Israël
Past developments in annual real GDP growth and inflation appears in OECD Economic Surveys: Israel.
Compositional change in compulsory and tertiary education appears in OECD Economic Surveys: Israel.
Net household income for couples with earnings capacity at appears in OECD Economic Surveys: Israel.
Israel has a temporary labour migration scheme which provides a significant part of its labour force. It has recognised a need to reform the complex labour migration system to ensure that temporary foreign workers are not recruited when suitable local workers are available. The system, despite some procedural changes that have led to improvement of respect for contractual conditions, still leaves significant room for illegal practices by recruitment agencies and employers. This chapter considers the principal issues in temporary labour migration management in Israel in light of Israel’s avowed policy objectives and OECD experience.
Israel, a country founded on immigration, received unprecedented numbers of permanent immigrants in the 1990s, making it a laboratory for studying processes of labour market integration of immigrants. It has been largely successful in achieving the labour market integration of these immigrants: employment rates have reached or surpassed those of natives and prior immigrants, although gaps in wages persist. Some groups have, however, not been integrated. While permanent immigration rates have fallen in the past decade to levels below those of most OECD countries, Israel continues to invest heavily in immigrant absorption and offers a range of specific policies for facilitating integration, both for the highly skilled and the least educated immigrants.
This chapter looks at Israel’s pension, disability and long-term care policies in the light of demographic trends and the relatively high poverty rates amongst elderly people in Israel. The basic pension system provides a low level of support to nearly everyone, and additional public pension payments are either means-tested or depend on length of service. At their maximum public pension benefits exceed the poverty income threshold. However, strict means-testing limits access to income supplements, so that only a quarter of the elderly in Israel receive the maximum payment, while another quarter has incomes below the poverty line.
Israel has enjoyed strong economic and population growth over the last 20 years. Apart from the cyclical slowdown in the early 2000s and the current downturn, GDP grew by at least 4% per annum since the early 1990s. In 1990-91 immigration, largely from the former Soviet Union, amounted to around 200 000 people per annum, or 8.2% of the population. Together, “Russian immigration” and high fertility (the total fertility rate was 2.9 children per women in 2007 compared with an OECD average of 1.6), are key drivers of the rapid population growth in Israel from 4.5 million people in 1990 to almost 7.4 million people by the end of 2008. GDP per capita is now 80% of the OECD average.
Increasing employment among low-skilled individuals has been a major policy objective in Israel for some years. Sizeable cutbacks in welfare benefits in the early 2000s, while motivated by public finance concerns, were also seen as a way to reduce dependency on welfare among the low-skilled groups. Overall, the financial incentives to work provided by the tax and transfer system are strong. This is because of low taxation, relatively low benefits for those out of work, and the availability of income support for those in work. In practice, however, access to benefits is limited, due to very strict eligibility conditions for both unemployment benefits and income support. Since 2005, a pilot welfare-to-work programme has been running in four regions with large minority populations, which was initially tilted towards getting participants off the welfare rolls rather than into sustainable jobs. Reforms implemented in 2007 have improved the incentive structure for private operators, but problems remain. For example, competition among the operators is limited and the payment structure varies little with the characteristics of clients. A pilot earned income tax credit has also been in place since 2008 in the same regions, but the amounts are currently too small for it to ensure a decent standard of living and reduce in-work poverty.