For additional information, or to schedule an interview, please contact Anat Sella-Koren, Director of Marketing, Communications, and Government Relations at the Taub Center: 050-6909749.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Educational Inequality in Israel: From Research to Policy

Book Launch

Thursday | January 9 | 9:30am – 1:00pm | National Library of Israel, Jerusalem

Space is limited, advanced registration is required.

For registration please click here >>

First Session: Presenting the Book

Chair: Prof. Avi Weiss, President, Taub Center Bar-Ilan University

Discussion:
Prof. Hanna Ayalon, Tel Aviv University (Emerita)
Nachum Blass, Principal Researcher, Taub Center
Dr. Yariv Feniger, Ben-Gurion University
Prof. Yossi Shavit, Chair of the Education Policy Program, Taub Center; Tel Aviv University (Emeritus)

Second Session: To What Extent Can the Education System Reduce Gaps?

Chair: Nachum Blass, Principal Researcher, Taub Center

Discussion:

Prof. Michal Beller, President, Levinsky College of Education
Prof. Sigal Alon, Tel Aviv University

Coffee Break

Third Session: Differential Budgeting and Affirmative Action

Chair: Prof. Yossi Shavit, Chair of the Education Policy Program, Taub Center; Tel Aviv University (Emeritus)

Discussion:

MK Yousef Jabareen (The Joint List)
MK Yakov Margi (Shas), Deputy Speaker of the Knesset
Nachum Blass, Principal Researcher, Taub Center
Shirley Rimon Bracha, Director of the Tel Aviv Education Department

For registration please click here >>

Space is limited, and advanced registration is required

The venue is accessible for people with disabilities. If you have special needs (e.g., audio or visual assistance, a seat near the door, a nursing room, etc.), please note them in the registration form and we will contact you to discuss your needs, or call us at 02-5671818. Kindly submit accommodation requests at least one week in advance of the event.

Educational Inequality in Israel: From Research to Policy

Despite pervasive differences of opinion and ideological battles within Israeli society, there is one subject where there is complete agreement and that is the need to narrow educational gaps. Most agree that education is one of the keys to success in life, and that we should ensure equity in terms of educational opportunities for all children in Israel.

Many believe that narrowing educational inequalities can also contribute to narrowing economic inequality that is so prevalent. Nevertheless, educational disparities between socioeconomic groups, sectors, and ethnic groups abound. These gaps seem intransigent despite the efforts of government and the education system.

The Taub Center for Social Policy Studies in Israel has published a new book Educational Inequality in Israel: From Research to Policy, which gathers the current knowledge on a variety of issues relating to educational inequality, and discusses education policy and steps that can be taken towards change. Leading educational authorities in Israel collaborated on this book including Professor Hanna Ayalon, Nachum Blass, Dr. Yariv Feniger, and Professor Yossi Shavit.

This book examines the issues of educational inequality in Israel. Children’s academic achievements are determined to a large extent by the economic and educational resources that their parents have available.

Click here for the complete book

Click here to read the Foreword by Avi Weiss

Click here to read the Introduction by Yuli Tamir: Shall the Crooked Be Made Straight? The Education Plateau and the Challenge of Inequality

Click here for Chapter 1: Challenges and Hopes on the Road to Equality of Educational Opportunity

Click here for abstracts of Chapters 2-12

Click here for Chapter 13: Conclusions and Policy Recommendations Attendance Rates and Gaps

There are tremendous inequalities among families in Israel in terms of these resources, and this contributes to a large extent to the differences in educational opportunities for the younger generation. These inequalities do not just stem from differences in family resources but also from the structure of the education system and its processes.

For example, separation of weaker and stronger students contributes to a strengthening of the inequality between these groups in terms of their achievements.  Similarly, privatization of the education system is likely to increase the achievements of students from well-off families since they can afford the expenses of private education while students from poorer families often attend schools with fewer resources providing education of a lower quality.

This all contributes to a widening of educational gaps. This book documents educational inequality in Israel and discusses the possible contribution of education policy to the narrowing of these disparities among young people. It appears that despite the advantages that stronger social status groups hold, there is hope that focused education policy can narrow the disparities, even if they cannot be eliminated. Knowing the centrality of family resources in creating educational disparities should not weaken the drive of policy makers to work towards narrowing these gaps.

If anything, it should strengthen their resolve to develop directed policies to this end. The book’s chapters discuss a variety of ways that education policy can further educational opportunities among weaker social groups in Israel.

A policy of differential allocation of student resources should be implemented

There are differences in resource allocation between socioeconomic groups, and affirmative action policies enacted by the Ministry of Education have not, as yet, brought about substantial changes. It does, however, appear that gaps in resources – especially between the Hebrew and Arab education sectors – are narrowing.

Only about 10% of the Ministry of Education budget is set aside to advance weaker population groups. The Taub Center researchers suggest changing the budgeting system by implementing a differential basket of student resources from preschool through to high school, recognizing that this is a valuable tool for advancing equity in the education system.

Allocating in this way allows the services to be concentrated in the hands of the Ministry of Education and gives them the ability to change the current situation where municipalities with different resources and needs are required to contribute the same percentage of their resources to education funding.

Differential budgeting allows the Ministry to set a separate system of compensation and incentives for teachers in schools serving weaker population groups. It is based on the school’s Nurture Index, giving priority to those institutions that are socially integrated with students from lower socioeconomic backgrounds.

Investment in early childhood brings returns both to the individual and to society

The first years of life – early childhood – are a critical period in child development. The family’s socioeconomic background is likely to impact the supply of positive and negative stimuli in the young child’s experience with long-term developmental impact including on future academic achievements. Research shows that socioeconomic gaps in early childhood tend to intensify over the child’s lifetime.

Taub Center researchers explain that inequalities in academic achievement in Israel are linked to economic inequalities for families of young children. Interventions during this critical period, while the infant’s brain is still malleable, bring greater returns than later interventions, and are also likely to narrow academic achievement gaps among children from different socioeconomic groups.

The researchers suggest several steps, including increasing accessibility and improving the quality of early childcare in day care centers and family-run daycare and increasing participation in programs of this nature; keeping child to staff ratios low in early childhood frameworks; and investing in training high-quality staff for these facilities.

In addition, the researchers recommend increasing Income Support, increasing and differentially distributing Child Allowances, and raising the work grants for those parents of young children who are low wage earners. Early intervention brings returns to the child and to society in a plethora of areas.

Decreasing class sizes is not a “cure-all,” although it can help students from weaker populations

Classrooms in Israel are the most crowded of the OECD countries and Israeli student achievements are middling to low relative to their peers in other countries. Does class size explain the low level of achievements?

Those who favor smaller classes claim that they allow teachers to give more individual attention to students, make teacher’s work easier, and lessen teacher burn-out, among other benefits. However, decreasing the number of students per class is an expensive proposition, and it involves enlisting many more teachers who may be less well qualified.

In the Hebrew education system, students from wealthier socioeconomic groups tend to learn in relatively large classes, and those from weaker backgrounds are in smaller classes. Thus, decreasing class sizes in this sector is most likely to benefit the wealthier students. Despite this, there is evidence that small classes can bring about an improvement in academic achievements at the primary school level and in classes for students from weaker backgrounds.

It is important to also emphasize that decreasing class size must go hand in hand with modified pedagogical methods. Thus, it is advisable to do this in schools serving weaker populations (including in the Arab education sector), primarily in primary education, and this step should be accompanied by the development of new pedagogical tools and teacher training programs.

Privatization and parental choice within the education system increases inequalities

There are those who see parental choice, competition, and privatization of schools as an efficient means of improving the education system, however, current research does not bear this out. The majority of studies find no clear advantages to opening registration areas or to private or independent schools that benefit from public funding in comparison to regular public education.

Studies show that choice and privatization do not contribute to improving the overall system, and are, in fact, likely to increase the level of inequality in the system. Taub Center researchers stress that we should ensure that existing choice mechanisms do not harm the public system, and that they encourage pedagogical approaches with a proven potential to improve both teaching and learning of weaker students.

The book’s researchers recommend that in cases where there is parental choice of schools, the state and the local authority should ensure that schools do not charge entrance fees (since payments of this sort are a deterrent to those students with more limited resources) and that, in cases of excess demand, students are accepted on the basis of a lottery system rather than on the basis of tests or interviews. In addition, there should be transportation available to every child in the area to make the school of choice accessible regardless of parental ability to pay.

The price of student testing and the potential for developing measurement and evaluation tools

The Meitzav exams (the Hebrew acronym for School Growth and Efficiency Measures) are intended to provide the public and decision makers with information on academic achievements and gaps. As in other countries that have adopted such exams, though, it seems that their disadvantages outweigh their advantages.

Instead of the exams serving as a tool for developing policy and directing policy for narrowing educational gaps, many schools intensively prepare their students for the exams, and in some cases, there have even been reports of altering test results.

In light of this, the researchers recommend changing the Meitzav exams to tests based on a representative sample of schools that will give a picture of achievements and educational perspectives and will also enable testing over multiple years.

Data collection of this sort will lessen pressures on schools following the publication of results and will allow them to focus on real improvements. In addition, existing information sources – in the Ministry of Education, in the National Authority for Measurement and Evaluation in Education, and others – should be used to improve teaching methods in schools.

Heterogeneous student populations

The Israeli education system is divided into “four tribes,” as the President of Israel said: Hebrew State, State-religious, Haredi, and the Arab education system. Despite various attempts, it is hard to imagine much integration of these four tribes. Within each tribe, there is also considerable segregation between various groups.

Schools in the Israeli education system differ in the socioeconomic composition of their student bodies. These differences contribute to perpetuating intergenerational inequality because the composition of the student body has an impact on student achievements.

For this reason, researchers are of the opinion that integration within the schools between students from the different tribes and different socioeconomic backgrounds should be encouraged, for instance through economic incentives.

Improving teacher recruitment and training for those serving the periphery

 In the past two decades, teacher’s colleges have raised their entrance requirements somewhat, but they still draw mostly students with weak academic performance.

In the past decade, there have been programs aimed at encouraging candidates with high academic skills to work with weaker populations, including monetary incentives and retraining. Nevertheless, there is still an issue of teacher attrition rates, as well as teachers with high seniority and advanced degrees tending to teach in schools serving stronger populations. One of the Ministry of Education’s programs mentors new teachers, although its efficacy has not yet been fully evaluated.

The Taub Center researchers believe that teachers from strong backgrounds should be encouraged to teach students with relatively weak backgrounds, and should be mentored during their first years of work to give them broad professional support.

Policies to narrow gaps in higher education

Opening up the higher education system has brought about a substantial rise in the share of those seeking higher degrees among Jews and Arab Israelis, and for both women and men, though female rates of higher education are higher in both sectors, and particularly among Arabs. Nevertheless, the rise did not narrow gaps a great deal between Jewish and Arab Israeli students.

About 70% of those Jews with a bagrut (matriculation) qualification continue on to higher education compared to about 50% of Arab Israelis.  A look at Jews by ethnic origin shows that about 75% of Ashkenazim, about 65% from the former Soviet Union, about 61% of Mizrahiim, and only about 51% of Ethiopian descent continue onto academic studies.

Children whose parents have an academic education are far more likely to continue on to higher education than are children whose parents do not have an academic education (76% versus 61%, respectively). There are also differences in the choice of institutions of higher learning: Muslims and Druze tend to study in colleges, while Jews (primarily Ashkenazim and those from the former Soviet Union) and Christians tend to study in the university system.

The likelihood of Arab Israelis dropping out from their degree studies is twice that of Jews. With regard to completing a degree, those of Ethiopian descent have the lowest completion rates – less than half of them complete their studies within the defined period of time. In teacher colleges, only 60% complete their studies on time while about 18% drop out.

“The study’s findings show that high school gaps have repercussions that extend to higher education, and interventions should begin early in the education system, primarily among groups with weaker socioeconomic backgrounds and among Arab Israelis,” say the researchers.

They add, “Gaps in accessibility to higher education between Jews and Arab Israeli students are deep, and Arab Israelis need to be encouraged to obtain higher education and to develop their employment possibilities. In addition, preparatory courses for Arab Israeli candidates who meet entrance requirements for higher education should be increased.”

The negative implications of tracking students

Tracking students is done so that they can learn according to their abilities and interests. Tracking, though, increases inequalities since students from weaker backgrounds are often directed into tracks where their educational opportunities are limited.

Students are placed in different educational tracks in middle and high school. Following a substantial decline over the years in the extent of vocational-technological education, the Ministry of Education set a goal to once again increase attendance in those tracks.

The claims were that doing so would narrow gaps between the Center and the periphery and between wealthy and poorer population groups, would ultimately help the Israeli market place which has been hurt by a shortage of workers with vocational-technological skills, and would also strengthen the work ethic in education. Those against the Ministry move claim that vocational-technological education perpetuates inequalities, despite the changes that it has undergone, since the weakest students are directed to those vocations that give their graduates the fewest opportunities.

The researchers recommend working to limit tracking in middle school, for instance by having a more heterogeneous mix of students in classes, and encouraging even those students with difficulties to take academic track high school classes that lead to a bagrut qualification.

Gender gaps in education

A good deal of the discussion about gender gaps in education is concerned with girls’ inferior performance in mathematics and science, despite the fact that in all subjects and at all levels of study their achievements are no worse and even better than those of their male peers.

This is true in all population groups and particularly so in the Arab education system. Nevertheless, policy planners and education researchers show little interest in how boys are consistently outperformed in language skills.

Gender gaps in mathematics and sciences are seen in both high school and higher education, and are expressed in the low share of women who study physics and computer science. Gender gaps in these fields reflect on gender-based gaps in wages in the labor market, since studying engineering and computer science at the academic level increase the chances of attaining lucrative employment. Recent studies show that encouraging women to study technology related fields can help narrow the gender wage gap, and might even eliminate it.

Pedagogical interventions to narrow gaps in the classroom and school

Cooperative learning in small groups and individual tutoring for students with difficulties are two approaches that are found to be effective in advancing equity between students, and yet require little economic investment. Unfortunately, the Ministry of Education has yet to develop a clear framework for their efficient implementation in a manner that will target those students who need it the most.

Cooperative learning in small, heterogeneous groups can substitute for tracking students by academic level, and can thereby narrow inequalities inherent in tracking. This approach requires training and mentoring teachers, and organizational flexibility in teaching hours and study materials.

Its implementation requires a change in the mindset among school principals and those in the Ministry of Education. Researchers suggest that the hours of individual tutoring required by teachers should be focused on advancing low-performing students, and additional tutoring hours should be budgeted for those schools serving socioeconomically weak populations.

 

 

 

 

 

 

 

Do the different stages of early childhood affect children differently?

babyWhen researchers study inequalities in society and opportunities for social mobility, they often try to determine the sources of these inequalities. Not surprisingly, many look to inequalities in the education system and their lasting effect in adulthood, but new studies show that these gaps find their beginnings earlier in life.

The first years of life are critical in terms of brain development; as the academic literature shows, the brain reaches 85% of its final size by age 3, and 95% of its size by age 5. During this period, all the developmental processes are at their peak: cognitive, linguistic, emotional, social, perceptual, and more. It is a critical period, one in which exposure to a supportive, enriching, and stimulating environment is essential for optimal development.

A recent Taub Center study, published with the generous support of the Bernard van Leer Foundation, delves deeper into the influence of environmental factors on early childhood development and children’s future scholastic achievements. The study asks if there is a difference in Israel between infants and toddlers – conception to age 2 – and preschoolers – ages 3-5 – in the effect that poverty has on later academic achievements.

In general, the researchers discovered that certain family characteristics have an impact on students’ achievements across both age groups (birth to age 2 and 3-5). For example, as parents’ level of education rises so do their children’s scholastic achievements. In addition, number of siblings has a negative effect during early childhood – as the number of siblings rises, scholastic achievements drop.

When it comes to poverty, however, there are differences between the two age groups. Poverty during the first two years of a child’s life is strongly and negatively correlated with later academic achievements, while poverty that is experienced by the child at ages 3-5 does not have the same correlation. These findings hold true for all the subjects tested on the 5th grade Meitzav exams – mathematics, Hebrew, English (as a second language), and literacy in science and technology.

Math-ENG-long

 

 

Language-ENG-long

Furthermore, there are significant differences in Bagrut outcomes between students who experience poverty from birth to 2-years-old and those who experience poverty between ages 3 and 5; again, the negative correlation is greater for those who experience poverty during the very first years of life.

These findings are particularly poignant because child poverty in Israel, which stands at about 26%, is nearly the highest among the developed countries (with the exception of Turkey). It seems that such poverty, experienced from birth to two years, is likely to result in a kind of “scar” that remains over time and accompanies the child through adulthood.

To address poverty in early childhood the researchers suggest the possibility of shifting a portion of child allowances towards early childhood, and in this way, offering assistance to young parents.

In view of the high employment rates among mothers with small children, it is also important to increase the quality of educational frameworks for very young children, especially for children up to age two and especially for families who are in financial distress. Because of the critical importance of early childhood development and its many implications, the Taub Center plans to continue researching this topic in the coming years.

 

For more articles like this, sign up for the Taub Center monthly newsletter.

Press Release – Educational Inequality in Israel: From Research to Policy

 

Despite pervasive differences of opinion and ideological battles within Israeli society, there is one subject where there is complete agreement and that is the need to narrow educational gaps. Most agree that education is one of the keys to success in life, and that we should ensure equity in terms of educational opportunities for all children in Israel.

Many believe that narrowing educational inequalities can also contribute to narrowing economic inequality that is so prevalent. Nevertheless, educational disparities between socioeconomic groups, sectors, and ethnic groups abound. These gaps seem intransigent despite the efforts of government and the education system.

The Taub Center for Social Policy Studies in Israel has published a new book Educational Inequality in Israel: From Research to Policy, which gathers the current knowledge on a variety of issues relating to educational inequality, and discusses education policy and steps that can be taken towards change. Leading educational authorities in Israel collaborated on this book  including Professor Hanna Ayalon, Nachum Blass, Dr. Yariv Feniger, and Professor Yossi Shavit.

This book examines the issues of educational inequality in Israel. Children’s academic achievements are determined to a large extent by the economic and educational resources that their parents have available. There are tremendous inequalities among families in Israel in terms of these resources, and this contributes to a large extent to the differences in educational opportunities for the younger generation. These inequalities do not just stem from differences in family resources but also from the structure of the education system and its processes.

For example, separation of weaker and stronger students contributes to a strengthening of the inequality between these groups in terms of their achievements.  Similarly, privatization of the education system is likely to increase the achievements of students from well-off families since they can afford the expenses of private education while students from poorer families often attend schools with fewer resources providing education of a lower quality.

This all contributes to a widening of educational gaps. This book documents educational inequality in Israel and discusses the possible contribution of education policy to the narrowing of these disparities among young people. It appears that despite the advantages that stronger social status groups hold, there is hope that focused education policy can narrow the disparities, even if they cannot be eliminated. Knowing the centrality of family resources in creating educational disparities should not weaken the drive of policy makers to work towards narrowing these gaps.

If anything, it should strengthen their resolve to develop directed policies to this end. The book’s chapters discuss a variety of ways that education policy can further educational opportunities among weaker social groups in Israel.

A policy of differential allocation of student resources should be implemented

There are differences in resource allocation between socioeconomic groups, and affirmative action policies enacted by the Ministry of Education have not, as yet, brought about substantial changes. It does, however, appear that gaps in resources – especially between the Hebrew and Arab education sectors – are narrowing.

Only about 10% of the Ministry of Education budget is set aside to advance weaker population groups. The Taub Center researchers suggest changing the budgeting system by implementing a differential basket of student resources from preschool through to high school, recognizing that this is a valuable tool for advancing equity in the education system.

Allocating in this way allows the services to be concentrated in the hands of the Ministry of Education and gives them the ability to change the current situation where municipalities with different resources and needs are required to contribute the same percentage of their resources to education funding.

Differential budgeting allows the Ministry to set a separate system of compensation and incentives for teachers in schools serving weaker population groups. It is based on the school’s Nurture Index, giving priority to those institutions that are socially integrated with students from lower socioeconomic backgrounds.

Investment in early childhood brings returns both to the individual and to society

The first years of life – early childhood – are a critical period in child development. The family’s socioeconomic background is likely to impact the supply of positive and negative stimuli in the young child’s experience with long-term developmental impact including on future academic achievements. Research shows that socioeconomic gaps in early childhood tend to intensify over the child’s lifetime.

Taub Center researchers explain that inequalities in academic achievement in Israel are linked to economic inequalities for families of young children. Interventions during this critical period, while the infant’s brain is still malleable, bring greater returns than later interventions, and are also likely to narrow academic achievement gaps among children from different socioeconomic groups.

The researchers suggest several steps, including increasing accessibility and improving the quality of early childcare in day care centers and family-run daycare and increasing participation in programs of this nature; keeping child to staff ratios low in early childhood frameworks; and investing in training high-quality staff for these facilities.

In addition, the researchers recommend increasing Income Support, increasing and differentially distributing Child Allowances, and raising the work grants for those parents of young children who are low wage earners. Early intervention brings returns to the child and to society in a plethora of areas.

 

Decreasing class sizes is not a “cure-all,” although it can help students from weaker populations

Classrooms in Israel are the most crowded of the OECD countries and Israeli student achievements are middling to low relative to their peers in other countries. Does class size explain the low level of achievements?

Those who favor smaller classes claim that they allow teachers to give more individual attention to students, make teacher’s work easier, and lessen teacher burn-out, among other benefits. However, decreasing the number of students per class is an expensive proposition, and it involves enlisting many more teachers who may be less well qualified.

In the Hebrew education system, students from wealthier socioeconomic groups tend to learn in relatively large classes, and those from weaker backgrounds are in smaller classes. Thus, decreasing class sizes in this sector is most likely to benefit the wealthier students. Despite this, there is evidence that small classes can bring about an improvement in academic achievements at the primary school level and in classes for students from weaker backgrounds.

It is important to also emphasize that decreasing class size must go hand in hand with modified pedagogical methods. Thus, it is advisable to do this in schools serving weaker populations (including in the Arab education sector), primarily in primary education, and this step should be accompanied by the development of new pedagogical tools and teacher training programs.

 

Privatization and parental choice within the education system increases inequalities

There are those who see parental choice, competition, and privatization of schools as an efficient means of improving the education system, however, current research does not bear this out. The majority of studies find no clear advantages to opening registration areas or to private or independent schools that benefit from public funding in comparison to regular public education.

Studies show that choice and privatization do not contribute to improving the overall system, and are, in fact, likely to increase the level of inequality in the system. Taub Center researchers stress that we should ensure that existing choice mechanisms do not harm the public system, and that they encourage pedagogical approaches with a proven potential to improve both teaching and learning of weaker students.

The book’s researchers recommend that in cases where there is parental choice of schools, the state and the local authority should ensure that schools do not charge entrance fees (since payments of this sort are a deterrent to those students with more limited resources) and that, in cases of excess demand, students are accepted on the basis of a lottery system rather than on the basis of tests or interviews. In addition, there should be transportation available to every child in the area to make the school of choice accessible regardless of parental ability to pay.

The price of student testing and the potential for developing measurement and evaluation tools

The Meitzav exams (the Hebrew acronym for School Growth and Efficiency Measures) are intended to provide the public and decision makers with information on academic achievements and gaps. As in other countries that have adopted such exams, though, it seems that their disadvantages outweigh their advantages. Instead of the exams serving as a tool for developing policy and directing policy for narrowing educational gaps, many schools intensively prepare their students for the exams, and in some cases, there have even been reports of altering test results.

In light of this, the researchers recommend changing the Meitzav exams to tests based on a representative sample of schools that will give a picture of achievements and educational perspectives and will also enable testing over multiple years.

Data collection of this sort will lessen pressures on schools following the publication of results and will allow them to focus on real improvements. In addition, existing information sources – in the Ministry of Education, in the National Authority for Measurement and Evaluation in Education, and others – should be used to improve teaching methods in schools.

Heterogeneous student populations

The Israeli education system is divided into “four tribes,” as the President of Israel said: Hebrew State, State-religious, Haredi, and the Arab education system. Despite various attempts, it is hard to imagine much integration of these four tribes. Within each tribe, there is also considerable segregation between various groups.

Schools in the Israeli education system differ in the socioeconomic composition of their student bodies. These differences contribute to perpetuating intergenerational inequality because the composition of the student body has an impact on student achievements. For this reason, researchers are of the opinion that integration within the schools between students from the different tribes and different socioeconomic backgrounds should be encouraged, for instance through economic incentives.

Improving teacher recruitment and training for those serving the periphery

 In the past two decades, teacher’s colleges have raised their entrance requirements somewhat, but they still draw mostly students with weak academic performance.

In the past decade, there have been programs aimed at encouraging candidates with high academic skills to work with weaker populations, including monetary incentives and retraining. Nevertheless, there is still an issue of teacher attrition rates, as well as teachers with high seniority and advanced degrees tending to teach in schools serving stronger populations. One of the Ministry of Education’s programs mentors new teachers, although its efficacy has not yet been fully evaluated.

The Taub Center researchers believe that teachers from strong backgrounds should be encouraged to teach students with relatively weak backgrounds, and should be mentored during their first years of work to give them broad professional support.

Policies to narrow gaps in higher education

Opening up the higher education system has brought about a substantial rise in the share of those seeking higher degrees among Jews and Arab Israelis, and for both women and men, though female rates of higher education are higher in both sectors, and particularly among Arabs. Nevertheless, the rise did not narrow gaps a great deal between Jewish and Arab Israeli students.

About 70% of those Jews with a bagrut (matriculation) qualification continue on to higher education compared to about 50% of Arab Israelis.  A look at Jews by ethnic origin shows that about 75% of Ashkenazim, about 65% from the former Soviet Union, about 61% of Mizrahiim, and only about 51% of Ethiopian descent continue onto academic studies.

Children whose parents have an academic education are far more likely to continue on to higher education than are children whose parents do not have an academic education (76% versus 61%, respectively). There are also differences in the choice of institutions of higher learning: Muslims and Druze tend to study in colleges, while Jews (primarily Ashkenazim and those from the former Soviet Union) and Christians tend to study in the university system.

The likelihood of Arab Israelis dropping out from their degree studies is twice that of Jews. With regard to completing a degree, those of Ethiopian descent have the lowest completion rates – less than half of them complete their studies within the defined period of time. In teacher colleges, only 60% complete their studies on time while about 18% drop out.

“The study’s findings show that high school gaps have repercussions that extend to higher education, and interventions should begin early in the education system, primarily among groups with weaker socioeconomic backgrounds and among Arab Israelis,” say the researchers. They add, “Gaps in accessibility to higher education between Jews and Arab Israeli students are deep, and Arab Israelis need to be encouraged to obtain higher education and to develop their employment possibilities. In addition, preparatory courses for Arab Israeli candidates who meet entrance requirements for higher education should be increased.”

The negative implications of tracking students

Tracking students is done so that they can learn according to their abilities and interests. Tracking, though, increases inequalities since students from weaker backgrounds are often directed into tracks where their educational opportunities are limited.

Students are placed in different educational tracks in middle and high school. Following a substantial decline over the years in the extent of vocational-technological education, the Ministry of Education set a goal to once again increase attendance in those tracks.

The claims were that doing so would narrow gaps between the Center and the periphery and between wealthy and poorer population groups, would ultimately help the Israeli market place which has been hurt by a shortage of workers with vocational-technological skills, and would also strengthen the work ethic in education.

Those against the Ministry move claim that vocational-technological education perpetuates inequalities, despite the changes that it has undergone, since the weakest students are directed to those vocations that give their graduates the fewest opportunities. The researchers recommend working to limit tracking in middle school, for instance by having a more heterogeneous mix of students in classes, and encouraging even those students with difficulties to take academic track high school classes that lead to a bagrut qualification.

 

Gender gaps in education

A good deal of the discussion about gender gaps in education is concerned with girls’ inferior performance in mathematics and science, despite the fact that in all subjects and at all levels of study their achievements are no worse and even better than those of their male peers. This is true in all population groups and particularly so in the Arab education system. Nevertheless, policy planners and education researchers show little interest in how boys are consistently outperformed in language skills.

 

Gender gaps in mathematics and sciences are seen in both high school and higher education, and are expressed in the low share of women who study physics and computer science. Gender gaps in these fields reflect on gender-based gaps in wages in the labor market, since studying engineering and computer science at the academic level increase the chances of attaining lucrative employment.

Recent studies show that encouraging women to study technology related fields can help narrow the gender wage gap, and might even eliminate it.

Pedagogical interventions to narrow gaps in the classroom and school

Cooperative learning in small groups and individual tutoring for students with difficulties are two approaches that are found to be effective in advancing equity between students, and yet require little economic investment. Unfortunately, the Ministry of Education has yet to develop a clear framework for their efficient implementation in a manner that will target those students who need it the most.

Cooperative learning in small, heterogeneous groups can substitute for tracking students by academic level, and can thereby narrow inequalities inherent in tracking. This approach requires training and mentoring teachers, and organizational flexibility in teaching hours and study materials.

Its implementation requires a change in the mindset among school principals and those in the Ministry of Education. Researchers suggest that the hours of individual tutoring required by teachers should be focused on advancing low-performing students, and additional tutoring hours should be budgeted for those schools serving socioeconomically weak populations.

Professor Avi Weiss, President of the Taub Center, says: “Quality education is an investment that pays off and a path towards social mobility. It can serve as a springboard for boys and girls from weak socioeconomic backgrounds to a brighter future and economic stability. In Israel, for the most part, children from wealthy families benefit from access to better education, and the gaps between population groups are large. This harms society as a whole. A country that fails to realize the full potential of its human capital ultimately harms its economic growth.”

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749; 02 567 1818 ext. 110.

 

 

The State of the Acute Care Hospitalization System in Israel

The study  looks at the general hospitalization system in Israel and suggests that there are systemic failures in planning, budgeting, and regulation by the government especially in light of the increasing needs of Israel’s aging population.

The result: a low number of beds per population relative to the OECD countries, inefficiencies due to the size of hospitals and their geographic dispersion, substantial gaps in accessibility to hospitals between the Center and the periphery, and bed occupancy rates (the average number of hospitalizations per bed per year) that are especially high which make it difficult for the system to function.

Inequalities are created in early childhood: Early childhood poverty and future academic achievements

Executive Summary

The academic literature shows that the first years of life are critical in terms of brain development: until age 3, the brain reaches 85% of its final size, and until age 5, 95% of its size. In this period, all the developmental processes are at their height: cognitive, linguistic, emotional, social, perceptual, and more.

For this reason, there are those who claim that the first 1,000 days of life – from conception until age 2 – are the most critical in terms of development, a period where exposure to a supportive, enriching, and stimulating environment is essential for optimal development.

This study, generously supported by the Bernard van Leer Foundation, examines the impact of family income during early childhood on Israeli students’ future academic achievements on the 5th grade Meitzav exams, and distinguishes for the first time between infants – birth to 2-years-old – and preschoolers – ages 3-5.

Economic and scholastic inequalities in Israel

 

Economic inequality in Israel is among the highest in the OECD countries, and especially high among children – almost 30% of Israel’s children lived in poverty in 2017. More than half of all poor families are families with children. Israel also ranks among the lowest in student academic achievements among the OECD countries, with high levels of inequality in those achievements among Israeli students.

Family characteristics and scholastic achievements

 

Certain family characteristics have an impact on students’ achievements across both age groups (birth to age 2 and 3-5). There is a strong positive relationship between parents’ level of education and achievements – that is, as parents’ level of education rises so do their children’s scholastic achievements. Likewise, number of siblings has a negative effect during early childhood – as the number of siblings rises, scholastic achievements drop.

Poverty in early childhood and Meitzav exam performance

 

Poverty during the first two years of a child’s life appears to have an especially strong and negative effect on later academic achievements, while poverty that is experienced by the child at ages 3-5 does not have the same impact. These findings hold up across all the scholastic tests of the 5th grade Meitzav exams: math, Hebrew, English, and science.

Poverty in early childhood and attaining a Bagrut certificate

 

Controlling for previous achievements, poverty experienced during the first two years of life lowers the chances of students receiving a Bagrut certificate. Furthermore, there are significant differences in Bagrut outcomes between students who experience poverty from birth to 2-years-old and those who experience poverty between ages 3 and 5.

Given these findings, it is possible to suggest that poverty experienced from birth to two years is likely to create a kind of “scar” that remains over time and accompanies the child through adulthood.

The researchers suggest the possibility of shifting a portion of child allowances towards early childhood, and in this way, offering assistance to young parents. Likewise, in view of the high employment rates among mothers with small children, it is especially important to increase the number of quality, educational frameworks for very young children, especially up to age two.

 

 

Press Release – Inequalities are created in early childhood: Early childhood poverty and future academic achievements

As the year ends – a year filled with difficult stories of abuse in preschools and parent’s protests – and as a new year begins, the Taub Center is publishing a new study with the support of the Bernard van Leer Foundation on the influence of environmental factors on early childhood development and children’s future scholastic achievements.

The incidence of poverty in Israel and especially child poverty, which stands at almost 30%, is nearly the highest among the OECD countries (with the exception of Turkey). The Taub Center study examines the impact of family income during early childhood on future academic achievements for children in Israel, and, for the first time, distinguishes between infants and toddlers – birth to age 2 – and preschoolers – ages 3-5 – in order to identify differences in impact between the two groups.

The findings show that poverty experienced until age 2 has a substantial influence on learning over the child’s lifetime – on their grades in the Meitzav exams in 5th grade, as well as on their later academic achievements. When poverty is experienced from ages 3-5, similar effects were not found, something that supports the importance of investment in the first 1,000 days of a child’s life.

Economic inequality in Israel is among the highest in the OECD countries, and especially high among children – almost 30% of Israel’s children lived in poverty in 2017. More than half of all poor families are families with children. Israel also ranks among the lowest in student academic achievements among the OECD countries, with high levels of inequality in those achievements among Israeli students.

It is important to note that the first years of life are critical in terms of brain development: until age 3, the brain reaches 85% of its ultimate size, and until age 5, 95% of its ultimate size. In this period, all the developmental processes are at their peaks: cognitive, linguistic, emotional, social, perceptual, and more. For this reason, there are those who claim that the first 1,000 days of life – from conception until age 2 – are the most critical in terms of development, a period where exposure to a supportive, rich, and stimulating environment is essential for optimal development.

A new Taub Center study conducted by Dana Vaknin, Prof. Yossi Shavit, and Dr. Isaac Sasson looks at the influence of early childhood poverty on later academic achievements and for the first time separates early childhood into two groups: from birth to 2-years-old, and from ages 3 to 5.

The study looks at Jewish children in the 1990 to 1995 cohort (data for Arab Israeli students are very limited and so were not examined) at several points in time from birth to age 5, and again in 5th grade when they take the Meitzav exams which test proficiency in mathematics, Hebrew, English (as a second language), and literacy in science and technology. In addition, data on disposable family income per capita at two points in time (in early childhood and at age 10) were considered.

Inclusion in the lowest income quintile was defined as living in poverty; inclusion in the highest quintile was defined as living in wealth. Finally, other explanatory variables included the parents’ level of education, the child’s gender, and the number of siblings during early childhood and during their teens. The analysis was carried out for each of the two age groups to look for differences between them.

 

For children from birth until age 2, inclusion in the lowest family income quintile has a dramatic influence on exam scores in later life

Taub Center researchers found that there is a strong positive relationship between parents’ level of education and achievements – that is, as parents’ level of education rises so do their children’s scholastic achievements. Likewise, there was a negative influence of number of siblings during early childhood – as the number of siblings rises, scholastic achievements drop.

The most significant finding from the study is that poverty during the first two years of a child’s life has an especially strong and negative influence on later achievements, while poverty that is experienced by the child at ages 3-5 does not have the same impact.

These findings were borne out over all the scholastic tests of the 5th grade Meitzav exams: math, Hebrew, English, and science. These findings show the tremendous importance of a child’s environment during the first two years of life.

Hebrew ENG

It is important to note that per capita disposable family income is not necessarily stable for families with young children. This is due to the substantial changes in earning power of parents during this period in their lives, due to, among other things, changes in seniority, education, and workplace.
Math ENG

In addition, changes in the average number of children per family as well as government child allowances also play a part. A look at the distribution of families by family income quintiles shows that of the households with adults ages 25 to 27 in the lowest income quintile, only 30% of them remain in the lowest quintile by ages 30 to 32 while the majority have moved up: 19% moved to the second quintile, 13% to the 3rd, 10% to the 4th, and 8% have moved to the highest household income quintile.

The data testify to the mobility among parents of young children in disposable income, and explain how the impact of poverty at very young ages does not necessarily continue until children reach ages 3 to 5.

Early childhood poverty reduces the chances of attaining a bagrut certificate

The Taub Center researchers looked at the continued effects of early childhood poverty beyond the Meitzav exams, for example, on the likelihood of receiving a bagrut certificate. Controlling for previous achievements, it was found that poverty experienced during the first two years of life lowers the chances of receiving a bagrut certificate, and that there are significant differences between poverty experienced in the two age groups (birth to 2-years-old, and ages 3 to 5).

On the basis of findings from this Taub Center study, it is possible to suggest that poverty experienced from birth to two years might create a kind of “scar” that remains over time and accompanies the child through adulthood.

“We found substantial differences between the early childhood stages in everything relating to the influence of poverty on future academic achievements,” explain the researchers, and they add: “From the study, it is clear that early childhood is not a single period with homogeneous characteristics, and that special attention should be paid to the first 1,000 days of life, which have an impact on future child development.

In Israel, where about 2.5 million children are under the age of 18, and, of them, 40% are under age 6, and where the rates of childhood poverty are particularly high, it is important to understand the impact of the timing and duration of poverty on child development. This possibly explains some of the disparities in academic achievement between socioeconomic levels, which are also particularly wide in Israel.”

“The findings of this study have implications for policy in Israel; it is important to take steps that address the negative phenomena that can stem from poverty and harm children in their first thousand days,” says the President of the Taub Center, Prof. Avi Weiss. The researchers suggest the possibility of shifting a portion of child allowances towards early childhood, and in this way, offering assistance to young parents.

It is possible that allocating the child allowance differently than how it is allocated today (a universal and equal allowance) could be especially helpful to those families most in need.

Likewise, in view of the high employment rates among mothers with children up to age 3 and the large number of their young children enrolled in early education frameworks, only 20% of which are under government regulation, it is especially important to increase the number of quality, educational frameworks for very young children, especially up to age two.

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749; 02 567 1818 ext. 110.

 

 

Raising the bar: are enough Israeli students taking advanced math and English?

The new school year is in full swing, which, for Israeli high-schoolers, means already starting to prepare for the matriculation exams (bagrut) they will take before graduating.

One of the main goals set by the Ministry of Education in recent years was to increase the share of high school students studying math and English at the highest (five-unit) level, as well as the rate of bagrut qualification at this advanced level.

These subjects have become a central focus of the Ministry because they are important for many fields of study in higher education. In addition, studying advanced math and English builds important skills for integration into the labor market and is even associated with higher earning capacity in the future.

After several years of decline, the number of students taking five-units in math and English has improved greatly in the past five years, in both Hebrew and Arab education. There has been a 40% increase in the number of students taking the five-unit level English bagrut exam since 2012. After a sharp decline between 2006 and 2010, the number of students testing at the most advanced math level has risen even more dramatically – 80% since 2012.

Given that the number of students in the 12th grade grew by only 13% during the same period, this is a very notable improvement.
math bagrut ENG -large

In English, the situation is quite similar; the share of students in the Arab sector studying English at the highest level is much lower than in the Hebrew sector – under 17% in 2017, compared with about half of the students in non-Haredi Hebrew education. Nonetheless, it is important to note that the 2017 rate in Arab education is more than double the rate only seven years earlier, so this is a marked improvement and the situation seems on track to continue improving.
Share of students taking the Bagrut in English at the five unit level

Among Bedouin students in particular the changes over the past decade or so have been drastic; between 2006 and 2017, the number of Bedouin students in the 12th grade almost doubled, the number of students with bagrut qualifications rose 2.5-fold, the number taking five units in math rose 4-fold, and the number taking five units in English increased more than 11-fold.

Another interesting finding is that almost all of the students taking advanced math are either enrolled in technological education (the vast majority in high technological tracks) or are science majors in an academic track. In fact, only 4.4% of those who took five units in math were enrolled in non-science academic majors.

Though large gaps still remain across sector and study track, the impressive increases in the number of Israeli high schoolers taking math and English at the five-unit level indicates that the Ministry of Education and its leaders have set concrete goals and that they have the means and the ability to achieve them.

Press Release: High School Dropouts

Embargo until Wednesday (25.9) 6:00 am

Click here For the full research in Hebrew 

With the start of the school year, the Taub Center is releasing a new study by researchers Guy Yanay, Hadas Fuchs, and Nachum Blass on high school dropout rates. The findings show that the phenomenon has declined considerably, especially among weaker population groups.

Despite the overall decline in dropout rates across all population groups and genders, the research finds that dropout rates are still high among particularly vulnerable groups like immigrants and students from weak socioeconomic backgrounds.

A new study by Taub Center researchers Guy Yanay, Hadas Fuchs, and Nachum Blass looks at dropout rates among 10th to 12th grade students and finds that rates dropped from almost 10% in the 2003 school year to less than 8% in 2017.

Excluding Haredi schools, where a large portion of the students transfer to yeshivas that are not under Ministry of Education supervision, the dropout rate declined even further, from about 9% to almost 5.5%. Dropout rates among Haredi girls are low and similar to rates among girls in the other Jewish sectors.

The decline in dropout rates among students in the academic track in high school – where rates were low to begin with – was relatively small, while in the technology tracks, there was a substantial drop in rates, from 9.5% in 2003 to about 5.5% in 2017, almost halving the rate over the course of a decade.

Since the middle of this decade, the dropout rate from technological education has been almost the same as the rate from academic tracks. This is significant because today, unlike in the past, technological education gives its students similar opportunities for social mobility as academic track education. That said, there are substantial differences in dropout rates within technology tracks; in the high technology track, rates have dropped from a high of 4.5%, in 2006, to only 1.5%, in 2017 – a rate that is even lower than in the academic track.

In the medium technology track, the rate decreased from 11% to 7%. The lowest technology (vocational) track, which struggles to keep its students in the system, saw the greatest percentage point decline from 28% to 19%.
Dropout rates from academic and technology education tracks

The dropout rates from academic tracks in Arab education are twice as high as those from the Hebrew education system

In the Arab education sector, there has also been a considerable decline in the dropout rate, from 15% to about 8%. The drop is particularly striking in the Druze sector, where the rates now resemble those in the non-Haredi Hebrew education sector. However, dropout rates among academic track students in the Arab education sector are twice as high as those among students in the Hebrew education sector.

Given the high dropout rates within the academic track, it is surprising to find that the dropout rate from the technology tracks in Arab education is actually lower than in the Hebrew education sector. In terms of gender, boys in Arab education have dropout rates that are 3 times higher than girls in the sector.
Dropout rate by education sector

Within the Arab education sector, the decline in dropout rates in technological education are especially striking in the high technology track, where dropout rates are lower than in the Hebrew sector (only 1% drop out in the Arab sector), and in which there has also been an increase of more than 40% in the share of students enrolled.

A closer examination shows that the most significant factor in the declining dropout rate from Arab education is not the educational track but rather the students’ family background; students from stronger socioeconomic backgrounds study in the high technology track.

Taub Center’s researchers found that the dropout rate among boys decreased from about 11% to about 7% and among girls from about 6% to about 3.5% – a drop of some 40% for both gender groups. A between sector comparison shows that, in 2017, the dropout rate among girls in Arab education was almost 5% versus 3% among girls in Hebrew education. Among boys, the differences are even greater: about 11.5% among boys in Arab education versus 5% among boys in Hebrew education.

Looking at rates by geographic district, the researchers found there are no substantial differences between students in Hebrew education in different geographic regions of the country while, among students in Arab education, there are large differences. When socioeconomic background factors are controlled for, though, the disparities due to geographic location become non-significant in explaining the dropout rate.

An exception to this is Arab education in the Tel Aviv district, where the dropout rate remains significantly higher than in other areas, even when controlling for other factors.

Schools in the Arab education sector are more successful at preventing dropping out than in the Hebrew sector

As expected, the dropout rate rises as the school Nurture Index rises in both sectors – a higher Nurture Index score indicates lower socioeconomic status of the school and its student body. It is important to note that the level of success of schools of similar Nurture Index rankings in having their students complete 12 years of education is not the same in the Hebrew and Arab education sectors.

In fact, there is a clear advantage in favor of the Arab education sector; Arab schools at the lowest Nurture Index ranking among schools in the Arab education system (highest socioeconomic ranking) had a dropout rate of only 2%, while the rate in schools in Hebrew education with similar Nurture Index rankings was 4.5%.

In Hebrew schools with the highest Nurture Index among schools in the Hebrew education system (with the weakest socioeconomic ranking), the dropout rate was 8.5%. Among Arab education schools with a similar ranking, the rate was only 6%. This demonstrates the ability of schools in the Arab education sector to retain their students.

Taub Center’s researchers found that among new immigrants the dropout rate is particularly high – over 9%, versus 3% among Israel-born students. It is especially high for those students who immigrated after the age of 12, about 20%. For those who immigrated at a younger age, the dropout rate is declining, from nearly 10% to about 6%.

It should be noted that higher dropout rates among immigrants who arrived at an older age is not a phenomenon unique to Israel and is well known in other countries. It is possible that the high rate among those who immigrated after age 12 has to do with their leaving Israel or transferring to other educational tracks.

In summary, the researchers say: “The past few years have seen a considerable improvement in high school dropout rates. The continuous decline in the dropout rate from technological education may indicate that it is giving its students equal value to academic track education in terms of opportunities for higher education and integration into the labor market. We have also seen a narrowing of gaps between students in Hebrew education and Arab education, although the dropout phenomenon is still present primarily among weaker population groups.”

In order to further reduce dropout rates, the researchers suggest some possibilities, among them developing innovative frameworks that deal with dropouts in ways other than conventional school frameworks and targeted programs appropriate for new immigrants.

The President of the Taub Center, Professor Avi Weiss, adds: “The education system has the ability to give students from different socioeconomic backgrounds an opportunity to attain human capital skills needed for the future labor market; technology education is an important portion of this effort. Special attention should be paid to population groups with relatively high dropout rates, especially new immigrants to Israel.”

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749; 02 567 1818 ext. 110.

Trends in the High School Dropout Phenomenon

Among students from 10th to 12th grade, the dropout rate declined from almost 10% in the 2003 school year to less than 8% in 2017. Excluding Haredi schools, where a large portion of the students move to yeshivas not under Ministry of Education supervision, the dropout rate declined even more: from about 9% to almost 5.5%.

Dropout rates by study tracks

The decline in dropout rates among students in the academic track in high school – where rates were low to begin with – was relatively small, while in the technology tracks, there was a substantial decline: the dropout rate was almost halved in a decade – from 9.5% in 2003 to 5.5% in 2017.

  • In the high technology track, rates have dropped from a high of 4.5%, in 2006, to only 1.5%, in 2017 – a rate that is even lower than in the academic track.
  • In the medium technology track, the rate decreased from 11% to 7%.
  • The lowest technology track, saw the greatest decline in dropouts, from 28% to 19%.These trends show that, unlike in the past, technological education today gives its students similar opportunities for social mobility as academic track education.

    Dropout rates by sector and gender

    There has been a considerable decline in the dropout rate in the Arab education sector, from 15% to 8% between 2003 and 2017. Nonetheless, the rate is still higher for both boys and girls in Arab education than in Hebrew education.
    Dropout rate by education sector

  • Dropout rates in the high technology track in the Arab sector stand at only 1% and are lower than in the high technology track in the Hebrew sector.
  • Boys in Arab education have dropout rates that are 3 times higher than girls in the sector.
  • In 2017, the dropout rate among girls in Arab education was almost 5% versus 3% among girls in Hebrew education. Among boys, the differences are even greater: about 11.5% in Arab education versus 5% in Hebrew education.

    Dropout rates by socioeconomic status and geography

    As would be expected, the dropout rate rises as the school Nurture Index rises (a higher Nurture Index indicates a student body of lower socioeconomic status) in both sectors. However, there are no substantial differences in dropout rates in different geographic regions of the country, at least when controlling for socioeconomic background factors.

  • Arab education schools at the lowest Nurture Index ranking (highest socioeconomic ranking) had a dropout rate of only 2%, while the rate in the same schools in Hebrew education was 4.5%.
  • In Hebrew education schools at the highest Nurture Index ranking (with the weakest socioeconomic ranking), the dropout rate was 8.5%. Among Arab students with a similar profile, the rate was only 6%.
  • There are large differences in dropout rates in Arab education across geographic regions but, when controlling for socioeconomic background factors, these disparities are smaller and become non-significant in explaining the dropout rate. An exception is Arab education in the Tel Aviv district, where the dropout rate is 8.5 percentage points higher than in Hebrew education.

    Dropout rates among immigrants

    Among immigrants, and especially those who immigrated after the age of 12, dropout rates remain particularly high.

    • The dropout rate for new immigrants is over 9%, compared to 3% among Israel-born students.
    • The dropout rate for those who immigrated after the age of 12 remains high at 20%, while the rate is declining for those who immigrated at a younger age – from 10% to 6% between 2008 and 2017.Recent years have seen a considerable improvement in high school dropout rates overall as well as narrowing gaps between students in Hebrew education and Arab education. However this phenomenon is still present among weaker population groups, and should be addressed through innovative and targeted programs for these groups.

     

 

 

REALITY CHECK* – Healthy Israelis but an Unhealthy System

* Reality Check: A consideration of the facts, setting aside opinions, preconceptions, and beliefs
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In an international comparison of mortality and life expectancy rates, Israel’s healthcare system appears to be doing an impressive job. The infant mortality rate (3.1 per 1,000 births) is low relative to other countries with healthcare systems similar to Israel’s (based on competing health funds, like Belgium, France, Germany, the Netherlands, and Switzerland). Life expectancy at birth is also relatively high compared to those countries and stands at 82.5 years.

Nevertheless, looking to the future, it is evident that the healthcare system faces challenges in dealing with an aging population and its own inefficiencies.

Between 1995 and 2017, national expenditure on healthcare as a percentage of the country’s gross domestic product (GDP) grew only slightly, from 6.9% to 7.3% of GDP, while in the OECD it grew from 7.2% to 8.9% of GDP, and in those countries with similar healthcare systems to Israel it grew from 8.7% to 11%. While in general, countries are interested in keeping medical expenditures in check, the relatively low increase in expenditures in Israel is of concern for two reasons.

First, the aging of the population would seem to require an increase in expenditures. Second, healthcare prices have risen faster than prices in the rest of the economy; between 2011 and 2017, physician wages in the public sector increased by over 40% while wages increased by only 15% in the rest of the economy.
In addition, from 2011 to 2018, the price of private healthcare services went up more than twice the increase in the consumer price index (CPI): about 9% versus 4%. Taken together, we would have expected national health expenditures as a portion of GDP to rise, and given that they rose only slightly, this may be a sign of a worsening of service.

In general, national expenditure on healthcare is divided into two parts: public expenditure, financed by the state through the tax system and delivered by four health funds (kupot holim): Maccabi, Clalit, Meuhedet and Leumit, and private expenditure, financed by individuals through out-of-pocket expenditures and  the purchase of supplemental and/or commercial private insurance.

The National Health Insurance Law of 1995 was intended to ensure accessible medical services to all of the country’s residents on an equal basis. As the years have passed, though, and especially since the Economic Arrangements Law of 1997, there has been a decline in public financing along with a rise in private financing of healthcare which has undermined the equality principle in the law.

In fact, in Israel, the portion of public expenditure out of total healthcare expenditure has been falling, and in 2017,  stood  at 62.8% versus an OECD average of 73.4% and 78.2% in countries with similar systems.

Thus, individuals are are privately financing a greater portion of healthcare expenses in Israel than in other countries. As a result, there has been a consistent rise in the share of private expenditure on healthcare out of the average household budget: from 3.9% in 1997 to 5.7% in 2017.

The rise in private expenditure is partially a by-product of the unusual organization of the Israeli healthcare system, which has a problematic public-private mix at its core. In addition to public financing and optional private financing of healthcare services, individuals may purchase supplementary insurance services (known by the Hebrew acronym shaban) from their health fund in the public system.

About 80% of the population carry this type of insurance, which has a public character since it contains a cross-subsidy element; while monthly premiums differ based on age, there is no cost differentiation on the basis of health status. This supplementary insurance finances both treatments that are not included in the national health care basket of services and treatments that are provided through the public system but can be accessed more quickly or with greater physician choice when using supplementary insurance than they can when using only the public system.

The result is that the principle of equality laid out in the law is violated; as a result, a portion of those activities that should take place within the public system are shifted to a private system, and the funds from this insurance serve to fund the private system, alongside direct out-of-pocket commercial insurances. Perhaps even more acute than this public-private mix issue is a basic conflict that arises from the government’s various roles in hospitalization services.

The acute care (curative) hospitalization system runs for the most part as an “internal market” that began with the National Health Insurance Law in 1995. In this market, consumers receive the healthcare services they are entitled to, funded and regulated by the state, through the health funds. These health funds ensure medical services – whether through their purchase from public healthcare centers (hospitals) or by producing them themselves.

There are 58 hospitals in Israel (not including long-term care hospitals): 44 general hospitals, 12 psychiatric hospitals, and 2 rehabilitation hospitals. Of these, 19 are government-owned, 11 are privately-owned, 10 are under some form of public ownership or are owned by non-profit organizations, 12 are owned by the health funds (primarily Clalit Health Services), and 6 are owned by missions.

The result is that the system has built-in conflicts of interest. On the one hand, the state funds the health funds, which use some of these funds to purchase hospitalization services. In addition, it is responsible for regulating the hospitals, which requires it, among other activities, to be directly involved in both price setting for services sold to the health funds, and in setting quantities to be supplied to these funds at each price level.

Finally, it is the largest owner and supplier of acute care hospitalization services. Thus, in essence, the government competes with other hospitals that are dependent on it for budgeting and regulation. As a result, for example, budget constraints for government-owned hospitals may be “softer” than for other hospitals since deficits are more likely to be financed by the government. The conflicts of interest that result from this multiplicity of roles require addressing.

While Israelis enjoy relative good health at the moment, the healthcare service system is facing challenges from underfunding and basic systemic conflicts of interest that will persist unless there is a reckoning between the state’s role as financier, regulator, and service operator.

REALITY CHECK* – Arab Israelis: From Education Through Employment

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The past decades have seen remarkable changes in education within Arab Israeli society, with particularly prominent changes evident among Arab Israeli women.

Starting with high school, the portion of 14-17-year-olds enrolled in school grew from 63% in 1990 to 93% in 2015, with a steeper climb for girls than for boys. There was growth for the Jewish population also, but since the portion studying was far higher to begin with, the increase was much smaller – from 91% to 97%.

Within the high-school system, the share of students in technological-vocational education tracks (VET) has risen. As of 2017, more than 45% of students in the Arab education system were enrolled in VET studies, compared to 37% of students in the Hebrew education system. (The Israeli education system is divided into Hebrew and Arab education based on the supervisory authority and language of instruction.)

It is interesting to note that the greatest increase was among those entering the high technology education track (e.g., computer programming); here, too, the share among those in Arab education is higher than among those in Hebrew education. This trend is likely to improve their chances to integrate into the future labor market; the high technology track gives its students high-level math skills, which are in demand in high tech employment.

Although these science and technology studies are more prevalent in Arab education than in Hebrew education, unfortunately, the scholastic level of their bagrut (matriculation) qualification is on average lower, and fewer of their students study math and English at the highest proficiency level (5-units of study).

In general, the lower level of English (and Hebrew, which is also studied as an additional language) proficiency in the Arab Israeli sector harms their ability to integrate into high wage employment. Improving their proficiency in these languages is central to narrowing labor market gaps.
Graph Eng

The increase in the share of Arab Israeli girls studying in the technology track, and particularly in the high technology track, is noteworthy. In 2017, 21% of the girls in Bedouin education and 31% in Christian education studied in the technology track.

In addition, their share in the science-engineering track is high, including in studies not traditionally considered “female subjects” such as computer science, electronic systems, technology science, and the like. Among Druze girls, more than half of those with a bagrut in science study in tracks other than biology and chemistry (which are not considered high tech oriented).

The percentage of those with a bagrut qualification has increased substantially over the past 20 years, as has the portion of those with a qualification that fulfills the requirements for acceptance to higher education. The most substantial gain was among Arab Israeli girls – in 2017, their achievements were close to those of their Jewish peers.

Among Arab Israeli boys, the increase was smaller, relative to both Arab Israeli girls and to Jewish boys. The share of boys with a bagrut in the Bedouin sector remains particularly low – only 25% – and it rose by only about 5 percentage points between 1999 and 2013.

With the increase in the share of those in Arab education with a bagrut certificate, the share of those entering higher education has also increased. However, the rise was mostly among Arab Israeli women, while the increase among men was much smaller.

The most marked increase was among the Druze and Bedouin women, where the rates of those entering higher education rose by about 50% between 2008 and 2013 and, in all likelihood, this upward trend has continued.

In terms of study majors in higher education, it is interesting to note that about a third of Arab Israeli students, both men and women, study health-related fields, either in Israel or abroad. That said, the past decade has seen a shift, with men with high grades studying computers and engineering (rather than health professions) at rates similar to those of their Jewish peers.

Despite the fact that we see more Arab Israeli high school girls studying these subjects, we do not yet see women in higher education studying science at high rates. Their share in academic level computer and engineering studies is lower than that of Arab Israeli men or of Jewish women.

Until 2014, of the Arab Israeli women who studied science in high school (excluding biology and chemistry), 22% of Christian and Druze women and only 9% of Muslim women continue their studies in related fields in academia.

These developments in education have had a tremendous influence on the employment of Arab Israelis. There is a positive relationship between higher education and employment, with higher employment rates among those with an academic education.

Employment rates among Arab Israeli women are on the rise; between 2003 and 2014, the employment rate rose by about 11 percentage points, an increase of almost 50%, and in the final third of 2018, it reached almost 40% of the population – only 1% shy of the 2020 employment target for Arab Israeli women set in 2010 by the then Ministry of Labor, Trade and Employment.

The rise in the employment rate of Arab Israeli women is strongly correlated with the increase in their education levels; Arab Israeli women with degrees are far more likely to work than are those without such a degree. Nevertheless, their employment rates are still much lower than those of Jewish women in Israel.

In light of the strong correlation between education and employment for Arab Israeli women, encouraging them to major in fields with the potential for subsequent high wage employment, particularly in technology and engineering fields, could have significant spillover effects.

A rise in these women’s salaries could serve as a beacon to other women, which can ultimately lead to increased education and employment rates, to an improvement in their socioeconomic situation, and to a decline in their poverty rates. For the same reason, it is worthwhile considering expanding vocational training programs and assistance given to Arab Israeli women who choose not to go on to academic studies and who, nonetheless, are interested in working.

Finally, turning to Arab Israeli men, their employment rates are lower than are those of non-Haredi men and lower than the OECD average. In 2018, about 75% of this group were employed as opposed to almost 90% of non-Haredi Jewish men.

Their lower education levels impact their employment opportunities, and a large portion of them are employed as skilled workers in manufacturing, construction, and agriculture. While this portion is falling, it is still high – about 50% in 2017. These are low prestige jobs that pay poorly, and are also likely to be computerized in the not-so-distant future, making these workers susceptible to losing their livelihood.

In addition, these jobs have high burn-out rates and, as a result, employment rates among Arab Israeli men over 50 are low. Men employed as skilled workers tend to have low education levels, particularly for Arab Israelis; the portion of Arab Israeli men without a higher education in these jobs is 60% versus 34% among Jewish men. Improving the education level of Arab Israeli men could help give them access to improved employment opportunities.

In light of the strong correlation between education and employment, policies and programs that encourage the Arab Israeli population to gain higher education and to find their place in high wage employment have the potential to be very beneficial to the Arab Israeli population and to contribute greatly to the continuing growth of the entire economy.

 

REALITY CHECK* – Women at Work

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As of 2019, the employment rate of women in Israel is among the highest in the OECD countries. This relatively new phenomenon is rooted in the growth in employment in the past decade, which came largely from women ages 35-44 and 55-64. For the younger of these age groups, the rise is attributable to an increase in the share of young mothers entering the labor market.

The increased participation for the older age group, on the other hand, reflects both the general growth in participation of women in the labor market and a delay in retirement resulting from an increase in the official retirement age from 60 to 62 in 2004.

In general, higher employment rates are correlated with higher education levels. Rising education levels are already evident in high school; the share of both boys and girls graduating high school with a bagrut (matriculation) qualification, as well as those with a bagrut sufficient to enter university, saw a large rise between 1999 and 2013. Though both girls and boys have increased their rates of bagrut qualification, girls have higher rates of bagrut qualification and higher average bagrut scores than do boys.

Nevertheless, there are large gender differences specifically in the choice of high school major and in the level of mathematics study – both of which are factors with an influence on wage gaps between women and men. The share of those receiving a bagrut qualification with an emphasis on high technology studies is higher among boys, and there is a male majority in majors like computer sciences and physics. Girls make up the majority choosing the arts – literature, theater, art, and the like.

Gender differences are also substantial in higher education. For at least the past 20 years, women have been enrolling in higher education in greater numbers than men.
Graph1 eng

Over time, the share of women continuing on to advanced degrees has grown. In 2017, the share of women among first, second, and third degree earners, respectively, was 58%, 63%, and 53%. Here, too, differences in field of study are evident and largely unchanged for the past 25 years: women tend towards the caring and education professions (e.g., nursing, social work, and teaching) while men tend toward mathematics-based studies at higher rates.

That said, there has been substantial growth in the share of women studying social sciences and business administration, and women now represent more than 50% of the students in law and medical schools. In the exact sciences (math, statistics, and computer sciences) the absolute number of students in BA studies tripled between 2000 and 2014 with the share of men rising sharply, so the share of women in these studies has actually dropped.

Until the beginning of the century the share of women in engineering fields rose, especially in the areas of biological, chemical, and food engineering, as well as in industrial engineering and engineering management, but since then, women’s share in engineering has been steadily declining.

Gender differences carry over to occupational choice as well; the caring professions including education are characterized by a female majority while the technology professions are largely male dominated. When occupations are divided by education level, it is found that occupations are particularly polarized for those without an academic occupation.

For individuals with an academic degree, the differences between the genders are less pronounced. It is interesting to note that there is an inverse relationship between gender gaps in occupations and those in wages; for those without an academic degree, gender wage gaps are low, while for those with higher education, there are substantial gaps, with men concentrated in the occupations at the highest end of the wage distribution.

Occupational choice is not the only factor responsible for wage gaps in the labor market. Additional factors contributing to wage gaps include characteristics of employment, like number of work hours, employment terms, maternity leaves and career breaks for childcare, as well as differences in wage growth in the labor market. In general, more women than men tend to work in less than full-time positions. In 2017, 31.8% of women worked part-time versus 12.9% of men, and the number of weekly hours worked by women was on average 16% less than men.

The main reason is likely that the brunt of childcare continues to fall to women. Even among women who are employed in full-time positions, the average number of weekly hours is still lower than for men (women tend to work less overtime). With regard to continuous employment, women’s employment patterns are characterized by maternity leaves and career breaks for childcare. Their absence from the labor market leads to less work experience, a lowering of their skill levels relative to their male counterparts, who are less likely to take career breaks, and a lessening of their attractiveness to employers.

In 2014, 41% of Israeli women who gave birth chose to take more than the 14 paid weeks of maternity leave then set in the law**.The high fertility rate in Israel – an average of 3.1 children per women – is also a factor that contributes to the number of career breaks that women experience.

There are also differences between men and women in salary increases; while beginning salaries are similar for 25-29-year-olds, wages grow at a substantially faster rate for men, with the wage gap between men and women greatest by age 45.
Of all these factors, the largest sources for the wage gaps between men and women are the number of hours worked and differences in occupational choices made at young ages.

Gender wage gaps in Israel also have a large impact on pension savings. Since, on average, women work less than men over the years, take more breaks, and are in relatively lower paying jobs than men, their pension accrual is less than men’s. Moreover, Israel is one of the nine OECD countries with a gender-based official retirement age and one of only three countries that intend to retain this gap for decades to come.

This means that not only do women accrue less pension savings for all the reasons given previously, but they also do so over fewer years than men. What is more, the lower pension accrual has to suffice for more years of retirement – both due to retirement at a younger age as well as due to their longer life expectancy relative to men.

** In 2014, maternity leave consisted of 14 paid weeks of leave and an additional 12 unpaid weeks of leave for any woman who had been working for a company for at least 12 months prior to giving birth. As of 2017, the paid portion of maternity leave is 15 weeks, in addition to 11 subsequent unpaid weeks for any woman working for a company for at least 12 months.

The State of the Acute Care Hospitalization System in Israel

A new Taub Center study (the first in a two-part series) published last month looks at Israel’s hospitalization system and paints a comprehensive picture of the system as it stands in 2019. In terms of the key metrics that are commonly used to measure hospital quality, the research suggests that there are systemic failures in planning, budgeting, and regulation by the government especially in light of the increasing needs of Israel’s aging population.

Israel’s general hospitalization system largely operates in the framework of an “internal market,” which was created with the passage of the National Health Insurance Law of 1995. In this market, entitled health services are provided according to patient needs, and they are financed and regulated by the State.

Medical services are provided through Israel’s four health funds: Clalit, Maccabi, Meuhedet and Leumit, whether by purchasing them from public medical centers or through the health funds’ direct provision of services. In general, hospitalization services are acquired from “public” hospitals, whose major activity, immaterial of their legal standing, is supplying healthcare services in the framework of the National Health Insurance Law, although the status of these hospitals has not been defined in the law.

Out of 44 general hospitals, 19 are government-owned (meaning employees are civil servants and the budgets are included within the framework of the State budget, for example Sheba and Rambam hospitals), and 12 are owned by health funds (for example, Soroka is owned by the Clalit health fund but provides services to members of all health funds).

In addition, there are also independent, non-profit hospitals (like Shaare Tzedek), companies for public benefit (like Hadassah), and limited companies (such as Assuta Ashdod). The State owns and operates about a quarter of all of Israel’s hospital beds and 47% of general hospital beds. The Clalit health fund owns about 30% of general hospital beds, making the State and Clalit the two main providers in Israel’s hospital market.

The public nature of hospitals with various forms of ownership giving service under the National Health Insurance Law, and the State’s obligation to them, has never been defined. The situation is particularly serious in light of the fact that the State, as both funder and regulator of the system, is also the largest owner and operator for general hospitalization and essentially competes with other hospitals that are dependent on the state for their budgets and regulation.

This situation harms the managed competition laid out in the law as a means to ensure efficiency and public satisfaction and to also ensure that the State fulfills its basic role as an independent regulator of the system.

By law, the State is responsible for ensuring public healthcare services, and accordingly, for licensing and funding hospitalization beds and other infrastructure, as well as determining the size and location of hospitals. In Israel, the number of hospital beds per 1,000 population is relatively low: 2.2 versus 3.6 in the OECD and 4.1 in European countries with healthcare systems similar to Israel’s.

Adjusting for Israel’s relatively young population, the number of beds reaches 2.5, which is insufficient to make up the gap between Israel and other countries. Moreover, while the number of beds per 1,000 population is trending downward in most countries, that trend is especially sharp in Israel, with a 22% decline in a fifteen year period (versus an OECD average of 15% and about 20% in countries with similar systems between 2002 and 2017).

This is in spite of Israel’s relative growth in needs and in the number of elderly people in Israel as compared to other countries.

As previously mentioned, the average number of curative hospital beds in Israel is low, particularly in the geographic periphery of the country.

In the Northern and Southern periphery, the number of beds per 1,000 population is the lowest, 1.32 and 1.55 respectively, while Jerusalem hospitals have the most, 2.36. It is important to note that the number of beds per 1,000 population has declined in all districts, although in Jerusalem, Tel Aviv and the North, the decline has all but stopped, while in the Center and South, it has continued.

In addition, average distances to the nearest hospital for relatively simple medical cases are longest in the Northern district (more than 19 km), then Judea/Samaria (more than 18 km), followed by the Southern district (about 16 km). This is relative to much shorter distances in Tel Aviv and Jerusalem of about 3-4 km. Average distances to regional centers, for more complex medical treatments, are about 45 km in the Northern district and about 41 km in the Southern district, while in Jerusalem and Tel Aviv the distances remain about only 4 km. These differences are also reflected in longer waiting times for hospitalization in the periphery.
Among other reasons, this situation stems from inefficient planning of additional hospital beds. This includes expanding hospitals beyond the optimal 800-bed range in areas which already have a high proportion of beds per population, instead of adding beds and resources to hospitals in the periphery which are in the optimal size range and/or building an additional hospital in the south.
General ospitals in Israel by number of beds

Despite the relatively low number of hospital beds, the number of hospital discharges per 100,000 population in Israel is similar to the OECD average – about 15,000 annually – although lower than the average in countries with similar systems, which is about 16,000 annually.

The average number of curative hospitalizations per bed (bed turnover rate) in Israel in 2016 was particularly high: about 66 versus an OECD average of about 41 and about 44 in countries with similar systems. Israel’s bed turnover rate reflects relatively short hospitalizations on the one hand (about 5 days per patient in contrast to an average of 6.7 days in the OECD countries and 6.2 days in countries with similar systems), and particularly high bed occupancy rates on the other hand.

The average bed occupancy rate in Israeli hospitals is exceptional at about 94%, versus an average of 75% in both the OECD countries and those countries with similar systems. That is, the system is quite limited in its ability to absorb new patients, as it is treating “newly arrived” patients on the one hand and managing a high occupancy rate on the other.
Curative hospital bed use

The data indicate a curative care hospitalization system that is characterized by a diminished ability to handle emergencies. This is in addition to a potentially lower level of treatment quality due to relatively short hospitalizations and additional pressures to shorten hospitalizations due to those waiting for treatment at home and in the emergency rooms, as well as the inability of hospitals to compete with each other due to high occupancy rates.

In light of the disparities between needs and hospital infrastructure in Israel, particularly in the periphery, the addition of curative hospital beds – that are efficient and accessible – is inevitable within the next few years, even when accounting for technological advances that allow expansion of services given in the community setting. Before additional investments in the system are made, though, it is worthwhile to redefine the government’s involvement in the marketplace.

Press Release: The Acute Care Hospitalization System in Israel- From a Vision of Decentralization to a Centralized and Out-of-Control Reality

Embargo until Thursday (15 August) 6:00 AM

The full publication in Hebrew is available here

The acute care hospitalization system in Israel is in a state of crisis, due to large gaps between the system’s needs and the public resources allocated to meet those needs, and due to the deepening involvement of the State in the system’s day-to-day management, which goes against the spirit of the National Health Insurance Law.

The second part of the Taub Center study on the healthcare system in Israel conducted by Professor Dov Chernichovsky and Roi Kfir, which is published today, deals with the regulation of the hospitalization system and government involvement in it. The researchers conclude that the deficiencies in the regulation and the over involvement of the State impact negatively on the efficient use of resources and their accessibility to the public.

These deficiencies cast doubt on the value of investment in additional hospital beds, budget, and implementation of special programs led by the State (like the program to shorten waiting times), as long as these deficiencies have not been addressed.

“Public hospitals” should be defined to ensure that accessible and equal services are available as specified by law

The 1994 National Health Insurance Law (the Law) does not define what constitutes a public hospital for the provision of entitled care to residents. As is the practice, such a hospital – even if not owned by the State – could be required to provide such care from its own, non-public, resources. Obligating hospitals to supply entitled care without securing appropriated funding gives the State power over non-proprietary budgets, including moneys that the hospital does not know with certainty that it will receive.

This can lead to situations, contrary to the stipulation of the Law, where some residents may not be able to receive hospitalization services, or where these services may be less available than to residents in other locations.

The researchers suggest defining a public hospital in the context of provision of entitled care according to the Law, irrespective of hospital ownership or its incorporated status, according to three criteria:

  1. Normative test: according to which the hospital will offer all entitled services (including elective treatments) to the public equally, in accordance with the National Health Insurance Law;
  2. Performance test: according to which the hospital operates public services like national centers of excellence, emergency and urgent care service departments, research and teaching units and the like;
  3. Economic test: according to which the majority of hospital income comes from service provision to the national service basket – that is, from the sale of services to the health funds in the framework of the National Health Insurance Law.

Public hospital financing for the provision of services required by the Law will be provided through funds stipulated by the Law, and, in addition, extra funding will be allocated through targeted funding for additional activities such as emergency care, research training, etc.

Use of the capping mechanism has achieved quantitative expansion rather than the desired restraint

In order to ensure universal and egalitarian availability of hospital services that are efficient and sustainable, some involvement of the State is required in the hospitalization market. The State regulates the number of beds and the price of hospital services in order to overcome market failures inherent in the system that may lead to “excessive hospitalizations,” which may place an unjustified financial burden on the public.

To this end, the government has put in place a “capping mechanism.” This mechanism sets a ceiling on the number of hospitalization days that each public hospital supplies to a sickness fund (not effective for services secured by Clalit Health Services (fund) through its own hospitals); above this limit, health funds pay hospitals about a third of the set price for each additional hospitalization day.

This is to deter hospitals from extending service beyond what is necessary. In practice, though, this system forces the government to increase its involvement in setting the number of hospitalization days that each hospital must supply to the health funds, and to be in control of the performance data for each institution in a dynamic environment subject to rapid technological change.

This has been an onerous task. Indeed, the capping mechanism has gotten out of control.

Due to the high fixed cost component of hospitalization, hospitals prefer rendering service even at a low marginal cost in order to more fully utilize their existing facilities or infrastructure.

The sickness funds became accustomed to these low prices and their demand for hospitalization services grew, including at the expense of community care, so, in the long run, the State ultimately subsidizes the losses borne by the hospitals from the low prices that do not cover fixed costs.

The mechanism, which was meant to be marginal and temporary, has become the norm. Simultaneously, state subsidies to both hospitals and sickness funds increased, contrary to the spirit of the Law.

Indeed, for the period with complete data, 2002-2013, hospital outputs have increased, partially for technological reasons, faster than determined by capping regulation: the quantitative norm that was set was a growth of 8%, while, in practice, hospital outputs have grown by 28%.

The mechanism has thus created a number of distortions in the system: the weakening of relative prices as a signal for priorities within the system (for instance, provision of a specific service in a hospital instead of in the community, or supplying one treatment instead of an alternate treatment using the same infrastructure and manpower); difficulties in identifying the source of deficits and a weakening of budgetary supervision; creating a dependency of the sickness funds on reduced prices and the financing of deficits of hospitalization services directly from the state budget, aside from the budget allotted by the Law; and, encouragement of private medicine at the expense of the public system, since the low prices make it difficult for the hospitals to compete against the private facilities that employ the same physicians in the afternoon hours.

The National Program for Shortening Waiting Times has brought about the financing of private services by taxpayers

In addition to implementation of the capping mechanism – and, to a large extent, due to it – beginning in 2017, the Ministry of Health has implemented a program to shorten waiting times in the public hospitals.

This was done to contend with the ability to shorten waiting times and choose one’s surgeon (usually the same surgeon as in the public institution) in the private health care system, with the surgeon and hospital receiving higher prices than the cap mechanism would allow in the public system. In this framework, the State transfers an earmarked budget of some NIS 900 million to the sickness funds annually in addition to the service basket budget, with the additional funds earmarked as incentive payments to the medical staff.

In addition, beginning in 2018, a 6 month cooling-off period for physicians was mandated, preventing physicians from referring their patients in the public health system to their private practices.

As in the case of the capping mechanism, though, this program also involves the State in reporting and supervision tasks at an unreasonable level. In order to avoid the bureaucracy, sickness funds used the designated moneys from the public system to perform surgeries in private facilities and hospitals that allowed physician choice, utilizing the mechanism of supplementary private insurance.

In this manner, the program to shorten waiting times in the public facilities ended up financing surgeries in private facilities at the expense of tax payers.  Public facilities remained in a relatively weakened position vis-a-vis private institutions in competing for the services provided ‘after hours’ by the same physicians employed in the public facilities.

An inefficient system

According to the research findings, there was an increase of about 20% in productivity (2002-2013) in the creation of services for the basket of hospitalization services. It would be expected that this increase would allow the system and hospitals to improve their financial performance and possibly also that of the health funds, and to also improve the availability of hospitalization services to the public.

Hospital and health fund deficits, though, grew, and public services remained lacking as evidenced by the need for a program to shorten waiting times. This means that the regulation policies – primarily the capping mechanism and the public-private mix – have resulted in systemic inefficiencies – including undue shift of elective services from the public to the private system – that have harmed every aspect of the public system’s financing and services.

“The State has set as its goal to restrain the supply of services in order to ensure funding of entitled care, has implemented a mechanism of low prices that obligated its greater intervention, and has required an acknowledgement of the deficits that now require it to encourage more service rather than to restrain them,” says Professor Dov Chernichovsky. “The State created a complicated bureaucratic mechanisms rather than make reasonable improvements to the regulatory mechanism and lessen its involvement in the system.”

The researchers raise several possible steps to address the existing distortions in the system:

  • Divest ownership and management of hospitals by the State in order to allow it to properly regulate the system and ensure availability of resources.
  • Clearly define “Public hospitals.”
  • Eliminate the capping mechanism and the program to shorten waiting times, and create a transparent framework that includes pricing calculations that accurately reflect the costs of supplying the service basket, both in and of themselves and relative to the costs of alternatives in the community.
  • Direct financing of cost components specific to public hospitals, like emergency services, national excellence centers, teaching, research, emergency systems, and the like, that are not included in the health basket.
  • Develop a mechanism that will allow physician choice in the public system, as in the private system.
  • Adopting a pricing mechanism to share risk and to direct capacities similar to those used in other countries – mechanisms such as the DRG system (Diagnostic Related Groupings), like the differential pricing mechanism that the government is developing. This will allow health funds and hospitals to come to arrangements without government over involvement. The only thing the government needs to ensure is that there is no harm to the service users.

In conclusion, Professor Dov Chernichovsky says, “the planning and supply of services should be decentralized by giving autonomy to the competing agencies – sickness funds and hospitals – with minimal State supervision, to regulate the status of public hospitals and to get the government out of the business of hospital ownership and management, and to reduce over-involvement in the system, as is accepted in the rest of the developed world.”

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.

 

 

Growth and/or Inequality? Preparing for the Future

The Herbert M. Singer International Annual Conference

Growth and/or Inequality?
Preparing for the Future

Thursday, November 14, 8:30 am – 4:30 pm, Mishkenot Sha’ananim, Jerusalem

The conference will be conducted in Hebrew and English with simultaneous translation

Click here for speakers bios

Introduction

Prof. Avi Weiss, President, Taub Center (Click for his presentation)

First Session: Keynote Lectures

Prof. David Weil, Brown University: Technology, Economic Growth, and Inequality (Click for his presentation)

Coffee Break

Prof. Janet Gornick, Graduate Center – CUNY: Income and Wealth Inequality in Affluent Countries:  Levels, Trends, and Implications for the Middle Class (Click for her presentation)

Response from
Dr. Daniel Gottlieb, Former Deputy Director General of Research and Planning at the National Insurance Institute

Second Session: The Future Labor Market and Implications for Inequality

Chair: Prof. Yossi Zeira, Hebrew University

Discussion:

Dita Bronicki, Founder of Ormat, Technologies, Winner of the 2018 Israel Prize

Shira Greenberg, Chief Economist, Ministry of Finance

Shavit Madhala, Researcher, Taub Center

Dr. Sigal Shelach, Director General, Joint Israel

 

Lunch (Dairy)

Third Session: Developing the Human Capital of the Future – The Role of the Education System in Facilitating Growth and Reducing Inequality

Chair: Prof. Benny Bental, Chair, Economic Policy Program, Taub Center

Discussion:

Michal Avera-Samuel, CEO, Fidel Association for Education and Social Integration of Ethiopian Jews in Israel

Emanuel Bohbot, Vice President of Research and Development, Social Finance Israel

Rabbi Menachem Bombach, Head of the Netzach Haredi Educational Network

Prof. Zvika Eckstein, Dean, Tiomkin School of Economics; Head, Aaron Institute for Economic Policy, The Interdisciplinary Center Herzliya – IDC (Click for his presentation)

Motty Elisha, Head of Employment, Ministry of Labor, Social Affairs and Social Services

Nasreen Hadad Haj-Yahya, Director, Arab-Jewish Relations Program, The Israel Democracy Institute; Portland Trust

The relationship between growth and inequality is not always clear. Does economic growth lead to greater income inequality, or are its rewards shared by everyone? Does income inequality undermine economic growth, or is it essential to enhance development?

While the Taub Center carries out research on both growth and inequality in Israel, it is not always clear how these interact, and what the policy implications are. To address this, the Taub Center 2019 Singer Conference will focus on the relationship between economic growth and income inequality, both internationally and in the Israeli context.

The conference will begin with a keynote speech delivered by Prof. David Weil, who will provide an overview of the issues at hand.  A second keynote from Prof. Janet Gornick will give us insight into how to understand and measure inequality in developed countries.

We will then delve into the situation in Israel, looking at two distinct areas where the issues of economic growth and inequality both come into play.  First, we will consider the future labor market. Will it promote greater economic growth for Israel? Is there a risk that it will also lead to greater income inequality, with people of certain occupations and skill levels left behind?

Then, we will turn to the education system, a key mechanism for developing the human capital of the future. How can the education system promote economic growth while at the same time helping to reduce income inequality? Is Israel’s education system prepared to tackle these twin challenges?

We expect that the conference will provide participants with a better understanding of the interplay between these two issues that are so central to the social and economic fabric of the country, while also gaining an understanding of the risks and opportunities that lie ahead.

Space is limited, advanced registration required

The conference will be conducted in Hebrew and English, with simultaneous translation.

The auditorium in Mishkenot Sha’ananim, where all the conference sessions will take place, is a safe room.

The venue is accessible for people with disabilities. If you have special needs (e.g., audio or visual assistance, a seat near the door, a nursing room, etc.), please write your requirements in the registration form and we will contact you to discuss your needs, or call us at 02-567-1818. Kindly submit accommodation requests at least 2 weeks in advance of the conference.

Just a Taste: A Picture of the Nation 2019

A Picture of the Nation 2019, published last month by the Taub Center thanks to the generous support of the Koret Foundation, tells the story of Israel’s economy and society. The overall picture that emerges shows a rise in the standard of living alongside numerous challenges and areas in need of improvement.

The education system in Israel has shown visible signs of strengthening in the past few years along with continuing signs of weakness. For example, between 2010 and 2015, per-student expenditure in Israel has increased by approximately 25% while in other OECD countries, the growth was only 4%.

Nevertheless, in real terms, per-student expenditure in Israel remains lower than the average in other countries. Similarly, improvement in Israeli students’ scores on international achievement exams was greater than in other countries, however, Israeli students’ scores remain lower than the average scores in other countries.

The Ministry of Education’s efforts to increase the number of high school graduates obtaining bagrut (matriculation) certificates at the highest level (five units) in math and English, as well as their efforts to increase public awareness regarding the importance of these fields to future employment prospects, has led to a 20% increase in the number of students taking the bagrut exams in these subjects at the highest level since 2013.

In addition, the share of students in technology education – among the Ministry of Education’s declared goals in the past few years – has grown in the majority of Israel’s population. The total share of the 12th grade student population in technology education rose to 40% in 2017.

The most significant growth took place among students in high technology studies, characterized by high scholastic and bagrut achievements, with a disproportionate number of these students coming from strong socioeconomic backgrounds. The number of schools offering this course of study has also increased.

However, there are significant differences between population sectors and genders. The share of Arab Israeli students in high technology studies is sharply increasing, in particular among the Druze and Bedouin, where the share is higher than among the Jewish population.

The rate of bagrut qualification in the high technology track is similar for Jewish and Arab Israeli students (about 85%), and even among Bedouin, the share of those with bagrut qualifications in 2017 rose to 74%. This is a very positive trend that can lead to better integration of the Arab Israeli population into prestigious sectors of the Israeli labor market in the future.

In terms of gender differences, in the Jewish sector, the share of girls in the high technology track is substantially smaller than their share in the student population, particularly in State-religious education. However, in the Arab Israeli sector, the opposite is true.

Here, too, the change is especially striking in the Druze and Bedouin sectors. Among the Bedouin, the gap between female and male students is the largest: the share of girls studying in the high technology track rose from 6% to 21% between 2006 and 2017, and among boys, it rose from 6% to only 12%.
Fig 2 ENG

Employment and labor force participation rates continue to rise, while unemployment rates are hitting historical lows of around 3.5%. The greatest improvement is among women, and especially Arab Israeli women. It is apparent that the sharp rise in their employment matches the rise in their education and enrollment rates in higher education. These changes are likely to continue to impact developments in Arab Israeli society.

The increase in labor force participation rates is due in part to steps taken by the State to encourage employment in various population groups. These measures include programs for integrating Arab Israelis and Haredim into the labor market; broadening the criteria of eligibility for work grants (negative income tax); investments in day care for young children; and the “Families First” program of the Ministry of Labor, Social Affairs and Social Services (in conjunction with JDC and the Rashi Foundation).

However, despite the efforts of the welfare system to encourage employment, expenditures on programs aimed at optimizing integration into the labor force, such as vocational training programs, investing in employment centers and in programs aimed at integrating individuals with disabilities into the labor market, are among the lowest of the OECD countries.

This lack of investment in raising the skill level of workers is felt strongly in PIAAC exams, an OECD survey measuring skill levels for workers ages 16-65. The survey shows that the skill level among the most skilled in Israel is similar to that of workers in other countries, however, for less skilled workers there is gap relative to other OECD countries, with the gap widening as skill levels decline.

Practically, this means that there are large disparities between the skill levels of workers in the high tech sector (generally among the highest skilled employees in the labor force) and workers in the rest of the labor market; skill levels of workers in high tech are nearly a full standard deviation higher than those of workers in the rest of the economy – a gap that is far greater than in other countries.

The situation is especially worrying among Arab Israelis, whose skill levels are particularly low in all parts of the labor force distribution. The survey findings demonstrate the need to strengthen the weakest sectors of the population.

This short survey is just a small taste of the research presented in A Picture of the Nation. We invite you to read more stories of the economy and society in Israel and the issues of the economy and standard of living, demography, education and higher education, employment, health, and welfare.

 

Press Release: The General Hospitalization System in Israel – The Current Situation

Embargo until 6:00 AM Tuesday, July 18

The full research in Hebrew is available here

Each year, about 1.1 million people are treated in the general hospitalization system in Israel. Despite its influence on the health of the population, the system has no measurable health outcomes.

The metrics commonly used are the basic input measures – like the number of hospital beds nationwide – versus output measures that are general estimates of the contribution of the public healthcare system – like the number of hospitalization days and the number of annual hospitalizations.

Therefore, the public judges the system in terms of waiting times in the emergency rooms and for hospital procedures, the quality of service, and their freedom of choice in selecting a physician. From these perspectives, it appears that the State has failed: the government is forced to institute programs to shorten waiting times for general hospital procedures and admissions.

A new study by Professor Dov Chernichovsky from the Taub Center and Roi Kfir looks at the general hospitalization system in Israel. The research suggests that there are systemic failures in planning, budgeting, and regulation by the government especially in light of the increasing needs of Israel’s aging population.

The result: a low number of beds per population relative to the OECD countries, inefficiencies due to the size of hospitals and their geographic dispersion, substantial gaps in accessibility to hospitals between the Center and the periphery, and bed occupancy rates (the average number of hospitalizations per bed per year) that are especially high which make it difficult for the system to function.

Public general hospitals are those in which the major activity is supplying healthcare services in the framework of the National Health Insurance Law, regardless of the hospital’s legal ownership.

Out of the 44 general hospital facilities, 19 are government-owned (hospitals in which the employees are government workers and their budgets are controlled by the State budget, like Sheba and Rambam hospitals), 12 are owned by health funds (like Soroka Hospital which is owned by Clalit Health Services, although it also supplies services to other health funds).

In addition, there are independent, nonprofit hospitals (like Shaare Zedek), companies for the public benefit (like Hadassah), or those owned by limited companies (Assuta Ashdod).

The government owns about a quarter of the hospital beds in Israel and about 47% of the curative hospital beds (not including psychiatric, long-term care, and rehabilitation beds); Clalit Health Services owns about 30% of the curative hospital beds. Thus, the State and Clalit Health Services are the two main suppliers in the Israeli market.
Fig 1 Hospitalization PR

The state’s multiple roles in the system impairs its ability to regulate

The “public” nature of hospitals with various ownership giving service under the National Health Insurance Law and the state’s obligation to them has never been defined. The situation is particularly serious in light of the fact that the state, as both funder and regulator of the system, is also the largest owner and operator for general hospitalization and essentially competes with other hospitals that are dependent on the state for their budgets and regulation.

What is more, the state is likely to prefer short-term budgetary solutions for those hospitals under its ownership and to avoid adjustments to the budget for the basket of services and in the prices of hospitalization services that serve the entire system.

So, for example, the situation of Jerusalem residents who are dependent on hospital services from Hadassah and Shaare Zedek Hospitals which are not under government ownership is inferior relative to residents of Tel Aviv who receive hospital services from Ichilov and Sheba Hospitals which are owned by the government.

This reality harms managed competition as specified in the law to ensure efficiency and public satisfaction and to also ensure that the state fulfills its basic role as an independent regulator of the system.

For nearly 50 years various government and public committees as well as government ministers have made recommendations but the situation has remained unchanged.

The state has failed in infrastructure planning

By law, the State is responsible for ensuring public healthcare services, and accordingly, for licensing and funding hospitalization beds and other infrastructure as well as determining the size and location of hospitals.

In Israel, the number of hospital beds per 1,000 population is relatively low: 2.2 versus 3.6 in the OECD and 4.1 in European countries with healthcare systems similar to Israel’s. Adjusting for Israel’s relatively young population, the number of beds reaches 2.5, insufficient to make up the gap between Israel and other countries.

What is more, while the number of beds per 1,000 population is trending down in most countries, that trend is especially sharp in Israel – 22% (versus an OECD average of 15% and about 20% in countries with similar systems between 2002 and 2017). This is the result of the continuous growth in the population in Israel, and despite the rapid aging of the Israeli population compared to other countries.

With regard to funding, the share of expenditure on hospitalization out of the national expenditure on healthcare is declining worldwide. Nevertheless, in Israel the decline is especially sharp, and the expenditure is consistently low relative to the average in other countries. What is worse, the disparity between Israel and other countries continues to widen.

The average number of curative hospital beds in Israel is low, particularly in the geographic periphery of the country. The distribution of curative hospital beds in Israel by districts shows inequalities in the number of beds per 1,000 standardized population: in the Northern and Southern periphery, the number of beds per 1,000 population is the lowest, 1.32 and 1.55 respectively, while Jerusalem hospitals have the most, 2.36.

It is important to note that the number of beds per 1,000 population has declined in all districts, although in Jerusalem, Tel Aviv and the North, the decline has all but stopped, while in the Center and South, it has continued.

In addition, average distances to the nearest hospital for relatively simple medical cases are longest in the Northern district (more than 19 km), then Judea/Samaria (more than 18 km), followed by the Southern district (about 16 km).

This is relative to much shorter distances in Tel Aviv and Jerusalem of about 3-4 km. Average distances to regional centers, for more complex medical treatments, are about 45 km in the Northern district, about 41 km in the Southern district, while in Jerusalem and Tel Aviv the distances remain about only 4 km.

Thus, there are differences between the Center and the periphery in terms of accessibility to healthcare services and hospitalization beds. These differences are reflected in longer waiting times for hospitalization in the periphery.

Among other reasons, this situation stems from inefficient planning of additional hospital beds – expanding hospitals beyond the optimal 800-bed range in areas which already have a high proportion of beds per population, instead of adding beds and resources to hospitals in the periphery which are in the optimal size range and building another hospital in addition to Soroka in the South (see figure below).
Fig 8 ENG

Due to these findings, the researchers at the Taub Center stress that it is important to consider issues of accessibility and efficiency when making decisions regarding the opening of new hospitals or the expansion of existing facilities.

Treatment and service quality are in danger

Despite the relatively low number of hospital beds, the number of hospital discharges per 100,000 population in Israel is similar to the OECD average – about 15,000 annually – although lower than the average in countries with similar systems, which is about 16,000 annually.

The average number of curative hospitalizations per bed (bed turnover rate) in Israel in 2016 was particularly high: about 66 versus an OECD average of about 41 and about 44 in countries with similar systems.

Israel’s bed turnover rate reflects relatively short hospitalizations on the one hand (about 5 days per patient in contrast to an average of 6.7 days in the OECD countries and 6.2 in countries with similar systems), and particularly high bed occupancy rates on the other hand. The average bed occupancy rate in Israeli hospitals is also exceptional at about 94%, versus an average of 75% in both the OECD countries and those countries with similar systems
Fig 2 Hospitalization PR

The data indicate a curative care hospitalization system that is characterized by a diminished ability to handle emergencies (not necessarily security related).

This is in addition to a potentially lower level of treatment quality due to relatively short hospitalizations and additional pressures to shorten hospitalizations due to pressures of those waiting for treatment at home and in the emergency rooms, and an inability to compete with other hospitals on issues of quality of care, due to high occupancy rates.

In light of the disparities between needs and hospital infrastructure in Israel, particularly in the periphery, the addition of curative hospital beds – that are efficient and accessible – is inevitable within the next few years, even considering technological advances that allow expansion of services given in the community setting.

Before additional investments in the system are made, though, it is worthwhile to reduce the government’s involvement in the marketplace – an involvement that only exacerbates the situation as is highlighted in a second new study by the Taub Center to be published shortly.

Physicians claim that additional beds will not substantially improve the situation

Conversations with physicians have revealed that they feel additional hospital beds will not significantly change the situation, and that what needs to change are hospitalization procedures in order to reduce pressure on the hospitals and waiting times for patients.

The physicians interviewed recommend among other things: avoiding unnecessary hospitalizations by discharging patients from the emergency rooms (something that requires strengthening specialist staff in emergency rooms and opening holding units); moving physicians to two shifts in hospital departments (in place of a single shift until 16:00 with physicians on call for critical treatment only) and tests in the evening hours and weekends in order to shorten overall hospitalization time; a look at the efficacy of home hospitalization and creating lines of communication between hospital departments and community physicians; physician consultations to old-age facilities and supervision of residents’ medications in order to avoid hospitalization of the elderly in curative care units in place of treatment in their residential facility.

 

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.

 

 

 

 

 


Determinants of financing in the Israeli education system

This is important because the clearer and more well-defined the budgeting formulas, the less likely that preferential treatment will be given to a certain sector. Nonetheless, a recently published Taub Center study shows that for Israel’s official primary schools that include grades 1-6 (not including ultra-Orthodox schools), the per class and per student budgetary formulas partially reflect not only educational considerations, but social and ideological considerations as well.

The first and central portion of the budget is called “the basic standard,” which is mostly based on the number of classes in a given school, and not the number of students. According to this formula, each class entitles the school to a certain number of teacher work hours, which comprise the main part of the school’s budget.

For budgetary purposes, the minimum number of students per class is 20, and each additional student entitles the school to a rather small supplementary budget (in the event that the number of students in a class is less than 20 the class receives only half of the basic standard budget). Thus, a rise in the number of students raises the budget per class, but budgeting per student goes down as the class size increases, as shown for the sample third-grade class depicted in the graph below.
Budget per class and per student

The cutoff for the maximum number of students considered a “class” for budgeting purposes is different than the number of actual students per class, and is based on the school’s Nurture Index (the higher the index, the weaker the socioeconomic profile of the school’s students).

The cutoff is 32 students per class for schools in which students have the weakest socioeconomic background and 40 students per class for schools in which students have the strongest socioeconomic background. This means that, in practice, two schools with the same number of students could be considered as having a different number of budgetary classes, impacting the schools’ overall budgets.

In addition to “the basic standard, “dedicated baskets” are provided to schools in recognition of special needs or special projects, such as a longer school day, which requires extra teaching hours in every class.

Other dedicated baskets include the “nurture basket” for the purpose of providing resources to improve the educational achievements of students from weak socioeconomic backgrounds; the “mainstreaming basket” for integrating students with special needs in mainstream classes; the “absorption basket,” which is meant to help integrate students who are immigrants or returning residents into the school; and the “prayer time basket,” allocated for prayer hours in Hebrew State-religious schools.

Thus, a school’s actual per class and per student allocation is influenced by a number of different variables, including, among others: the school’s Nurture Index, school size, the presence of a long school day program, and the presence of Special Education classes. Additional factors, such as the median seniority of teachers and the share of teachers with advanced degrees, also influence this allocation.

Taub Center researchers found that, indeed, the vast majority of the budget differences are explained by the factors in the fixed budgetary formulas, making it difficult for education leaders to grant budgetary preferences to one type of school or another.

The variables that best explain the differences in budgeting between schools are the Nurture Index, school size and participation in a long school day program. As seen in the graph, “education sector” is actually the variable with the least influence among those measured.

With this, even after controlling for different aforementioned school characteristics, the study reveals what appears to be a hierarchy in primary school budgets across different education streams in Israel; budgets are highest in the Hebrew State-religious education system, followed by the Hebrew State education system, and are lowest in the Arab education system.

The high allocation for Hebrew State-religious education may be explained by the prevalence of several special budgetary baskets in Hebrew State-religious schools including prayer time, separate classes for boys and girls, and rabbi hours. All of these factors are meant to maintain the special character of the Hebrew State-religious education system.
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Press Release: The Picture of the Nation 2019

The Taub Center for Social Policy Studies in Israel publishes A Picture of the Nation 2019 today. The booklet, written by Taub Center President and Bar-Ilan University Professor of Economics Avi Weiss, presents up-to-date data on Israel’s society and economy in the country’s 71st year .

The findings in the booklet, which is generously supported by the Koret Foundation, paint a complex picture of Israeli society, including improving trends alongside challenges that the next government will face.

Israel has a higher birth rate, a high employment rate, and high education levels, as well as an improvement in the standard of living. In contrast, student achievements on international tests remain relatively low (although they have improved over time), the health system is facing difficulties as inequalities in accessibility grow, and it is more difficult for households to lift themselves out of poverty than in other OECD countries.

Macroeconomics and the standard of living

The Israeli economy is stronger than at the beginning of the decade. Household incomes have risen and price levels are declining relative to other developed countries (although prices are still high), but it is questionable whether this positive trend will continue.

  • A sharp rise in the standard of living: in the past few years, there has been a rise in household income and consumption levels. Between 2012 and 2017, the net real income of households in the middle income quintile rose by about 22%, and in the lowest quintile by about 19% (versus an increase of only 14% in the highest quintile). Incomes rose primarily as a result of increased income from labor, whose source was a rapid rise in wages and employment levels.
  • In many OECD countries, it has become more difficult to purchase a home over the past two decades, while in Israel the ability to purchase a home over this entire period has largely remained the same. With this, purchasing a home has become much more difficult in the last decade. That is, at the beginning of the period, Israelis’ disposable income rose faster than housing prices, and since 2007 the situation has reversed and housing prices have risen faster than incomes.
  • Based on early estimations, in 2018 GDP grew faster than the average in OECD countries: 3.3% versus 2.9%. Nevertheless, per capita GDP, the more significant metric for determining standard of living, grew by only 1.3% annually versus an average rate of 2.2% in the OECD.
  • After an extended period of increases in employment rates, it is unlikely that additional improvements in the standard of living will be realized without an increase in labor productivity. Since 2000, the annual growth rate in labor productivity in Israel was low relative to what could have been expected given its level in 2000: it was 1.2% per year instead of an expected level of about 2% per year.
  • One of the greatest challenges facing the new government is dealing with the deficit, which stands at 3.8%. This is the highest level in recent years, with the deficit having ranged between 2% and 3% following the fiscal discipline that characterized the government budget. Foreign debt level in previous years has also been particularly low. Recent government commitments – primarily in the areas of wages and security – will likely lead to a reversal of these trends: the deficit is expected to rise, which is liable to lead to a downgrading of Israel’s international credit rating, raise debt financing costs and impact growth negatively.
    The real cumulative change in household income and consumption, 2012-2017

Israel’s fertility patterns break records and paradigms

Israel’s fertility rates are unusually high relative to other developed countries, even among Israel’s secular and religiously traditional Jewish population. These rates largely do not conform to international paradigms.

  • Israel tops the fertility charts: in 2015, the Total Fertility Rate (TFR) was 3.1 children per woman, which places Israel at the top of OECD countries, by far.
  • The source of the rise in TFR is mostly secular and traditional Jewish women; their TFR has never fallen below 2.2 (which is higher than all the other OECD countries) and has actually risen over the past 20 years.
  • A unique combination of high standard of living and high TFR: in countries where the per capita GDP is similar to Israel’s, the TFR level is much lower (1.24-2.02 children per woman), while in countries with a similar TFR level to Israel’s, the average per capita GDP is one-fifth of Israel’s.
  • A rise in mother’s age at first birth does not translate into a lower fertility rate among Jewish women in Israel: between 1994 and 2016, the average age at first birth rose by about three years among both Christian and Druze women and by about one year among Muslim women, and total fertility rates showed a corresponding decline (by about 6%, 41% and 30%, respectively). In contrast, among Jewish women, the expected relationship between age at first birth and TFR is severed: age at first birth rose by about 2.8 years while the TFR also rose, by about 0.4 children.
  • More educated Jews in Israel do not have fewer children: corresponding to worldwide trends, among Arab Israelis, the highest fertility rates are among those with the lowest education levels, while those with a university degree have fewest children. In contrast, among non-Haredi Jewish women, those who complete high school or college have the same fertility ratesgraph – check if there us one

Education

Israeli student achievements have improved and the gaps between them and OECD students have narrowed; achievements have remained low, though, relative to other developed countries. Expenditure per student has risen but remains low relative to the OECD level.

  • Israel’s student population has increased by 44% since 2000: this is an average annual growth rate of 2%, which is above the norm in developed and developing countries. The most rapid growth has been in the Bedouin and Haredi education sectors.
  • The number of children attending preschool rose by about 81% between 2000 and 2015: in the last decade, the share of these students in the Arab education system has declined, while the share of students in Hebrew State education has risen.
  • Expenditure per student in Israel continues to rise: since 2010, the increase in per student expenditure was faster than in other OECD countries, although the level of expenditure remains lower than average (as of 2015). Nevertheless, developments since 2015 – such as the new teacher wage agreements, school activities during vacations, and others – are expected to increase the average expenditure per student in Israel such that at least in elementary schools it will approach the OECD average in the next few years.
  • Test scores have improved and gaps have narrowed: since 2008, student achievement scores on the Meitzav exams have improved, and test score dispersion has narrowed – that is, gaps have lessened. The greatest advance has been in 8th grade science scores (17.4%).
  • International achievements have also improved, though not sufficiently: in almost all international tests, student scores have improved more in Israel than in other countries. Nevertheless, in almost all cases, Israeli student scores remain below the average of the countries that participated in 2001 and 2015.
    PR EN Ed fig
  • Druze students lead in terms of bagrut qualification rates: bagrut qualification rates have increased overall from about 41% to about 56%. In Druze education, this rate has more than doubled and today is the highest of all education sectors (about 66%). The rate has also doubled in the Bedouin schools, though it remains the lowest of all education sectors (about 32%).
  • In most industry sectors, workers with high skills enjoy greater returns to education relative to workers with low skills. An exception is in the education field where the return to education is much higher for those with low skill levels.

Expanding technological-vocational education in high schools

The goal of the Ministry of Education to expand technological-vocational education in high schools has largely succeeded, although the expansion is not identical across all education sectors.

  • The Druze and the Bedouin girls lead: the share of female students in the high technology track rose most markedly in the Arab education sector, and especially among Druze (from 8% to 31%) and Bedouin (from 6% to 21%) girls.
    PR EN Voc Training fig

    • Student backgrounds matter, especially among those in Hebrew education: students in the high technology track come from the strongest socioeconomic backgrounds, while those in the low track come from the weakest backgrounds. Socioeconomic profiles of Arab and Druze students in the high technology track are much weaker than of their Hebrew education peers, yet, despite these differences, bagrut qualification rates are similar at around 90% (as of 2017).
  • Technology education has expanded: in the last decade there has been a substantial rise in the share of students in technology education – in the Hebrew education sector it has increased to 38%, and in the Arab education sector to 46%. The majority of the increase has been in the high technology track (characterized by high achievements), while the share of students in the low technology track has remained stable (3%).
  • A large portion of Haredi and Arab Israeli women work in education: the share of Haredi women working in the education field stands at 45%. This rate is high relative to non-Haredi women, but lower than past rates, and it has neared that among Arab Israeli women (38%). The decline indicates a gradual process of employment diversification, which can also be seen in the increase in Haredi women studying in the technology track in high school.
  • The best men to high tech; the best women less: in 2017, only a third of those employed in high tech were women (an international phenomenon), the majority non-Haredi Jews. At the same time, there has been an increase in the share of Haredi women in the field – from less than 1% a decade ago to a little over 3% today. It is surprising to note that Arab Israeli women, who study science at high rates in high school, do not yet continue in the field – among other reasons because a large portion of them live in the north of the country and most high tech employment is in the center.
  • Arab Israeli women are working more; Haredi men are not: the share of Arab Israeli women who are working has risen consistently and is close to the government goal set in 2010 for 2020 (41%). Among Haredi men, on the other hand, the increased employment that was so notable at the beginning of the decade has stopped and their rate stands at 49% – very far from the government goal for 2020 (63%). This is one of the greatest challenges facing the Israeli economy.
  • Fewer students in Arab education than in Hebrew education take 5-unit math bagrut exams: in 2017, 19% of students in Hebrew education took 5-units of math versus only 8% in Arab education. The greatest increase in the portion of those taking the math bagrut at the highest level was from the high technology track students (an increase of about 60% in 12 years), and only 6% of those taking high level math bagrut exams studied in academic schools without a science major.

Employment hits new highs

The share of employment and labor force participation rates continue to rise and unemployment is at near-record lows.

  • Arab Israeli women are working more; Haredi men are not: the share of Arab Israeli women who are working has risen consistently and is close to the government goal set in 2010 for 2020 (41%). Among Haredi men, on the other hand, the increased employment that was so notable at the beginning of the decade has stopped and their rate stands at 49% – very far from the government goal for 2020 (63%). This is one of the greatest challenges facing the Israeli economy.
  • The best men to high tech; the best women less: in 2017, only a third of those employed in high tech were women (an international phenomenon), the majority non-Haredi Jews. At the same time, there has been an increase in the share of Haredi women in the field – from less than 1% a decade ago to a little over 3% today. It is surprising to note that Arab Israeli women, who study science at high rates in high school, do not continue in the field – among other reasons because a large portion of them live in the north of the country and most high tech employment is in the center.
  • A large portion of Haredi and Arab Israeli women work in education: the share of Haredi women working in the education field stands at 45%. This rate is high relative to non-Haredi women, but lower than past rates, and it has neared that among Arab Israeli women (38%). The decline indicates a gradual process of employment diversification, which can also be seen in the increase of Haredi women studying in the technology track in high school.
  • Commuters experience traffic jams: road congestion is rising, and in the past 30 years the number of workers who work outside their place of residence has tripled (while the population has only doubled). The increases in commuters have been accompanied by an increase in private car use, and the number of private cars has risen faster than the development of roads. At the same time, the price of public transportation has declined, and, in the past decade, the share of those commuting by train has increased.

High tech – the economy’s engine?

The government wants to expand employment in the high tech sector to improve Israel’s economy. But most of the high skill workers with the requisite skills are either already working in high tech or are working in other lucrative positions, and it appears that in order to expand employment in this sector, it will be necessary to improve the skill level of the Israeli labor force by interventions earlier on in the education process.

  • High tech is dominated by men: the share of high tech employment in Israel is the highest in the OECD (8%). Among workers at the highest skill level (as measured by the PIAAC, Survey of Adult Skills), more than one-quarter of the men and 12% of the women are employed in high tech, which places Israel higher than any other country for both men and women.
  • Gaps between workers are high: workers in the highest skill quintile are similar in skill level to the mean among high skill workers in the OECD, while for workers in the lower skill quintiles the gaps grow and skill levels are considerably lower than the levels of their OECD peers. This is especially true with regard to Arab Israelis. In order to close these gaps, skill levels in the overall population will have to be raised in future generations through the education system, and in particular amongst the weaker segments.
  • A large majority of those at the highest skill level who are not employed in high tech is employed in other lucrative positions, so it is not reasonable to assume that they will move into high tech. Alternate solutions will, therefore, have to be found for the shortage of workers in this sector.
    oecd average skill level

Health indicators are good, but there are concerns about the healthcare system

Israelis’ health is good: life expectancy in Israel is high and infant mortality rates are low. Nevertheless, there is a deep concern that the situation will change with the rapid aging of the population and increasing medical needs alongside the slow growth of resources.

  • Healthcare expenditures have increased relatively little: since 1995, the percentage of GDP spent on healthcare remained about 7% while in the OECD countries it increased from 7% to 9%, and to 11% in those countries with similar healthcare systems to Israel. The rapid aging of the Israeli population alongside rising physician wages will likely require a rise in the share of government expenditure to prevent the current levels of care from deteriorating.
  • Physician wages are rising, and the costs of healthcare are rising accordingly: between 2011 and 2018, the Healthcare Price Index rose by about 9% while the Consumer Price Index rose by only 4%. The increase was primarily due to rising physician wages.
  • In Israel, there is a common practice of referring patients from the public system to the private one, and physicians have an incentive t olimit their work hours in the public system to have more time for their private practices. This creates wage pressure in the public system: between 2011 and 2017, the wages of physicians in the public sector increased by about 42% (in contrast to an increase of about 15% in the average market wage).
  • Financer, operator, supervisor: the state finances hospitals (through budgets to the kupot holim, that then pay for hospitalization), is the owner of the majority of general hospital beds, and is the supervisor of all hospitals. These multiple roles constitute a conflict of interests.
  • In Israel there are fewer hospitalization beds per 1,000 population than in the OECD: Israel has 3 beds per 1,000 population versus an OECD average of 4.8. The number of beds per 1,000 population is declining – in Israel and in the other countries examined – largely as the result of technological changes.
  • Israel leads in terms of bed occupancy rates among the OECD countries (except for Ireland): 94% in 2016 (versus 75% on average in the OECD). In contrast, average length of hospitalization is shorter in Israel: 5.2 days versus an OECD average of 6.7 days. This leads to crowding and long waiting times even in emergency rooms.
  • May you never need it (especially in the periphery): the number of beds per person in the periphery (north and south) is the lowest in the country, and in Jerusalem it is the highest. What is more, the greatest average distance from the towns to the hospitals is in the northern district. Differences between the center and the periphery in the distance from towns to hospitals are also correlated with longer waiting times for medical procedures and treatments in the periphery.
    PR EN Health fig

Social welfare

The levels of poverty and inequality have declined in recent years and social investment has increased, but Israel is still far from the targets set by the Committee for the War Against Poverty.

  • The poverty line is rising, welfare benefits are not: increases in income support benefits have not kept up with the rising poverty line and the average wage, and, in fact, the gap between them has grown for over a decade. In 2000, the amount of income support and the child allowance for a couple with one child was about 70% of the poverty line, while in 2017, it is 40%. In addition, the number of families receiving the benefit has been halved in the past 20 years, while the incidence of poverty has only decreased by about 10%.
  • In Israel, it is exceptionally difficult to escape poverty: to increase their income above the poverty line, a household in the lowest income decile has to work many more hours than households in the OECD, as there is a large gap between household incomes in the poorest income decile and the median income quintile, which determines the poverty line.

PR EN Welfare fig

  • Limited policies of social investment: the government promotes social investment through the development of human capital, but steps have not been taken to improve the safety net for those who are not in the labor market – unemployment benefits and income support.
  • Investments in early childhood: the expenditure for building and refurbishing buildings as day care centers grew between 2011 and 2017 from NIS 2 million to NIS 260 million, with the adoption of the recommendations of the Trajtenberg Committee and in order to encourage employment.
  • Low investment in training: expenditure on active labor market policies (ALMP) is among the lowest of the OECD countries. Although there is a notable rise in spending on vocational training, Israel’s expenditure remains below the OECD average (0.06% of GDP in Israel versus an OECD average of 0.13%).
  • The weakest populations are on the verge of bankruptcy due to high debt: among households in the lowest decile that are in debt, the ratio between the average debt and income is close to 8.0 – that is, their debts are far greater than their annual income, and it is doubtful whether they will be able to repay their debts.

Pension gender gaps

The pension system has universal components that benefit women, but due to employment differences between men and women and their impact on private pensions, and due to differences in retirement ages, gender gaps are created in pension income that work to women’s disadvantage.

  • Women earn less – in their jobs and from their pensions: data from Menorah Mivtachim for 2017 show distinct gender differences in pension savings that tend to increase with age. The gap stems from differences in employment characteristics – fewer women work, women work fewer hours and for lower hourly wages.
    pensions

    • Women lose money during extended career breaks for maternity leave and childcare: the way in which pension rights are accrued during career breaks for maternity leave and childcare has an impact on the pension gender gap. A woman with two children who takes a 5-year career break for childcare (who according to the law cannot make pension contributions during this period), will receive about 90% of the pension of a woman with no career breaks. This is low relative to the OECD average.
    • It pays for women to delay retirement: a woman who delays her retirement to after age 62 (the retirement age set by the government) can receive as much as 40% in additional old-age benefits. In contrast, a man can receive at most an additional 15% for pushing off his retirement after age 67. Hence, a woman who delays her retirement until age 70 will receive a pension benefit that is 22% higher than a man who does the same.
    • The retirement age of 67 for a man is the highest in the OECD, and the retirement age of 62 for women is among the lowest. Israel is one of only three OECD countries that does not intend to eliminate the retirement age gap between men and women.
  • According to a simulation by Menorah Mivtachim, delaying retirement for a married woman to age 67 reduces the employment portion of the pension gender gap from 45% to 20% (and to 13% if one also takes into account the contribution of the old-age allowance). It seems that raising women’s retirement age would improve the retirement situation for most working women, and it is possible to find solutions for women who would be harmed by the policy change (e.g., those who are unable to continue working due to health, education or ageist issues).

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.


 

 

A Picture of the Nation 2019

Happy birthday to Israel! The country’s economy at 71

In the short term, it appears that the past few years have been economically robust for Israel in many respects: the employment rate is the highest it has been in years, unemployment has reached a historic low, wages have risen, and GDP growth is similar to recent years.

Israel experienced higher GDP growth than in other OECD countries – 3.3% in Israel, compared to an average of 2.9% in the OECD in 2018. However, because the Israeli population is also growing faster than in the OECD, Israel’s GDP per capita growth rate (1.4%) remains lower than the OECD average (2.2%).

When looking at productivity (how much the country produces per hour of work), Israel falls well below the OECD average, as well as below the US and the G7 countries, and is not managing to close the gap.
GDP per work hour

In fact, Israel has experienced a slowdown in productivity growth since the early 1970s, and even the rapid growth experienced by Israel’s high tech sector from the 1990s onward has not altered the slowdown.

While this trend is concerning, the lack of productivity growth in the past decade may actually be due, at least in part, to more Israelis entering the labor market. Growth in the economy can be attributed to several factors including human and physical capital, the number of work hours, and productivity.

For over a decade, increasing work hours as more people enter the labor market has been the main source of Israel’s per capita GDP growth. However, the fact that most of the workers joining the labor force during this period were low-skilled workers also had a dampening effect on productivity growth.

Despite this, there was some improvement in the quality of employment during this period due to an increase in workers’ experience and education levels.

Looking ahead, as the already-high employment rate continues to rise (leaving little room for it to keep growing) and the share of Israelis who are of prime working-age falls, the potential for future growth based on increased labor input will decline, and the country will need to look to other potential sources of growth.

The sizable increase in real wages in the past few years is not attributable to improved productivity, as explained above, but rather can be traced to a relative decline in consumer prices. The rise in real wages and the accompanying growth in consumption have occurred not only among high-income Israelis, but among the lowest-income Israelis as well.

Consumer prices have decreased in a number of categories in recent years, yet, despite this, price levels and the cost of living in Israel remain high. The steepest price decrease among consumption categories since 2015 occurred in communications, with substantial price reductions for food, transportation, and recreation/culture as well. At the same time, housing prices rose. It is likely that the decline in prices stems, at least in part, from measures taken by the government to try to lower the cost of living.

In addition to the challenges Israel faces in searching for new sources of long-term economic growth and keeping the cost of living in check, the country will need to address its fiscal system, which is subject to growing pressure.

Israel succeeded in reducing its debt significantly over the last two decades – from 90% of GDP to 60% – by adhering to spending limits and following a plan to lower the deficit to 1.5% of GDP by 2024. However, according to the most recent numbers, the annual deficit reached 3.8% of Israel’s GDP during the past twelve months – much higher than the 2.9% deficit ceiling set for 2018, and already on track to surpass the deficit limit for 2019.

This is exacerbated by the “hidden budget deficit” that has been created through common deviations from the spending and deficit rules by enacting long-term programs with long-term funding implications under “temporary directives” or by transferring governmental activities to off-budgetary frameworks that are not technically bound to the budget spending limits.

Given these trends, the government deficit is set to rise well above its limits in the coming years unless government spending is significantly cut and/or taxes are raised.

In summary, there are several indications that Israel’s economy is doing quite well right now, and that it will continue to be strong in the near future, but several larger challenges must be addressed for these trends to continue in the long-run.

Material Assistance to People Living in Poverty – A Historical Overview and Current Trends

Executive Summary

Almost one-fifth of families in Israel live in poverty, the highest rate among OECD countries. Over the past number of decades, the perception of poverty in Israel and methods for coping with it have changed. Since the early 2000’s, there has been a sharp decrease in the scope and accessibility of Income Support provided by the National Insurance Institute (NII), which acts as a safety net for families living in poverty, while the budget allocated to impoverished families for emergency assistance has remained fairly stable.

Alongside the NII allowances, there have been efforts in the past decade to offer people living in poverty comprehensive programs that include providing material assistance through local social services departments. The Ministry of Social Affairs and Social Services’ flagship program for this is the Breath of Relief program.

Trends in poverty policy and material assistance over time

Today, assistance to impoverished families is granted mainly through Income Support distributed by the NII, while a smaller amount, earmarked for financing emergency assistance, is provided by local social services departments.

Since the turn of the century, Israel has shifted from a “welfare-to-work” model to more of a “social investment” and “poverty-aware” approach to social welfare.

  • Economic instability in the early 2000’s resulted in a sharp reduction in the level of Income Support and more stringent eligibility requirements, such that the share of families receiving Income Support declined from 8% to 3% by 2017.
  • The early 2000’s also witnessed an acceleration of the outsourcing of social services to civil society organizations and private companies.
  • In 2004, a welfare-to-work program was established to encourage Income Support recipients to integrate into the labor market, but was discontinued after a short trial period.
  • The public began paying more attention to social welfare issues following the 2011 social protests. One manifestation of this was the establishment of the Committee for the War Against Poverty (The Elalouf Committee). The Committee’s recommendations touched on areas of education, housing and employment, and were designed to strengthen the human capital of families living in poverty.
  • The “poverty-aware social work” paradigm, which emerged in 2010, directed the discourse on poverty to families’ social rights, and paved the way for the comprehensive Breath of Relief program.

    The Breath of Relief program

    The Breath of Relief program has been in operation since 2015. The program consists of two main components: (1) Rights Centers – community centers focused on the take-up of people’s social rights and the implementation of employment and community programs; (2) An intensive 2-year family support program that includes a flexible family budget and social worker intervention.

    The cost of this program is NIS 100 million a year. Each family participating in the program receives NIS 8,000 a year for various purposes, allocated at the discretion of social workers and in consultation with the families.

    • By the end of 2018, approximately 5,700 families had been reached through the program, of which 41% were from the Arab and Bedouin sectors, and 44% from the north of the country.
    • About 40% of recipient families have four or more children, and about 64% of the Jewish participant families (not including Haredim) are headed by single parents.
    • The parents in most of the families have 12 years of schooling, 17% have studied in higher education, and 27% have less than a high school education.
    • Most participants in the program are employed, but their incomes are low and allowances comprise the major source of their livelihood.
    • About 70% of the families in the program reported being in debt, and it is reasonable to assume that the real percentage is even higher.

The flexible budget seems to serve families for a variety of expenses: household needs, employment, paying off debt, and more. However, not all recipient families use the assistance to the fullest extent and they avail of the funds to cover different types of expenses.

  • The sum used during the first year of the two-year program stands at only NIS 4,200, on average – a little over half of the total allocated sum. Those who joined the program in 2017 used a larger sum in the first year.
  • About 42% of the assistance is used by families for household needs (electrical appliances, furnishings, and household goods), about 28% is spent on employment (training advising, and equipment), and about 10% is spent on paying off debt.
  • Among Arab Israeli families, a large share of the assistance is spent on electrical appliances and home accessories. This is particularly true among the Bedouin, where about 50% of the assistance is spent on household needs.
    Expenditure from financial assistance on goods and servicedThe differences in the ways in which the recipient families use the aid indicate the need to maintain the flexible nature of these budgets so that they can provide a real response to the different needs of the families participating in the program.

 

 

Is there a cure? Addressing challenges in Israel’s healthcare system

Israelis have benefited from the universal health coverage enacted in 1995 following the National Health Insurance Law (NHIL), and they are in comparatively good health: for example, Israel has a relatively high life expectancy at birth (82.5 years) – among the highest in the world – and low infant mortality (3.1 per thousand births) – among the lowest in the world.

However, the current health indicators reflect past investments in the healthcare system. There are signs today that the relative health status of Israel’s population may deteriorate in the future, as a result of rising tension between medical needs and resources that stems from state policy or, rather, a lack thereof.

The medical needs of the population are rising. Israel has a young but rapidly aging population. Simultaneously, Israel has rising fertility rates – already the highest among the developed nations – requiring a growing investment in pregnant women and infants.

Additionally, the country faces growing risks of modern diseases that have an impact on the entire population, such as obesity, which can be linked, in part, to increasing income disparities and rising food prices.

The challenges the system faces in response to these rising needs is reflected in its lagging funding. Worse, changes in the composition of this funding aggravates the situation.

In 2017, the share of healthcare spending in Israel stood at 7.4% of GDP (compared to 6.9% of GDP two decades prior). This figure is lower than both the OECD average of 8.9% and the 11.0% average among countries whose healthcare systems are based on sickness funds (HMO-type organizations) like in Israel. The gap between Israel and these other countries has been increasing over time, though they do not face an increase in medical needs similar to Israel’s.
Healthcare expenditure as percent of GDP

As for the composition of spending, the share of public spending out of total healthcare spending has been falling, and is relatively low compared to other developed nations with universal coverage. Public spending out of total health spending stands at about 63% in Israel, compared to 73.5% in the OECD, and 78% in countries with similar healthcare systems.

Consequently, households are spending more and more out of pocket for their medical needs: healthcare spending out of household disposable income nearly doubled between 1997 and 2016.

These developments mean that access to care in Israel, manifested, among other things, in prolonged waiting lines, has become increasingly dependent on residents’ ability to pay – contrary to the fundamental philosophy of the National Health Insurance Law.

Worse, regulations of private and supplemental insurance (which is quasi-public) mean that physicians are currently allowed to simultaneously be employed in both the public and private spheres. This results in the widespread practice of doctors referring patients from the public system to their own services in the private system, where they can charge higher prices for treatments that could largely be administered through the public system as well. This results in ethical issues, supplier induced demand for private services (including potentially unnecessary procedures), inequalities in access to care, and inefficiencies in the system.

At the same time, health care prices have increased, mainly due to rising physicians’ wages and fees. Physician wages in the public sector increased by 42% between 2011 and 2017 while the average wage rose by only 15%. This is because publicly funded institutions need to increase wages in order to compete for their own personnel moonlighting in the private institutions.

Additionally, the public health infrastructure has been underutilized because of the “migration” of medical personnel with their patients from starved publicly funded institutions to privately funded institutions for services financed by supplemental insurance.
Trends in physicians wages

The public-private mix in the Israeli health care system is an ungainly hybrid with no clear distinction between public and private, on the one hand, and no infrastructure to regulate the two, on the other. The state has been trying to confront the issues with ad hoc solutions such as preventing physicians from self-referral to privately funded care for a period of six months and organizing a special program to cut waiting lines in the public system.

To confront the challenges created by this ungainly system, one of two models (the principles of which are already in effect in various countries) could be implemented in Israel.

In the first model, known as the “separated model,” the public and private systems would exist at separate funding and infrastructure levels, administered in separate institutions. Most importantly, in this model, both citizens and healthcare workers would not move between the public and private spheres.

All patients would have to decide whether to receive their care in the public or private system for the duration of a specific treatment. Likewise, healthcare workers receiving income based on public funding would not offer private treatment.

The second model – the “integrated model” – would merge the private and public systems. In this model, every resident would receive basic public insurance with extra elective services available for pay out-of-pocket or through private insurance.

Another insurance and medical tier would be based entirely on private funding. This model can be compared to an airplane in which one might choose between flying in economy class, business class, or first class – or to fly in a separate, private plane.

In this model, the system is regulated so that people cannot pay for shorter waiting times in the publicly-based system and doctors in the integrated system can provide both basic and elective services, but cannot work at the same time in the separate, completely private system.

Regardless, because Israel’s healthcare issues are so embedded in the way the system itself functions, they need to be addressed in a comprehensive manner by fundamentally re-examining the system’s structure, incentives, and regulation.

Press Release: Material Assistance to People Living in Poverty – A Historical Overview and Current Trends

Embargo until Wednesday, April 17, 6:00a.m.

To read the full study (in Hebrew) – Password: taub042019

Almost one-fifth of families in Israel live in poverty, the highest rate among the OECD countries. Local social services departments deal with 266,000 assistance requests for people living in poverty, and the question of how to help poor families has preoccupied policymakers for many years.

A new Taub Center study conducted by Prof. John Gal, Prof. Michal Krumer-Nevo, Shavit Madhala and Guy Yanay explores changes in the perception of poverty and methods for coping with it over time.

The study shows that there has been a sharp decrease in the generosity and accessibility of Income Support over the years, which acts as a safety net for families living in poverty. At the same time, the government budget allocated for emergency assistance to these families remains limited.

The growing economic distress of families living in poverty and the high volume of requests for assistance have led to a new approach to addressing poverty in social services departments in recent years. One manifestation of this is the development of the flagship program of the Ministry of Social Affairs and Social Services – the Breath of Relief program (“Noshmim Lirvacha”).

The study examines patterns in the use of material assistance among various population groups participating in the program, and finds that individual characteristics, especially sector, are related to the extent to which the assistance provided by the program is utilized and the purposes for which it seems to be used. The researchers point to the need for flexibility and tailored assistance for families living in poverty.

Changes in tackling poverty in the early 2000s: reduced allowances and the privatization of social services

Most of the responsibility for financial assistance to families living in poverty was transferred from social services departments at the local level to the National Insurance Institute about four decades ago. Today, the assistance is granted mainly through Income Support distributed by the National Insurance Institute, while a smaller amount, earmarked for financing emergency assistance, is provided by the local social services departments.

The Taub Center study notes that, in the past, Income Support was linked to the average wage. The economic crisis and rising unemployment in the early 2000s led to changes in poverty policy and was reflected, among other things, in a sharp reduction in the level of Income Support and in tougher eligibility requirements.

As a result of these changes, the share of those receiving Income Support declined from 8% to 5% of Israeli families. The decrease in the level of Income Support and child allowances increased the gap between the level of assistance and the poverty line. At the same time, from 2000 to 2005, the incidence of poverty rose from 17.5% to a peak of 20.6% of Israeli families, and since dropped to 18.4%.

Alongside the decline in the level of Income Support and eligibility, efforts were made to encourage the integration of impoverished populations into the labor market through the “Mirvacha La’avoda” program, which, despite being a leading program in the field (also known as the “Wisconsin Program”), was discontinued after a limited trial period.

Even aid provided by social services departments, intended to provide assistance in situations such as difficulty to pay rent and the financing of basic necessities, underwent changes during this period. The main development was the expanded role of non-governmental actors – such as civil society organizations and private companies – in the areas of welfare and employment, which accelerated the outsourcing of social services.

A prominent example of this is the International Fellowship of Christians and Jews (IFCJ) which doubled the sum transferred by the Ministry of Social Affairs and Social Services for material assistance administered by social services departments. However, due to bureaucratic difficulties and the approach of social workers in these departments, who believed their main purpose was to provide counseling and not material assistance, the budgets were not fully utilized.

The impact of the 2011 protests: expansion of social investment – but without increasing the budget

The social protests of 2011, and the recommendations of the Trajtenberg Committee that followed, led to a fundamental change in the discourse on social issues and poverty in Israel. In 2013, a public committee was established to combat poverty (The Elalouf Committee). The committee set an ambitious goal to almost halve the poverty rate within a decade, and recommended a number of steps to achieve such a goal.

Of the recommendations, the government primarily implemented those designed to strengthen education, housing and employment. These measures epitomize the “social investment” approach to social welfare, which seeks to strengthen the human capital of families living in poverty – mainly by expanding early childhood care – thus enabling parents to integrate into the labor market and improve their children’s ability to escape poverty in the future.

However, alongside these measures, there was no significant change in social welfare expenditure or expenditure for the impoverished population, and the percentage of those entitled to Income Support continued to decline from 5% to 3% of families in 2017.

As the Taub Center study shows, the change in attitude was also felt in local social services departments. Difficulties in providing for the material needs of people living in poverty at the beginning of the century led to the development of new modes of assistance during this period in cooperation with non-governmental organizations:

  • “Guardians of Israel”: The IFCJ transferred NIS 20 million a year to local social services departments, and invested in training social workers to distribute the funds. Due to the accessibility of the funds and the ease with which they can be used, the sum is generally utilized to its full extent. In recent years, the Foundation decided to gradually reduce the level of assistance until the funds are closed and transferred to the supervision of the Ministry of Social Affairs and Social Services.
  • Flexible family budget: The Ministry of Social Affairs and Social Services has developed programs to improve family functioning and reduce poverty. These programs see the family as the preferred point of intervention and integrate elements of counseling, training and advising, budget management, and job-searching skills. In this framework, families are allocated a flexible budget, which can be used in various manners and is meant to improve the family’s employment situation (for example by funding childcare). However, the sum is not directly given to the family, but is rather allocated at the discretion of social workers.

These two types of assistance have expanded both the professional welfare discourse and the understanding of poverty as a systemic phenomenon of socioeconomic inequality, which influences social workers’ approach to care. At the same time, the “poverty-aware social work” paradigm developed around 2010, which bases the discourse on poverty on families’ social rights.

This approach paved the way for the implementation of the comprehensive Breath of Relief program and Rights Centers. Thanks to the additional Guardians of Israel funds and the Breath of Relief budget, the sum allocated for material assistance increased from NIS 60 million to NIS 100 million in 2016-2017.

Breath of Relief program: most families are single-parent, most participants are in debt

The Breath of Relief program has been in operation since 2015 and has become the flagship program of the Ministry of Social Affairs and Social Services. It operates in 108 low socioeconomic status localities and in deprived neighborhoods in large localities and, since its establishment, it has provided care for thousands of families. Gal, Krumer-Nevo, Madhala and Yanay analyzed data from the program, providing, for the first time, an understanding of the material needs of Israel’s impoverished population.

The program consists of two main components: (1) Rights Centers – community centers focused on the take-up of people’s social rights and the implementation of employment and community programs; (2) An intensive 2-year family support program that includes a flexible family budget and social worker intervention. The cost of this program is NIS 100 million a year.

Each family participating in the program receives NIS 8,000 a year (NIS 15,000 total over the two years of participation, reflecting a deduction of NIS 1,000 transferred to the locality for group activities).

By the end of 2018, approximately 5,700 families had been reached through the program, of which 41% were from the Arab and Bedouin sectors, and 44% from the north of the country.

About 40% of recipient families have four or more children, and about 64% of the Jewish families (not including Haredim) are headed by single parents. The parents in most of the families have 12 years of schooling, 17% have studied in higher education, and 27% have less than a high school education.

Distribution of families ENG
Most participants in the program are employed, but their incomes are low and allowances comprise the major source of their livelihood. Beyond the financial difficulties reflected in the families’ income data, most of them are in debt.

About 70% of the families in the program reported being in debt, and it is reasonable to assume that the real percentage is even higher. It therefore seems that the flexible family budget is an important source for acquiring their basic material needs.

Arab Israelis and the Bedouin report using monetary assistance to purchase basic necessities, Haredim – for employment

The flexible budget seems to serve families for a variety of expenses: household needs (electrical appliances, furnishings, and household goods), employment (training and advising), paying off debt, and more. Plans for spending the money are made in cooperation with the family, and provide aid to ease both material and emotional deprivation.

In general, the share of the flexible budget reportedly used for household needs stands out at about 42%. For Arab Israeli families, and even more strongly for Haredi families, the share of the budget reportedly spent on employment is significantly higher than in other population groups.

Among Arab Israeli families, especially Bedouin families, the reported spending on household needs, clothing, and footwear is notable; in other words, a larger portion of their flexible budget is devoted to basic needs, leaving them with less to cover needs such health and paying back debt.

According to the researchers, these differences indicate the need to maintain the flexible nature of these budgets so that they can provide a real response to the different needs of the families participating in the program.

Distribution of use of monetary aid ENG

Although flexible budgets are a central component of the Breath of Relief program, most participating families do not make use of the total sum of available aid. The sum used during the first year of the two-year program stands at only NIS 4,200, on average – a little over half of the total allocated sum.

However, it seems that as the program has progressed there has been an increase in the share of the flexible budget utilized: participants who joined the program in 2017 used a larger sum. The Taub Center researchers note that only 42 families (less than 1% of participants) left the program within 6 months or sooner after utilizing part of the budget; that is, for most participants, the motivation to participate in the program is not only material aid.

“The study shows the limitations of Israel’s social security system in dealing with poverty,” says Prof. John Gal. “Income Support and the social safety net for working-age people living in poverty is far from adequate. At the same time, there has been a notable in change in the perception of poverty over time and a transition to poverty-aware social work.”

The researchers highlight the importance of using data on how assistance seems to be used, particularly among population groups that do not use the aid to its full extent, to examine how the welfare system addresses the needs of families living in poverty.

They also note that, while government allowances are intended to meet regular living needs, additional emergency funds or funds for special needs are necessary as well. Furthermore, the researchers emphasize the importance of easy-to-use flexible budgets and the ability to tailor them to families’ specific needs.

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.

 

 

 

 

Women of the future: Israeli high school girls in technological education

Under its last four ministers, Israel’s Ministry of Education has focused many of its efforts on increasing the number and share of high school students in technological-vocational education (as opposed to academic education).

But how do trends in technological education over the last decade break down by gender? In honor of International Women’s Day, which took place this month, let’s take a closer look at the gender differences in technological education across Israel’s education streams.

In general, technological education in Israel has indeed grown in the past decade; as of 2017, 40% of 12th grade students were enrolled in technological education, compared to just over 33% in 2006. The number of high schools offering technological tracks has increased substantially over this time period, as well.

A new achievement-based classification system proposed by Taub Center researchers sorts technological majors into high, medium, and low technological tracks based on the bagrut qualification rates of the students in these tracks and the level of math and English studied.

This new classification shows that the share of technological students studying in majors with high achievement levels – those in the high technological tracks – has risen by 40% over the past decade.

Overall, the share of boys enrolled in technological education is higher than the share of girls in all of the education streams except for the Haredi stream.

However, when broken down into high technological, medium technological, and low technological tracks, there has been a substantial rise in the number of girls in the Arab education system choosing to study in high technological tracks.

In fact, unlike the Hebrew sector where the share of girls in the high technological track is considerably smaller than the share of boys, girls in Arab education make up a majority of students in the high technological track.
High technological education by gender and sector

The most noteworthy change has taken place in Druze and Bedouin education. In Bedouin education, for example, the gap between the share of girls and boys studying in high technological tracks is largest: 21% compared to 12%, respectively. The great increase in the share of girls in all streams of Arab education in the high track is accompanied by a large increase in the bagrut qualification rate for this group and in the number of Arab Israeli women pursuing academic studies.

In contrast to the changes in the Arab sector, girls in the Hebrew education sector are still a minority in all scientific tracks in general, and, particularly, in high technological education.

The percentage of girls studying in high technological tracks is particularly low in the State-religious education system, even though the boys in the same system study these subjects at a higher rate than boys in any other education stream. While one out of four boys in the State-religious education system is enrolled in high technological education, the same is true for fewer than one out of every ten girls.

It appears that single-sex schools in the State-religious system result in fewer study options for religious girls. Indeed, only 18% of the religious girls’ schools offer high technological tracks, compared to 48% of all other schools (except Haredi schools).

Not offering high technological tracks could prevent interested religious girls from pursuing these majors. One possibility for increasing the options open to these girls is combining technological classes between a number of religious schools.

In Haredi education, the share of girls in the medium technological track rose from 9% to 46% between 2006 and 2017, with many of these students studying bookkeeping and human resources majors.

Whereas in the past the vast majority of Haredi women went into the teaching profession, the large increase in the share of Haredi girls enrolled in these majors seems to indicate that new career opportunities are opening up for Haredi women, in addition to the classic teaching track.

The large differences across education streams require varied, tailored approaches for encouraging girls who are interested to study technological subjects in high school at a high level. In the Arab sector, where the share of girls in the high technological track is already high, it is important to address the transition from high school to academia, where many Arab Israeli women pursue a degree in education despite having studied scientific majors in high school.

In the Haredi stream, the sharp increase in the share of girls enrolled in the medium technological track – which opens up more employment opportunities – is encouraging, but there is still much room to increase the share enrolled in the high technological track, which has hardly changed in the past decade.

In the State-religious stream, it is crucial to ensure that high technological tracks are offered in girls’ high schools, so that religious girls have the opportunity to study them.

It is, of course, important that each student choose a study major in high school that interests him or her. However, it is also worth noting that skills learned in high technological tracks are in-demand in the labor market and are associated with labor market opportunities and higher earning potential.

Encouraging interested girls to study these subjects could help to close gender gaps that emerge later on, in academia and the labor market.

Why are there so many children in Israel?

Fertility in Israel stands at 3.1 children per woman – the highest fertility rate in the OECD, and almost one full child above the next highest fertility countries, Mexico and Turkey. To put Israel’s fertility in historical perspective, among Western countries fertility was last as high as 3.1 in the US toward the end of the baby boom in the mid-1960s, in Italy in 1931, in Germany in 1914, in the UK in 1908, and in France in 1889.
Israel's birth rath relative to the OECD countries

Not only is Israel’s fertility high among developed countries, it is also higher than fertility rates in emerging economies. In fact, despite a magnitude of differences in other areas – including GDP – Israel’s fertility is most similar to that of its direct geographic neighbors: Egypt and Syria.

People often mention two factors that encourage Israel’s high fertility: the cultural aspect, which is anchored in the historical experience of the Jewish people, and particular policies that make it easier for Israeli women to balance work and family (such as leave for sick children, reduced working hours following the return from maternity leave (“nursing hour”), and part-time, flexible positions).

Yet these arguments are less convincing when we compare Jews in Israel to their counterparts elsewhere. Although they share the same history, fertility among Jews in every other developed country is considerably lower – including among Jews living in Europe, where welfare policies are more generous than in Israel.

Another argument is that Israel’s high fertility is driven by certain parts of the population, such as Haredi (ultra-Orthodox) women, having many children (the fertility rate of Haredi women is indeed quite high at around 7 children per woman).

However, the rise in Israel’s fertility over the last two decades has been largely driven by the secular and traditional Jewish populations, whose combined fertility rate is greater than 2.2, which is itself higher than the overall fertility in any other OECD country.

Among the Arab Israeli population, fertility trends have followed patterns similar to those in the rest of the modern world – decreasing significantly since the 1960s in conjunction with increased education levels and employment participation rates among women. As such, Israel’s fertility has risen in recent decades despite Haredi fertility remaining relatively stable and despite a decline in fertility among Arab Israelis.

Furthermore, Israel’s fertility is not only exceptional because it is high. It is also exceptional because strong pronatalist norms cut across all educational classes and levels of religiosity, and because fertility has been increasing alongside a rise in the age at which women first give birth and increasing education levels — at least in the Jewish population. From an international perspective, these are extremely unusual patterns.

For example, Israeli women are having more kids even though they are having them later in life and working more. In fact, non-Haredi Jewish women in Israel have higher employment rates than women in any other OECD country, except for Iceland. Around the world, both increased age at first birth and increased labor force participation are generally correlated with declining fertility, yet the trends in Israel do not follow suit.

Additionally, in almost every other developed country, more educated women have fewer children than less educated women. However, by age 40, Israeli women with a college degree have the same number of children as those whose highest level of education is high school.

To a large degree, the reasons behind Israel’s fertility trends remain a mystery. However, they will continue to impact Israeli society. As direct result of these fertility patterns, a higher percentage of children in Israel are being born to older and more-educated parents than is the case in other developed countries.

This has implications for education, social and health policy. Older parents tend to be wealthier and more financially stable, which influences their own children’s outcomes across a wide range of domains, and parent’s levels of education also have indirect effects on outcomes for other children in their neighborhoods, which allows for positive spillover effects.

As policy makers look into the future, these implications of Israel’s exceptional fertility profile need to be taken into account.

Household Debt in Israel

Executive Summary

The level of household debt in Israel (as a percentage of GDP) is low compared to many developed countries around the world, yet has been on the rise over the past decade as a result, in part, of the low interest environment, the rise in housing prices, and an increase in the supply of credit and private consumption that have occurred with the entry of non-banking entities into the market.

The study examines household’s level of debt by income decile, age group, and sector.

The credit market

In recent years, several regulatory measures have been taken to promote competition in the banking industry in general, and in the consumer credit market in particular.

  • The supply of credit has increased as a result of the entry of non-banking entities into the credit market, the removal of technological barriers, and the integration of new technologies.
  • There are four main sources of credit available to households: banks, institutional bodies, credit card companies, and government credit.
  • Between 2013 and 2017, there was a 148% increase in credit granted by credit card companies, and a 140% increase in total loans granted by institutional bodies. At the same time, the growth rate of total credit granted by banks to households declined: an increase of 3.9% in 2017, compared to an increase of 7.4% in each of the five preceding years.

Household debt in Israel in the past decade

The ratio of household debt to GDP in Israel stands at 42%, while in many other countries the ratio exceeds 100% (as of 2017), yet is on the rise. The expansion of Israeli households’ debt in the past decade stems from a number of factors: the rise housing prices, the low interest environment, and an increase in the supply of credit and private consumption.

  • Israel’s household debt balance at the end of 2017 stood at NIS 530 billion – an increase of 5% since 2016.
  • Between 2008 and 2017, household debt increased by 84%. Total housing debt increased by 70%, while total non-housing debt increased by 114%.

Level of leveraging by income decile

An analysis of household debt level by income decile (according to a long-term household survey from 2016) raises concerns about the financial stability of households in the lowest income decile.

The share of those in debt in the bottom decile is relatively low and stands at only 18%, compared to 56% in the top decile. However, the average ratio between households’ debt and their annual income is approaching 8 in the bottom decile, meaning their total debt is equal, on average, to their total income over 8 years.

By age:

  • Half the total population in the bottom decile is over age 54 and only 9% are under 25, whereas 69% of the top decile are of prime working age (25-54).
  • While, in the top decile, 75% of the indebted population are of prime working age and only 22% are 54 and older, in the bottom decile, only 59% are of prime working age and 35% are 54 and older.

By sector:

  • 23% of Arab Israelis in the bottom decile are in debt, and their median ratio of debt to annual income is close to 2.
  • Only 15% of non-Haredi Jews in the bottom decile are in debt, but their median debt-to-income ratio is higher at about 3.
  • For Haredim, 30% of those in the bottom decile are in debt, and the median ratio is 13.5.

By type of loan and sector:

  • 64% of indebted non-Haredi Jews and 43% of indebted Haredim from the bottom decile took out a consumer loan, compared with 89% of indebted Arab Israelis from this decile.
  • In comparison, 52% of non-Haredi Jews and 72% of Haredim from the bottom decile took out a housing loan, compared to only 15% of indebted Arab Israelis, perhaps because of difficulties Arab Israelis face in putting up collateral for housing loans.

By source of loan:

  • The percentage of those who rely on non-bank sources for non-housing loans in the bottom quintile is 22.5%, compared to 12% in the top quintile.
  • In contrast, the rate of applying to banks for non-housing loans is higher at the higher income levels: 88% in the bottom quintile compared to 92% in the top quintile.

The study’s findings raise concern that the expansion of the credit market and the rise in household debt would particularly affect the financial stability of households belonging to the bottom decile, and that the financial vulnerability of this population is liable to lead to its financial collapse in the case of an economic slowdown.

 

 

 

 

 

Press Release: Household Debt in Israel


The full study in Hebrew is available here.

Executive Summary in English available here.

The rate of household debt in Israel (as a percentage of GDP) is low compared to many developed countries around the world, yet has been on the rise over the past decade. What is the potential danger in this trend and which households are most vulnerable?

A common claim in Israeli socioeconomic discourse is that many households in Israel struggle to cover their daily expenses. A new study by Taub Center Senior Researcher Dr. Labib Shami examines one of the aspects related to households’ economic ability – level of debt – by income decile, age group, and sector. The study’s findings raise concern that the expansion of household debt would particularly affect the financial stability of households belonging to the bottom decile, and that the financial vulnerability of this population is liable to lead to its financial collapse in the case of an economic slowdown.

Competition in the credit industry has increased, and Israelis are taking on more credit

In recent years, several regulatory measures have been taken to promote competition in the banking industry in general, and in the consumer credit market in particular. In 2017, the Knesset passed the Law for Increasing Competition and Reducing Concentration in Israel’s Banking Market, based on the recommendations of the Strum Committee. The changes that took place in the industry – including the entry of non-banking entities into the credit market, the removal of technological barriers, and the integration of new technologies (such as digital banking) – increased the supply of credit and its forms available to households.

Today, there are four main sources of credit available to households: banks, institutional bodies (insurance companies, pension funds and provident funds), credit card companies, and government credit. The breakdown of credit between these sources has changed greatly in recent years: between 2013 and 2017, there was a 148% increase in credit granted to private individuals by credit card companies, and a 140% increase in total loans granted by institutional bodies. At the same time, the growth rate of total credit granted by banks to households declined, especially in 2017 (an increase of 3.9% compared with an increase of 7.4% in each of the five preceding years).

Debt in Israel is low compared to the rest of the world, but is on the rise

According to the Taub Center study, the ratio of household debt to GDP in Israel stands at 42%, while in many other countries the ratio exceeds 100% (as of 2017). However, despite Israel’s relatively good situation, this ratio is on the rise. At the end of 2017, Israel’s household debt balance stood at NIS 530 billion – an increase of 5% since 2016. Between 2008 and 2017, household debt increased by 84%. Total housing debt, usually backed by the value of the asset for which the loan was taken, increased by 70%. In comparison, total non-housing debt increased by 114%.

The expansion of Israeli households’ credit (debt) over the past decade stems from a number of factors: the rise in housing prices, which forces households to take out a higher mortgage; the low interest environment, which encourages taking out loans; and an increase in the supply of credit and private consumption. According to Dr. Shami, “This expansion is fraught with risks that can stem from the over-leveraging of households; that is, sinking deeper into debt relative to their income. This could put their financial stability at risk in the event of an increase in interest rates or a drop in real estate prices.”

About a quarter of households in the bottom decile are in debt

An analysis of household debt level by income decile (according to a long-term household survey from 2016) shows that while the share of those in debt in the bottom decile is relatively low and stands at only 18% (compared to 56% in the top decile), the average ratio between the amount of debt of households in this decile and their annual income is approaching 8. In other words, the total liability of indebted households from the bottom decile is equal, on average, to their total income over 8 years.

According to the Taub Center study, this means that the level of debt of many households in the lowest socioeconomic bracket is unreasonably high given their annual income, and it is doubtful that they will be able to repay this debt. In addition, the highest percentage of households who self-report being in debt (households whose income is insufficient to cover their expenditures and who do not have any savings) is in the bottom decile – about a quarter of the households in this decile, compared with only 3% among households in the top decile.

F1 Eng

Furthermore, segmenting the population in each decile by age, emphasizes the distress of those in debt from the bottom decile. In this decile, 59% of the indebted population are of prime working age (25-54) and 35% are over the age of 54, compared to a very different ratio among the indebted population in the top decile, where 75% are of prime working age and 22% are 54 and older. The data reveal that households in the top decile primarily take out loans at a younger age and reduce their debt over the years, enabling them to maintain a more uniform level of consumption throughout their lives than households from the bottom decile, and to better weather financial difficulties while minimizing their damage.

Gaps in debt are also evident across different sectors of the population. About a quarter of Arab Israelis in the bottom decile owe money, and their median ratio of debt to annual income is close to 2. Among non-Haredi Jews in this decile the share of those in debt is lower (15%), but the median debt-to-income ratio is much higher (close to 3), and among Haredim in the bottom decile, both the share of those in debt and the ratio of debt to annual income are higher (30% are in debt and the median ratio is 13.5).

The Taub Center’s Dr. Shami explains that differences in the indebtedness figures for the Arab Israeli and Jewish populations in general, and for the Haredi population in particular, stem mainly from the type of loan taken out: 64% of indebted non-Haredi Jews and 43% of indebted Haredim from the bottom decile took out a consumer loan, compared with 89% of indebted Arab Israelis from this decile – and, in comparison, 52% of non-Haredi Jews and 72% of Haredim took out a housing loan, compared to only 15% of indebted Arab Israelis in this decile. As pointed out by Dr. Shami, it is possible that the high rate of consumer credit-holders in the Arab Israeli sector stems from difficulties they face in putting up property they own as collateral for a housing loan, such that, in this sector, credit designated as consumer credit is actually being used for housing.

F2 Eng

The differences between various income levels are also evident in the source of the loan. To receive non-housing loans, the two bottom deciles rely on non-bank sources at almost twice the rate of the two highest deciles (about 22% compared to about 12%, respectively). In contrast, the rate of applying to banks for non-housing loans is higher at the higher income levels: 88% in the bottom quintile compared to 92% in the top quintile.

“The data reinforce the argument that the entry of non-banking entities into the consumer credit market increases the exposure of households in the bottom deciles to consumer credit,” explains Dr. Shami. “As a result, the risk in this industry has increased both for households, who are more likely to get caught up in debt, and for lenders, who will receive a smaller portion of debt repayments.”

 

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.

 

 

 

 

 

 

 

Economic growth and workforce diversity go hand in hand

As we say goodbye to 2018 and start the new calendar year, Israel’s labor market continues to be strong and show many encouraging trends: labor force participation rates are rising, employment rates of both men and women are increasing, and unemployment has reached a historic low. The number of job vacancies has also increased, and wages have been continually rising. This increase in employment has also contributed greatly to Israel’s economic growth in the past few years.

In a recent Taub Center study, Researcher Hadas Fuchs and President Prof. Avi Weiss find that over the past decade and a half (since 2003), employment has risen among both men and women and across all population groups: Haredim, non-Haredi Jews, and Arab Israelis. This is a change from the previous decade during which employment rates had declined or remained stagnant among all groups except non-Haredi Jewish women.
Employment rates by population groups and gender

The employment rate for Israeli men has risen by 7 percentage points and the increase was most impacted by a rise in the employment rate of 55-64-year-olds. Among women, on the other hand, employment increased by 13 percentage points and was driven both by increased employment among 35-44 year olds and among 55-64-year-olds, but for different reasons: the former because there has been a major increase in the percentage of mothers of young children who are working, the latter because women close to retirement work more than their predecessors and women’s retirement age was raised from 60 to 62.

All in all, these increased employment rates put Israel in a good position relative to the OECD. In fact, the employment rates of non-Haredi Jewish women and men and Haredi women in Israel are higher than the average employment rates in the OECD, and among non-Haredi Jewish women it is the second highest in the OECD (after Iceland).

But what about Israel’s other population groups?

Despite the gains of the past decade and a half, there are two groups whose employment rates remain particularly low: Arab Israeli women and Haredi men. In 2010, the government set target employment rates for these two population groups to reach by 2020.

After several years of stagnation, the employment rate of Arab Israeli women has increased substantially and stands at about 40%. This is nearly double the rate in 2003 and an increase of more than 6 percentage points since 2016, bringing the rate very close to the government’s 2020 target for Arab Israeli women of 41%. Furthermore, there are indications that this trend will continue. Most of the employment increase for this population group (72%) stems from the improved education of Arab Israeli women, and, because more Arab Israeli women are pursuing higher education, it is likely that their employment rates will continue to rise.

In contrast, the employment rate of Haredi men, after rising by more than 15 percentage points between 2003 and 2015, has declined slightly in recent years. It now stands at about 48% – far from the government’s 2020 goal of 63%. Of those who are working, about 42% of Haredi men ages 30-64 worked part time in 2017 (compared to 15% of non-Haredi Jewish males), mostly due to yeshiva studies.

It is important not only to look at employment trends in Israel in general, but also to break it down by industry. For example, 50% of Arab Israeli men, whose education levels have not risen as much as those of Arab Israeli women, worked in occupations characterized by low wages in 2017: manufacturing, construction, and agriculture. These are physically demanding occupations, and, consequently, Arab Israeli men show a major decline in employment rates from age 50 and on.

In high tech, the sector that attracts the greatest attention in Israel both because of its high wages and its disproportional contribution to Israel’s GDP, tax revenues, and exports, the share of those employed in the industry has increased from 8% to 15% among non-Haredi Jewish men, but among Arab Israeli and Haredi men the percentage has remained negligible. The percentage of women working in the field is also low (as it is in the rest of the world); women made up 32% of those working in high tech in Israel in 2017, and most of them are non-Haredi Jews. Nonetheless, there has been an impressive rise in the share of Haredi women employed in high tech: from less than one percent in the middle of the last decade to about 3%.

If labor market participation is to keep rising in Israel, the participation rates of Haredi men and Arab Israeli women and men must increase. Providing training to population groups that are currently underrepresented in the labor market, or in specific industries, and encouraging employers to aim for diversity in the workplace could help these groups not only join the workforce, but integrate into prestigious, high-paying fields, and thereby strengthen the Israeli economy and society as a whole. Moreover, in addition to training for adults, it is important to improve Israelis’ skill levels earlier on by providing high-quality education from a very young age.

As Director General Suzie Patt Benvenisti put it so poignantly at the Taub Center’s latest international conference (on Israel’s future labor market): “The issues of economic growth and enhancing diversity of the workforce really go hand in hand…Getting more segments of the population – like Arab Israelis and Haredim – more engaged in the workforce is not something that we need to do just because it’s the right thing to do, but because it will have a very positive impact on our economic growth as a country.”

 

Press Release: The State of the Nation Report 2018

Embargo until Monday, December 31st, 6:00am

To download the full chapters, click here 

The Taub Center’s State of the Nation Report 2018 has been released

The Taub Center’s annual report presents a picture of Israel’s society and economy in 2018. The report contains 10 new research studies in the fields of macroeconomics, employment, education, health, and welfare, as well as executive summaries of other studies published by the Taub Center over the past year.

The editor of the report is Prof. Avi Weiss, President of the Taub Center and Professor of Economics at Bar-Ilan University.

Selected findings from The State of the Nation Report 2018

Economic Developments in Israel: An Overview
Prof. Benjamin Bental and Gilad Brand

In 2018, employment is at an all-time high, unemployment is at a historic low, GDP growth is high, and wages have risen. However, growth potential is declining due to demographic changes and trends in labor productivity, which is not growing at all.

  • Assuming that the government will increase its expenditure in accordance with the relevant legal rules and limitations, it seems that as of 2020 the government will breach the deficit limit as it is set by law, and that the problem is likely to become even more severe in the long run. The budgetary problem is expected to increase further if the government follows through with its plan to increase the defense budget to about 6% of GDP, and to peg it to the GDP growth-rate. Such tendencies will impair the government’s ability to improve services and infrastructure and may weaken the standing of the Israeli economy in the global capital market.
  • Since 2012, increased employment has been the main source of Israel’s per capita GDP growth. Despite the fact that most of the workers joining the labor force were low-skilled workers, there was an improvement in the quality of employment due to an increase in experience and education levels. However, the working-age population is shrinking, as is the potential for future economic growth from increased employment rates. Therefore, it will be difficult for the Israeli economy to continue growing without an improvement in other growth-enhancing factors.
  • Expanded employment and the rise in wages were reflected in an impressive increase in households’ income and consumption. This was particularly apparent among households in the middle and lowest income quintiles (an increase of 16% and 13%, respectively, between 2012 and 2016), while among the highest income quintile there was a more moderate increase (9%).
  • In recent years, prices in Israel have increased at a significantly lower rate than in the OECD. As a result, consumer prices relative to the OECD average have declined by 5.2% since 2014. This is surprising given the good state of Israel’s economy and the sharp rise in wages in recent years, and resulted from measures taken to increase domestic competition after the 2011 social protests.
  • Nevertheless, price levels in Israel remain significantly higher than expected given income levels, which negatively affects the standard of living. Against the backdrop of mounting public pressure and reports of expected price hikes, removing barriers and encouraging competition in the local market could help the country cope with this challenge.
    1) Macro intro EN

Rising Housing Prices and Their Impact on Households’ Ability to Purchase a Home
Kyrill Shraberman

Housing prices have risen over the past decade, but the ratio of disposable household income to housing prices is similar to that of the mid-1990s.

  • The rise in housing prices over the past decade has reduced the ability of households to purchase housing. However, assessing the ability to buy a home in terms of total disposable household income (which usually includes the incomes of two earners, as well as income from sources other than work), rather than in terms of average salary (as is common practice), reveals that the decline in Israelis’ ability to purchase housing is more moderate, and the ratio of disposable household income to housing prices is similar to what it was in the mid-1990s. The reason for this is that the total disposable income of households rose to a greater degree than wages over this period, primarily due to an increase in the average number of earners per household.
  • The disposable income of young adult households (25-34) grew at a rate similar to the average disposable household income between 1998 and 2016, so their ability to purchase housing was no more affected than was that of the general population. The age group whose housing-purchasing ability suffered the most is the 35-54-year-olds, because the income of these households increased at a lower rate than the average for the general population.
  • The ability to purchase housing has declined significantly in Tel Aviv, Jerusalem, and Israel’s Southern District.
  • The average level of household leveraging – the size of households’ net financial liabilities to creditors as a percentage of GDP – has increased since 2009, which could potentially make it hard for them to receive additional credit in the future. The current level of leveraging is only slightly lower than it was in 2000, the year that witnessed the highest leverage levels recorded.
    2) Housing prices ENG

Israel’s Labor Market: An Overview
Prof. Avi Weiss and Hadas Fuchs

The employment rate in Israel is high, and has increased greatly among Arab Israeli women, but has declined among Haredi men. For employment to continue rising, there needs to be improvement in the employment of Arab Israelis and Haredi men.

  • Both employment and labor market participation rates continue to be high in 2018. The employment rate of non-Haredi Jews is higher than the average employment rate in the OECD, and among women, it is the second highest in the OECD (after Iceland). In order to further improve these figures, employment rates need to increase in sectors where they are relatively low – among Arab Israelis and Haredi men.
  • Wages have continued to rise in 2018 at a fast pace. This increase is consistent with the rapid rise in real wages since 2014 – an increase of 11% in total.
  • Over the past decade, the share of workers in high tech has increased from 8% to 15% among non-Haredi Jewish men, but among Arab Israelis and Haredim the percentage has remained minimal. The share of women employed in the high tech sector is low (as it is in the rest of the world), and those women employed in high tech are mostly non-Haredi Jews. However, there has been an impressive rise in the share of Haredi women employed in the field: from less than one percent to about 3%.
  • After several years of stagnation, the employment rate of Arab Israeli women increased substantially and stands at about 40% – an increase of more than 6 percentage points between 2016 and 2018 – and is now very close to the government’s 2020 target. Most of the increase (72%) stems from the improved education of Arab Israeli women, and, because more Arab Israeli women are pursuing higher education, it is likely that their employment will continue to rise. Arab Israeli men’s education levels have not risen in a similar manner, and the improvement in their employment rate is relatively low. After years of gradual decline followed by gradual improvement, it is only in the last two years that their employment levels returned to what they were in 1995. Low levels of education also affect the employment opportunities available to Arab Israeli men, 50% of whom work in occupations characterized by low wages: manufacturing, construction, and agriculture (as of 2017).
  • The employment rate of Haredi men has declined slightly in recent years, and stands at about 48%. Therefore, the government’s target rate for this segment of the population (63% by 2020) seems unrealistic. The decline may partially be a result of increased transfer payments in 2015. 42% of employed Haredi men ages 30-64 worked part time in 2017, mostly due to yeshiva studies.
  • Among Haredi women, the employment rate increased by 5.5 percentage points between 2013 and 2018, and stands at 76%. A large percentage of Haredi women are still employed in education, but this figure is declining while the share of women learning technological studies in seminaries is on the rise. Improving the quality of education in seminaries and opening additional engineering tracks could open up more high-paying employment opportunities for Haredi women.
  • Israel’s population is aging at a slow pace relative to the OECD, but when taking into account Israel’s high birth rate, the dependency ratio (the ratio between those not of prime working age and those of prime working age) is the highest in the OECD. One possibility for coping with this situation is to raise the retirement age for women. This would save money for the National Insurance Institute (NII), which is at risk of bankruptcy.
    3) Employment ENG

How Much Can the Israeli Start-Up Nation
Continue to Grow?
Gilad Brand

The share of high tech out of total employment in Israel is only about 8%, and it seems that efforts to expand employment in the field are only relevant for a small percentage of the population. Even if these efforts are indeed effective, expanding high tech employment is not expected to have a significant impact on the economy at large.

  • Comparing the skills of workers in Israel and other developed countries, as measured by the OECD’s Basic Skills Survey (PIAAC), shows that the skills of high tech employees are very different from those of workers in other fields. In Israel, the gap between the skills of workers in high tech and workers in the rest of the economy on the survey is almost a complete standard deviation, an exceptionally large gap among the developed countries. Due to differences in skills, the wages of high tech employees are much higher as well – double those of other workers in the economy, and this gap is also exceptionally large. The share of workers employed in high tech was also found to be higher in Israel than in other developed countries, and skilled workers are already integrated into the industry on a large scale. Given all these trends, it seems that efforts to expand employment in high tech are only relevant for a small percentage of the working-age population (about 1%).
  • Due to the large skills gap between high tech and other sectors, it is unlikely that expanding employment in high tech would lead to the spread of advanced knowledge and innovative work methods to other fields to a significant degree. It is also possible that expanding employment in high tech may slow the development of relative advantages in other areas of the economy, where the employment profile is more varied.
  • A high share of the Haredi and Arab Israeli populations report low levels of English proficiency, as opposed to a high level of proficiency reported among high tech employees. As a result of this, and due to low levels of general proficiency among these population groups (as measured by the survey), it seems that there is limited utility in using professional training as a means of integrating them into the high tech industry (thereby narrowing gaps). Most of the potential to expand high tech employment is found among non-Haredi Jews, who already comprise the majority of high tech workers.
  • Israel is characterized by a large presence of workers with low skills, which result in low earning ability. The percentage of Israeli workers whose skills are ranked in the lowest skills level in the OECD (the bottom decile) is about 16% of the adult population, and only about 7% of Israeli workers rank in the highest skills level (top decile). Among the Arab Israeli population, the picture is particularly worrying: about half of the adult Arab Israeli population ranks at the bottom of the OECD skills distribution (the bottom two deciles).
  • The availability of cheap labor makes it less feasible that employers will streamline processes and adopt advanced technologies, and is likely one of the causes of low levels of investment and low productivity in non-high tech industries. Therefore, focusing on raising skill levels specifically among the workers in these industries, through appropriate professional training and by improving the education system (in order to improve the skills of the next generation), may be preferable to efforts to recruit additional highly-skilled workers to move into the high tech field.
    4) Skill level gap ENG

The Israeli Education System: An Overview
Nachum Blass

The Ministry of Education budget has risen due to an increase in the number of students and the implementation of various programs and labor agreements. While the scores of Israeli students on Meitzav and international exams do not meet expectations, there has been an improvement in Israeli students’ achievements and the gaps are narrowing.

  • The student population has grown at a rate of 2% a year since 2000. While the growth rate is declining in the Haredi, Bedouin, and Druze education systems, it is rising in Hebrew State and State-religious education.
  • The Ministry of Education budget increased by 83% in real terms between 2005 and 2018. The budget increased due to a rise in the number of students, the signing of the Ofek Chadash and Oz LeTmura labor agreements, the implementation of the Compulsory Education Law for ages 3-4, and the introduction of programs such as reducing the number of children per class. The budget for Special Education increased at almost twice the rate of the overall education budget, mainly due to the tremendous rise (127%) in the number of students enrolled in Special Education.
    • Based on the latest data from 2014, the Ministry of Education’s real budget per student increased since 2010 at a faster rate than in the OECD, and it seems that this trend has continued through 2018 as a result of the measures detailed above. Despite the rapid increase, per-student expenditure in Israel remains lower than in other OECD countries: the expenditure per student in primary education in 2014 was $7,981 in Israel compared to $8,631 in the OECD, and the expenditure per student in high school education was $7,987 in Israel compared to $10,010 in the OECD.

    5) Per student expen ENG

  • Since 2000, the number of teachers in Hebrew primary education has increased by 28%, and by 20% in Arab education. In Hebrew education there was a slight decline in the percentage of female teachers, as well as in the average age of all teachers and their seniority, while in Arab education the trends were reversed. The percentage of teachers with an academic degree has risen in both sectors since 2000: from 50% to 89% among Jews and from 37% to 94% among Arab Israelis.
  • The scores of Israeli students on the Meitzav and international exams do not meet expectations, but there have been improvements in students’ performance on both the Meitzav and international exams relative to the past. Furthermore, Israel’s improvement on international exam scores and narrowing gaps (relative to the first exam) was greater than the improvement in most other participating countries.

Expenditure Per Class and Per Student in Israel’s Official Primary Education
Nachum Blass and Haim Bleikh

The Ministry of Education per-class and per-student budget has increased significantly in recent years. Most school budgets are allocated according to fixed formulas, and principals and other officials in the system have limited influence as to their scope. However, despite the universal formulas, after controlling for various school characteristics, budgeting is highest in the State-religious schools and lowest in the Arab Israeli schools.

  • There are several important characteristics that affect the per-student and per-class budget in regular official primary education (institutions that contain grades 1-6 only): the school’s Nurture Index – the higher the index (which indicates a weaker socioeconomic profile), the higher the allocation per student; the size of the school – the larger it is, the lower the allocation per student; and the presence of a “long school day,” which increases expenditure per class by an average of 14%, and per student by 15%.
  • An analysis that isolates each factor affecting the budget shows that the vast majority of explained variance has to do with factors that are difficult to influence, such as: Nurture Index, participation in the “long school day” program, and the size of the school. On the other hand, sector and type of supervision explain a much smaller share of the explained variance (about 13% for per-class budget and 8% for per-student budget).
  • After controlling for various school characteristics, per-class and per-student budgets are highest in the State-religious education system and lowest in the Arab education system; there is a 10% gap between the two. Part of the gap can be explained by unique budgetary baskets, but the remainder of the gap cannot be explained because the considerations behind budgeting are not transparent.
  • The State-religious education’s budgetary advantage stems from the fact that it receives unique budgetary baskets, such as funding supplements for prayer time, separate frameworks for boys and girls, and hours with a Rabbi. These supplements are intended to preserve the character of this education system, yet, on the other hand, it could be argued that similar funding should be granted in order to preserve the unique character of the State education system. It is also worth noting that differences in type of supervision by religiosity level is a phenomenon unique to Jewish education.
    6) Per student budget ENG

Technological Education: Trends and Developments, 2006 to 2017
Hadas Fuchs, Guy Yanay, and Nachum Blass

The share of high school students studying in high technological education has risen, primarily among Druze and Bedouins. The percentage of Arab Israeli girls studying in high technological education has risen, but the percentage remains low among Jewish girls in State-religious education.

  • A new achievement-based classification of technological education tracks reveals that, between 2006 and 2017, the share of technological-vocational students studying in high technological tracks (where achievements are the highest) rose by 40%, alongside a lesser increase in other tracks. This increase has come mainly from outstanding students transferring from academic tracks to high technological tracks (as indicated by a decline in the share of high school students studying in academic tracks from 67% to 60% during the period).
  • The greatest increase in the share of students studying in high technological tracks was in the Arab education system, especially among Druze (20 percentage points) and Bedouins (11 percentage points). This figure indicates a substantial change which could lead to better integration of the Arabic-speaking populations into more prestigious occupations in the Israeli labor market.
  • The percentage of girls studying in the high technological track in Arab education has risen substantially, and is even higher than the percentage of boys (31% compared to 26%). The gap between girls and boys in Bedouin education is even larger (21% compared to 12%, respectively). This increase has been accompanied by a rise in the bagrut qualification rate and in the pursuit of academic studies among Arab Israeli women, the effects of which can already be seen in the rapid growth in their employment (see the chapter on “Israel’s Labor Market: An Overview” in this Report).
  • Only a small percentage of Jewish girls study in the high technological track, particularly in the State-religious education system, whereas the percentage of boys in the high technological track is relatively high in State-religious education. It is possible that single-sex schools result in fewer study options for religious girls, because the number of high technological tracks offered in girls’ schools in the State-religious education stream is particularly low (only 18% of the schools offer these tracks, compared to 48% of all other schools, except Haredi schools).
  • Though the socioeconomic profile of Arab Israeli students in the high technological track is much lower than that of Jews, their bagrut qualification rates are similar to their Jewish counterparts. Even among Bedouin students – whose socioeconomic status is particularly low – the bagrut qualification rate is about 74%.
  • The number of students taking math at the five unit level (the highest level) has risen by 56% since 2012 and the number of those taking the bagrut exam at this level in English increased by 20% between 2013 and 2017 (over and above the increase in the overall number of students). However, the share of those learning English at such a high level is relatively low in the Arab Israeli sector and stood at only 17% in 2017, compared to 51% among Jews. This has a negative impact on the ability of these young adults to integrate into high-paying occupations in the future, such as high tech (see the chapter on “How Much Can the Israeli High Tech Sector Grow?” in this Report).
    7) Tech education ENG

Healthcare in Israel: An Overview
Prof. Dov Chernichovsky

Israel’s current health indicators are quite good, but they reflect past investments in the healthcare system. Today, there are signs of a worsening in the relative health of Israel’s population, and the situation is likely to deteriorate further unless changes are made in the level of health funding and in the system’s public-private mix and its regulation. 

  • The share of national expenditure on health out of Israel’s GDP was about 7.4% in 2017, compared to an average of nearly 9% in the OECD and 11% in European countries with health systems similar to Israel’s. The share of public expenditure out of total expenditure on health stands at about 63% in Israel, compared to 73.5% in the OECD, and 78% among countries with similar systems.
  • Since 1995, per capita health expenditure in OECD countries has increased on average by 2.5 times, and in countries with health systems that are similar to Israel’s, they have increased by about 3 times.  In Israel, however, per capita health expenditure has barely doubled over the same time period.
  • The growth in health expenditure was similar to the growth in GDP per capita – about 1.7% a year, on average, since 1995. However, when taking into account changes in healthcare prices relative to the Consumer Price Index and increased consumption rooted in changes in the age structure of Israel’s population, the growth was only 0.9% per age-adjusted standardized person.
  • The low level of funding, as well as the high share of private funding, inhibits Israel’s ability to maintain its good health status among the developed countries. In addition, the rising share of private health funding widens gaps in the accessibility of medical services for various population groups and increases health costs.
  • The relative increase in health prices is high, and stems, at least in part, from the public-private mix that has developed in the system, and the effect of this public-private mix on physicians’ wages. Physicians’ wages rose by about 42% between 2011 and 2017, compared to an increase of about 15% among other salaried employees in Israel. This increase also stands out in international comparison. One main reason for this is that doctors can refer patients from the public system to their own services in the private system, where they can charge higher prices for treatments that could largely be administered through the public system as well. At the same time, this phenomenon means that doctors are spending less time working in the public system.
  • Israel can improve the state of its healthcare system by regulating the provision of privately funded medical care relative to publicly funded care, based on existing models (already in effect in various countries) of either separating the two systems or unifying regulations across them. The two models do not deny access to private healthcare, however, at the same time, they do not allow the two parts of the system to overlap, as is the case today.
    8) Health fig EN

Israel’s Exceptional Fertility
Prof. Alex Weinreb, Prof. Dov Chernichovsky, and Aviv Brill

Fertility in Israel is not only high relative to the rest of the world, but is exceptional in a number of other characteristics. Other exceptional aspects of Israel’s fertility include an increase in fertility despite a coinciding increase in age of marriage and in women’s education levels, as well as a sharper rise in fertility among the secular and traditional Jewish populations.

  • The overall fertility rate in Israel is higher than in any other OECD country, and stood at 3.1 children per woman in 2015. While fertility rates in most countries have declined over time, the rate in Israel has risen by 0.2 children in the last two decades, and this growth is largely driven by the secular and traditional Jewish populations. At the same time, since 2004 the fertility rate of Muslim women has declined by almost one child, and of Haredi women by about half a child.The overall fertility rate is almost identical among Jewish and Arab Israeli women, but there are significant differences in the fertility patterns of each group. Among Arab Israeli women, age at first birth is four years younger; the percentage of women without children is much higher (13.7% among those born between 1947 and 1967, compared with 6.4% among Jewish women); and the negative correlation between education and fertility is much stronger.
    • In most population groups in Israel, as education increases, fertility declines. However, the situation is different for two population groups. For non-Haredi Jewish men, the number of children among academics and those with lower levels of education is the same. Haredi women with an academic degree give birth to their first child at a relatively late age, but by their late thirties their fertility rates converge with those of Haredi women with lower levels of education.
    • The main difference in fertility between Israel and other developed countries stems from the fact that, in Israel, relatively educated families – who make up a large and increasing share of all Israeli families – are having more children than their counterparts in Europe. As a direct result of these fertility patterns, a higher percentage of children in Israel are born to older parents and to more-educated parents (compared to any other OECD country).Non-marital fertility in Israel is low (less than 10%, compared to about 40% on average in the OECD), but is rising: from 3% in 2000 to 5% in 2016 among women aged 25-39 and from 7% to 17% of births among women aged 40+. In comparison to other developed countries, the increase in both marital and non-marital fertility in Israel is highly unusual.

Israel’s Social Welfare System: An Overview
Prof. John Gal and Shavit Madhala

The social investment policy Israel has adopted in recent years has emphasized improving human capital and making the labor market more accessible to various populations, yet poverty and inequality rates remain among the highest in the OECD.

  • Social spending (government spending on education, healthcare and social welfare) stood at 59% of total government expenditure in 2017 – an increase of 2 percentage points from 2016. Social welfare spending alone increased by about 9%, mainly due to spending for the National Insurance Institute’s “Savings for Every Child” program and growth in the budgets of the Ministry of Labor, Social Affairs and Social Services and the Ministry of Housing. However, these changes did not have an impact on most of the needy population, and both the proportion of families living in poverty and the level of inequality in Israel remain among the highest in the OECD.
  • In recent years, Israel has adopted a policy of “social investment” – measures that seek to improve the human capital of citizens and labor market accessibility – such as expanding the early childhood education system and the Savings for Every Child program. At the same time, there is still no indication that other major elements of the social investment approach have been adopted: expansion of unemployment insurance and income support programs.
  • Following an intensive protest campaign in 2018 by organizations for people with disabilities, the Knesset approved an increase in the basic disability benefit as well as an increase in the “disregard” limit (the maximum income from work that a person with disabilities can earn without their disability benefit being reduced) from NIS 2,800 to NIS 3,700. This has resulted in a change in the ratio between the disability benefit and the average wage. While between 2010 and 2018 the disability benefit eroded in comparison to wages, the benefit-to-wage ratio increased in 2018 as a result of agreements that enabled disabled persons with a spouse and two children, for example, to reach about 64% of the average wage, compared to 54% previously.
    10) Welfare ENG
  • Expenditure on vocational training in Israel stands at about 0.06% of GDP, about half of the OECD average. In recent years expenditure in this area has been rising, but there have been no significant changes in its share of GDP.
  • As part of the adoption of the Trajtenberg Committee recommendations, the Day Care Centers Department budget almost doubled between 2011 and 2017. In particular, the expenditure devoted to construction and the conversion of buildings into day care centers has increased substantially: from about NIS 2 million in 2011 to about NIS 260 million. This increase reflects the centrality that welfare states currently ascribe to early childhood education and the importance of early educational interventions for human capital enhancement, especially for children of families suffering from economic distress.
  • The additional expenditure allocated to fighting poverty in 2017 is 48% of the total expenditure recommended by the Elalouf Committee. Although a large portion of the Committee’s recommendations have been adopted, their chronic under-funding together with the government’s failure to implement other major recommendations, such as more generous income support benefits, have impaired the effectiveness of current poverty-fighting efforts.

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis. 

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.

 

 

 

Executive Summary: Today’s Workers, Tomorrow’s Retirees – Understanding the Pension Gender Gap in Israel

In recent years there has been much public discussion about a variety of issues relating to pensions in Israel, including concern about the performance of pension funds and the implications of an aging population on the pension system. In Israel, pension income comes primarily from two sources: oldage allowances (provided by the National Insurance Institute to retirees and elderly living in poverty) and occupational pensions (mandatory since 2008). The differences between men and women for each of these pillars are expected to dictate the degree of future gaps in pension income…

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Executive Summary: Welfare Nonprofits in Israel – A Comprehensive Overview

Civil society organizations (or nonprofit organizations) are playing a growing role in the field of welfare in Israel. In 2016, 43,000 nonprofit organizations were registered, a particularly high share of organizations per capita. Of them, 15 percent were active in the field of welfare…

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Executive Summary: Emerging Early Childhood Inequality: On the Relationship Between Poverty, Stress, Sensory Stimulation, and Child Development and Achievements

How do experiences in early childhood impact development and achievement? The academic literature indicates that there are various ways in which economic inequality experienced in early childhood may lead to inequality in scholastic achievement later in life…

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Executive Summary: Arab Israeli Women Entering the Labor Market – Higher Education, Employment, and Wages

Usually, socioeconomic discussions about the Arab Israeli sector focus on the gaps that still exist between this sector and Jewish Israelis, and do not emphasize the areas where substantial improvements have been made. However, large strides have been made by Arab Israeli women in educational achievements as well as improvements, though more limited, in employment…

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Executive Summary: Back and Forth – Commuting for Work in Israel

The subject of commuting has attracted more and more public attention in Israel in recent years as road congestion levels continue to rise with the increasing number of commuters. Over the last 30 years, the number of employed persons working outside their residential area has risen from 42 percent to 54 percent (as of 2016) among Israelis of working age (25-64)…

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Executive Summary: Trends in Religiosity Among the Jewish Population in Israel

What will the religious makeup of Israel’s Jewish population look like in the coming decades? According to the projections of the Central Bureau of Statistics (CBS), the Haredi (ultra-Orthodox) population will compose about 50 percent of Israel’s Jewish population by 2059.

These projections have raised serious concerns for Israel’s future economic growth given the education and employment patterns of contemporary Haredim. However, there are a number of significant demographic shifts occurring, some of which, it seems, have not been fully accounted for in the CBS forecasts…

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Executive Summary: The Income-Expenditure Gap and Household Debt in Israel

How do Israeli households sink into debt? Given the difficulty of assessing actual debt due to data limitations, the gap between Israeli household income and expenditure can be analyzed alongside characteristics such as socioeconomic status, age, marital status, and type of housing expenditure…

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Israel’s Social Welfare System: An Overview

Data on Israeli social welfare spending in recent years, and decisions by the government and its ministries on issues relating to the social welfare and social security of the country’s residents, point to two prominent trends in Israel’s social welfare system.

One trend is that of long-term stability in social spending levels and the limited effectiveness of measures to address poverty and inequality. The other trend indicates a new emphasis on implementing elements of a “social investment” approach to social welfare activities.

Welfare expenditure in Israel

 

The data show that, since the early 2000s, social security and social welfare spending as a percentage of GDP has remained more or less stable, as has the incidence of poverty in Israel. The overall trend during this period continues to be one in which the share of Israeli families living in poverty, and the degree of inequality between Israeli citizens, have remained among the highest in the OECD.

Welfare expen as percent of GDP ENG

  • Social spending, which includes government spending on education, healthcare and social welfare, amounted to about NIS 223 billion in 2017 – an increase of NIS 18 billion compared with 2016.
  • In financial terms, social welfare spending alone increased by about 9% between 2016 and 2017, amounting to about NIS 110 billion in 2017. The main source of this increase is expenditure on the Savings for Every Child program and growth in the budgets of the Ministry of Labor, Social Affairs and Social Services and the Ministry of Housing.
  • In February 2018, following an intensive protest campaign by organizations for people with disabilities, the Knesset approved an increase in the basic disability benefit as well as an increase in the “disregard” limit (the maximum income from work that a person with disabilities can earn without their disability benefit being reduced) from NIS 2,800 to NIS 3,700.

The government’s official adoption of the recommendations of the Committee for the War Against Poverty (established in 2013 and headed by MK Eli Elalouf) has not brought about a dramatic change in poverty policy.

  • The spending increase in 2017 as compared with 2014 for all areas covered by the final Committee recommendations amounts to some NIS 3.6 billion – 48% of the total recommended expenditure (NIS 7.4 billion per year).
  • Although a large portion of the recommendations have been adopted, their chronic under-funding together with the government’s failure to implement other major recommendations, such as more generous income support benefits, have impaired the effectiveness of current poverty-fighting efforts.

Implementing “social investment” policies

 

The three main elements of a “social investment” approach to welfare policy are:

  1. “Flow”: facilitating the entry and exit of groups into the labor market
  2. “Stock”: continuously improving human capital and skills
  3. “Buffers”: ensuring safety nets for segments of society in need

In recent years Israel has implemented measures intended mainly to reinforce the “stock and “flow” elements of a social investment approach, while little effort has been made to upgrade the “buffer” components.

Social investment areas ENG

  • Savings for Every Child. The implementation of the Savings for Every Child program, which, in 2017, amounted to NIS 4.2 billion, seeks to jumpstart young Israelis’ transition to post-secondary education and the labor market. This program is aimed to increase human capital and facilitate future social mobility.
  • Daycare centers. As part of the adoption of the Trajtenberg Committee recommendations, the budget of the day Care Centers Department almost doubled between 2011 and 2017 and stood at NIS 1.64 billion in 2017. Out of this budget, the share of expenditure devoted to construction and the conversion of buildings into day care centers increased substantially, from about NIS 2 million in 2011 to about NIS 260 million in 2017.

This increase reflects the centrality that welfare states currently ascribe to early childhood education and the importance of early educational interventions for human capital enhancement, especially for children of families suffering economic distress.

  • Expenditure on active labor market policy in Israel, that is, on programs to encourage the optimal integration of different populations into the labor market, is among the lowest in the OECD. Of this expenditure, the share that Israel devotes to vocational training is 0.06% of GDP, about half of the OECD average. In recent years the expenditure in this area has been rising, but there have been no significant changes in its share of GDP.

Between 2013 and the end of 2017, the budget of the agency responsible for government-funded vocational training grew by 26%. There have also been changes in the share of vocational training expenditure spent on adult v. youth training. The share of adult training has increased relative to the spending on youth training, and stood at about 43% of the training expenditure in 2017.

  • Work grants and Intervention programs. While there have been no major changes in the amount of the average work grant since 2012 (NIS 3,700 per year), eligibility for the grant was extended to single parents in 2017, which added another 50,000 people to the population of those entitled to the grant. Additionally, recent years have witnessed the promotion of intervention programs such as Noshmim Lirvacha, operated by the Ministry of Labor, Social Affairs and Social Services to address the social exclusion of families living in poverty.

On the one hand, the early childhood education system has been expanded; investment in vocational training has been increased; vocational programs targeting specific sectors have been created; holistic programs have been operated to help families living in poverty enter the labor market; and the Savings for Every Child program has been implemented.

However, there is still no indication that other major elements of the social investment approach have been adopted – elements that aim to ensure the quality of life of those who are ejected from the labor market (and their optimal re-entry), or that provide a buffer for those who are unable to integrate in the labor market.

 

Israel’s Exceptional Fertility

It is widely known that fertility levels in Israel exceed fertility levels in all other developed countries, and that this is the main factor driving Israel’s unusually high rate of population growth.

However, Israel’s fertility is not only exceptional because it is high. It is exceptional because strong pronatalist norms cut across all educational classes and levels of religiosity, and because fertility has been increasing alongside increasing age at first birth and education—at least in the Jewish population. From an international perspective, these are atypical patterns.

Fertility levels and trends

Israel’s Period Total Fertility Rate (TFR) in 2015 was 3.1, which is unusually high, and well above the population “replacement level” of 2.1. While there have been widespread and recognizable reductions in fertility over the last 150 year – the “Fertility Transition” pulling TFR to around 2-3 children per woman, and the “Second Demographic Transition” pulling it below 2 since about the 1970s – Israel is unique among OECD countries in not having followed the second of these international trends.

Total fertility rates ENG

  • Israel’s TFR is the highest among the OECD countries, and is almost one full child above the next highest fertility countries, Mexico and Turkey. Israel’s TFR is also much higher than that of BRIC countries and other emerging economies.
  • Despite a magnitude of differences on a number of other characteristics, Israel’s fertility is closest to that of its direct geographic neighbors, and falls between that of Egypt and Syria.
  • Israel’s TFR has never dropped below 2.8 children, and actually increased by 0.2 children between 1995 and 2015. With the exception of Israel, every country with a TFR greater than 2.0 in 1995 experienced a reduction in fertility by 2015.

There is considerable heterogeneity in fertility across different subpopulations within Israel, and the rise in Israeli fertility by 0.2 children over the last two decades is largely driven by the secular and traditional populations.

  • Between 1960 and 2016, the TFR of Christians dropped from 4.7 to 2.1; Druze fertility fell from 7.3 to 2.3 between 1970 and 2010; and Muslim fertility also dropped precipitously from an estimated TFR of 9.2 in 1965 to 3.3 fifty years later.
  • Since 2005, national fertility levels have risen—even as Muslim and Druze fertility have fallen and Christian fertility has remained stable—because of increases in the fertility of Israeli Jews (whose fertility declined slightly between 1960 and the 1990s, but has since increased).
  • Among Jews, the TFR among Haredim has fluctuated around 7 children per woman since the 1980s, and around 2.5 children per woman among the secular and the traditional who identify as not religious. However, Haredi fertility in the 2007 to 2013 period was lower than in the 1990s, while fertility in the non-Haredi Jewish population has increased since then.
  • Even among Jewish women who self-identify as secular and traditional but not religious, the combined TFR exceeds 2.2, making it higher than the TFR in all other OECD countries.

Israel’s unique fertility profile

Israel’s fertility is exceptional in a number of characteristics, including those relating to non-marital fertility, age at first birth, childlessness, and education levels.

Non-marital fertility

  • Across the OECD and other developed countries, there is a positive correlation between TFR and the percentage of children born outside marriage. However, this is not true for Israel: Israel has high fertility despite having one of the lowest rates of non-marital fertility (less than 10%, compared to about 40% on average in the OECD).
  • Nonetheless, non-marital fertility in Israel is rising. Across all births to women aged 25-39, the percentage born to never-married women increased from about 3% in 2000 to about 5% in 2016. Among never-married women aged 40+, it rose from 7% to 17% of all births.

Age at first birth 

  • Age at first birth has continued to increase in the OECD—driven largely by improved access to effective contraception and rising levels of women’s education and employment – and is negatively correlated with fertility levels.
  • In Israel, between 1994 and 2016, age at first birth increased by about 3 years for Christians and Druze, and by 1 year for Muslims, accompanied by an overall reduction in TFR in these populations.
  • Among Jews, age at first birth increased by about 2.8 years between 1994 and 2016, even as non-Haredi Jewish women’s TFR rose by about 0.2 children. This means that gains to fertility at older ages have outweighed reductions in fertility at younger ages.

Childlessness

  • Across countries with high contraceptive prevalence, there is no clear relationship between prevalence of childlessness and TFR. Countries in Eastern Europe tend to have both lower levels of childlessness and lower TFR than countries in Western Europe and the US, Canada, and Australia.
  • Within Israel, childlessness is comparatively low, but is more prevalent among Israeli Arabs than among Israeli Jews: 13.7% of Israeli Arab women in the 45-59 age group compared to 6.4%.

Education

  • Women’s education has long been one of the most important determinants of fertility. Because educated women have largely continued to have lower fertility than their less educated peers, rising levels of education—desirable for many reasons at both the individual and societal level—impose a fertility “cost” on societies.
  • In most population groups in Israel, as education increases, fertility declines. However, the situation is different for two population groups. For non-Haredi Jewish men, the number of children among academics and those with lower levels of education is the same. Haredi women with an academic degree give birth to their first child at a relatively late age, but by their late thirties their fertility rates converge with those of Haredi women with lower levels of education.
    Fertility ENG

The main difference in fertility between Israel and other developed countries does not only stem from the fact that, in Israel, relatively educated families – who make up a large and increasing share of all Israeli families – are having more children than their counterparts in Europe.

It’s that the difference in fertility between college-educated Israelis and their European counterparts is much greater than the difference between non-educated Israelis and their Europeans counterparts. As a direct result of these fertility patterns, a higher percentage of children in Israel are born to older parents and to more-educated parents (compared to any other OECD country).

 

Healthcare in Israel: An Overview

Israel’s current health indicators are potentially quite good, but they reflect past investments in the healthcare system. Today, there are signs of a worsening in the relative health of Israel’s population, and the situation is likely to deteriorate further unless there is an increase in the share of state funding, in the overall level of health funding, and in the regulation of the system’s public-private mix.

Israel’s current health indices

 

The health of Israel’s population looks good by common health metrics like infant mortality and life expectancy at birth. Nevertheless, there are concerning indications for the future.

  • Infant mortality is low in Israel at 3.1 per thousand births. This is even low compared with healthcare systems similar to Israel’s in Belgium, German, the Netherlands, France and Switzerland. However, infant mortality has stabilized since 2013, which is worrisome as there is potential for still further improvement among certain population groups.
  • Life expectancy at birth is relatively high at 82.5 years, but there are signs that, in terms of life expectancy and years of healthy life, Israel’s relative status is liable to decline.

The financing of Israel’s healthcare system

 

Israel’s healthcare expenditure as a share of GDP remained relatively stagnant despite the country’s impressive economic growth and, in international comparison, the share of public spending out of total healthcare spending in Israel is relatively low compared with all systems with universal coverage amongst developed nations.

  • The share of national expenditure on health out of Israel’s GDP was about 7.4% in 2017, compared to an average of nearly 9% in the OECD and 11% in European countries with health systems similar to Israel’s.
  • The share of public expenditure out of total expenditure on health stands at about 63% in Israel, compared to 73.5% in the OECD, and 78% among countries with similar systems. Meanwhile, the share of healthcare spending out of household disposable income rose from 3.9% in 1997 to 5.9% in 2016.
  • Between 1995 and 2017, per capita health expenditure in OECD countries has increased on average by 2.6 times, and in countries with health systems that are similar to Israel’s, they have increased by 2.7 times. In Israel, however, per capita health expenditure only doubled over the same period.
  • Growth in health expenditure was similar to the growth in GDP per capita – about 1.7% a year, on average, since 1995. However, when taking into account changes in healthcare prices relative to the Consumer Price Index and increased needs rooted in changes in the age structure of Israel’s population, the growth was only 0.9% per age-adjusted standardized person.
    National expenditure on healthcare per capita

Problems in the healthcare system: The public-private mix and physician wages

 

The relatively low level of public funding and the rising share of private health funding increases health costs and widens gaps in the accessibility of medical services for various population groups in Israel.

The relative increase in health prices is high, and stems, at least in part, from the public-private mix that has developed in the system, and the effect it has on physicians’ wages. Physicians’ wages rose by about 42% between 2011 and 2017, compared to an increase of about 15% among other salaried employees in Israel. One main reason for this is that doctors can refer patients from the public system to their own services in the private system, where they can charge higher prices for treatments that could largely be administered through the public system as well. At the same time, this phenomenon means that doctors are spending less time working in the public system. Therefore, publicly funded institutions compete for their own personnel in the privately paid institutions. This drives pay up in the public system as well.

Israel can improve the state of its healthcare system by employing existing models (already in effect in various countries) of either separating the two systems or unifying regulations across them.

The separated model

In this solution, the two systems would exist at separate funding and infrastructure levels. In the model:

  • Public funding would comprise the regular health tax and payments currently transferred to the health funds plus collections for supplementary insurance. Thus, the public framework would also offer the option of choosing a broader healthcare basket than the basic one.
  • Any institutions that have contracts for supplying entitled care, and thus funding from the state, would be considered “public,” regardless of ownership, and could compete for publicly funded patients. However, they would have to meet specific criteria to receive public funding.
  • In the private system, citizens could pay for treatment through a variety of commercial insurance policies or out of their own pockets.
  • All patients would have to decide to receive their care in the public or private system before seeking treatment, and this choice would obligate them throughout the course of treatment.
  • Healthcare workers whose income is based on public funding would not offer private treatment, but be “full timers” in the publicly funded system.
  • Emergency services currently provided by the public system would not support the private system.
    The separated model

The integrated model

In this solution, the private and public systems would be merged. In the model:

  • Every resident would receive basic public insurance, combining today’s basic and supplementary coverages (as in the separated model).
  • Another insurance tier would be based entirely on private funding.
  • The “integration” comes from the fact that elective services (supplementary and commercial insurance tiers) would be provided as part of the same system that delivers the public services. The extra insurance would be for extra services but not for faster elective service. In essence, the public system would offer a publicly-funded basket and a certain degree of private choice, and public services would be received in both privately and publicly owned institutions, but residents could also pay out of pocket or through insurance for treatments not included in the integrated system.
    The integrated model

 

 

Technological Education: Trends and Developments, 2006 to 2017

Under the last four education ministers, the Ministry of Education has focused much of its efforts on increasing the number and share of high school students in technological-vocational education. A second, related goal has been to increase the number and share of students taking the bagrut exams in math and English at the highest study level (five units). This study examines the profile of students in high school technological-vocational education according to a new achievement-based classification system of educational tracks proposed by the authors.

The growth of technological education in Israel

As of 2017, 40% of 12th grade students were enrolled in technological education (compared to just over 33% in 2006). Within that, 15% of the students study majors in the high technological track, 23% in the medium track, and less than 3% in the low track.

Students by edu tracks ENG

  • Between 2006 and 2017, the share of students studying in the high technological track (where achievements are the highest) rose by 40%. This increase has come mainly from outstanding students transferring from the academic track to the high technological track. This is indicated by a decline in the share of high school students studying in the academic track from 67% to 60% during the same period.
  • While the total number of students in the 12th grade increased between 2006 and 2017 by almost 18%, the number of students in academic track education increased by only about 4,000 students (a 6% increase), and the number of students in technological education increased by about 14,000 students (42% rise). The biggest increase was in the number of students in high technological education — about 7,000 students, or a 65% increase.
  • The number of schools offering only an academic track increased by only 17 during this period, whereas the number of schools offering technological tracks rose by 291.

Technological education by sector and gender

The share of students in technological education increased in all of the education streams (Hebrew and Arab), but there are large differences between sectors and genders.

High technological edu ENG

  • The greatest increase in the share of students studying in high technological tracks was in the Arab education system, especially among Druze (20 percentage points) and Bedouins (11 percentage points).
  • In 2017, the share of students in the high technological track in the entire Arab sector was higher than its share in the Hebrew education sector.
  • The percentage of girls studying in the high technological track in Arab education has risen substantially, and is even higher than the percentage of boys. The gap between girls and boys in Bedouin education is the largest (21% compared to 12%, respectively).
  • Only a small percentage of Jewish girls study in the high technological track, and the percentage is particularly low in the State-religious education system, whereas the percentage of boys in the high track is relatively high in State-religious education. It is possible that single-sex schools result in fewer study options for religious girls, because the number of high technological tracks offered in girls’ schools in the State-religious education stream is particularly low (only 18% of the schools offer these tracks, compared to 48% of all other schools (except Haredi schools)).
  • In Haredi education, the share of girls in the medium technological track rose from 9% to 46% between 2006 and 2017, with many of these students studying bookkeeping and human resources majors. Whereas in the past the vast majority of Haredi women went into the teaching profession, the large increase in the share of Haredi girls enrolled in these majors seems to indicate that they are now pursuing other areas of study.

Technological education: socioeconomic and academic background

As expected, students’ socioeconomic background is highly correlated with the level of academic achievement in each of the technological tracks: the students in the high technological track come from the strongest backgrounds, followed by the students in the medium and low tracks. In Hebrew education, those in the academic and high technological tracks have similar backgrounds, while, in the Arab sector, those in the high track come from slightly stronger backgrounds.

  • In Hebrew education, parents’ average years of schooling for students in the high technological and academic tracks is about 13.7 years, while in the Arab sector, it is 11.8 years in the high track and 10.5 years in the academic track.
  • Though the socioeconomic profile of Arab Israeli students in the high technological track is much lower than that of Jews, their bagrut qualification rates are similar to their Jewish counterparts: around 90%. Even among Bedouin students – whose socioeconomic status is particularly low – the bagrut qualification rate is about 74%.
  • The 8th grade mathematics skills of students in high technological education (according to Meitzav scores) is higher than those of students in academic education and medium and low technological education: the average percentile of students in the high technological track is 16 points higher in the Jewish population and 20 points higher in the Arab population than that of students in academic education.

Bagrut performance

After years of decline in the number of students studying math and English at the five unit level (the highest level), these rates are now increasing.

  • While the number of students in the 12th grade grew by 18% from 2006 to 2017, the bagrut qualification rate rose by 42%.
  • The number of students taking math at the five unit level declined between 2006 and 2012, but has risen by 56% since 2012. In the Arab sector, in 2006, the share of students studying math at the five unit level was lower than in the Hebrew sector — 11% compared to 15.5%. Until 2012, the decrease was larger in the Arab sector, and the recovery since has been slower.
  • The number of those taking the English bagrut exam at the five unit level increased by 20% between 2013 and 2017 (over and above the increase in the overall number of students). However, the share of those learning English at such a high level is relatively low in the Arab Israeli sector and stood at only 17% in 2017, compared to 51% among Jews.
  • In 2017, of all students taking five units in math, 47% were students in technological education, most of them in the high technological track.
  • The share of students taking five units in math who do not study in the high technological track or in a scientific academic track is very low, and declining: only 6% of students who took math at this level in 2017 are enrolled in non-science academic majors.

 

The Determinants of School Budgets: Per Class and Per Student

The per class and per student budget (the study deals only with budgets allocated by the Ministry of Education) in regular official primary education (institutions containing grades 1-6 only) increased significantly in recent years. Most school budgets are allocated according to fixed formulas. However, despite the universal formulas, after controlling for various school characteristics, budgeting is highest in State-religious schools and lowest in Arab Israeli schools.

Primary education budgeting

 

The budgeting of primary schools in Israel today is determined by a combination of three main budgeting sources that reflect educational, social, and ideological considerations.

1. The basic allocation (“the basic standard”): this guarantees a minimum number of teacher work hours necessary to provide the required curriculum and achieve other educational goals.

  • The basic standard part of the budget transferred to educational institutions depends on the number of classes and not on the number of students. Given that 20 students is the minimum number of students per class, each additional student entitles the school to a supplementary budget and when the number of students is less than 20 the class receives only half of the basic standard budget. Thus, a rise in the number of students raises the budget per class, but budgeting per student goes down the larger the class size.
    Budget per class and per student
  • The cutoff for the number of students considered a “class” for budgeting purposes (regardless of how many classes the students are split into in practice) is different based on the school’s Nurture Index (the higher the index, the weaker the socioeconomic profile of the school’s students): 32 for schools with a weakest socioeconomic background and 40 for schools with a highest socioeconomic background. On the ground, this means that two schools with the same number of students could be considered as having a different number of budgetary classes, impacting the schools’ overall budgets.
  • An educational policy decision to gradually reduce the number of students per class to a maximum of 34 applies to all students in grades 1-3 as of the end of 2018.

2. Dedicated “baskets”: these budgets are added to the basic standard, according to fixed formulas, based on the school’s student profile. They are “earmarked” for specific purposes.

  • The Nurture basket – which has the purpose of improving educational achievements of students from weak socioeconomic backgrounds and was increased in 2014.
  • The mainstreaming basket – which aims to integrate students with special needs into regular classrooms – is allocated by a fixed formula: 5.4% of all students in all schools receive an addition of 1.85 weekly teaching hours each.
  • The prayer time basket – for prayer hours at Hebrew State-religious schools – is 1.22 weekly hours per standard class.
  • The absorption basket – for immigrants and returning residents – takes into account country of origin and length of presence in Israel.

3. Other allocations (“baskets”): additional discretionary baskets based on a school’s inclusion in specific projects, or that stem from a recognition of a special need.

Factors that influence the school budget

 

The study takes a closer look and examines the influence of various school variables on budgeting per class and per student: the Nurture Index, school size, whether the school is part of the long school day program or not, the presence or absence of Special Education classes, the education sector and school supervisory authority, the median seniority of teachers, and the share of teachers with advanced degrees.

The results focus on two main aspects: the marginal effect of each variable on budgeting and the degree to which each variable contributes to the explained variance.

The results of a multivariate analysis, after controlling for various school characteristics, shows that most of the per student budget and of the per class budget can be explained by these variables:

  • The vast majority of the explained variance – 87% for per class budgeting and 92% for per student budgeting – has to do with factors that are difficult to influence, such as: Nurture Index, participation in the “long school day” program, and the size of the school.
  • Sector and type of supervision, on the other hand, explain a much smaller share of the explained variance: about 13% for per class budget and 8% for per student budget.
    Contribution of explanatory variables

 


 

 

 

 

The Israeli Education System: An Overview

The main developments in the education system in the last years have taken place over four dimensions of the system: the composition of the student population, the Ministry of Education budget, the profile of the teaching personnel, and students’ educational achievements.

Composition of the student population

The student population in Israel is growing, but the growth has not been consistent over time, across age levels, or across population subgroups.

  • Israel’s student population has increased by about 44% since 2000 (an increase of 2% per year), which is exceptional compared to other developed countries.
  • While the growth rate is declining in the Haredi, Arab, Bedouin, and Druze education systems, it is rising in Hebrew State and State-religious education.

The number of children in preschool increased between 2000 and 2015 by 81% (compared to a 43% growth in the total population). The fastest growth rate was between 2010 and 2015 and coincided with the implementation of the free Compulsory Education Law for ages 3-4.

Budget

An examination of the Ministry of Education’s budget shows an increase in the share of the budget allocated for Special Education and an increase in per-student expenditure.

  • The Ministry of Education budget increased by 83% in real terms between 2005 and 2018. The budget increased due to a rise in the number of students, the signing of the Ofek Chadash and Oz LeTmura labor agreements, the implementation of the Compulsory Education Law for ages 3-4, and the introduction of resource-heavy programs such as reducing the number of children per class.
  • The budget for Special Education increased at almost twice the rate of the overall education budget, mainly due to the tremendous rise (127%) in the number of students in Special Education.
  • The growth in the number of Special Education students was particularly fast among students diagnosed with autism – their number rose from 894 in 2000 to 11,145 in 2018 – and students with serious behavioral disorders – their number rose from 2,347 to 17,483 over the same period.
  • The Ministry of Education’s real budget per student increased between 2000 and 2014 at a higher rate than in the OECD. In 2015, the expenditure per student in primary education in Israel was $7,981 (PPP dollars) compared to $8,631 in the OECD. The corresponding figures in high school education were $7,987 in Israel compared to $10,010 in the OECD. Given recent developments, it is reasonable to believe that differences in the rate of change of expenditure per student between Israel and the OECD will continue to grow.

Teaching personnel

As a whole, the feminization of the teaching profession has come to a halt (except in Arab education) and there has been a real improvement in the academic level of teaching personnel.

  • Feminization: In primary school, the share of women working in Hebrew education dropped from 90% of teaching personnel in 2000 to 86% in 2017, while, in Arab education, the share of women rose from 65% to 78%. Similarly, in high school, the feminization process stalled in Hebrew education (87% of teachers were women in 2010 compared to 86% in 2018), and grew stronger in Arab education (increase from 36% in 2000 to 57% in 2018).
  • Academic level: In primary school, the share of teachers in Hebrew education with an a