OECD report points to deep structural problems in Israel

OECD on Israel
Marianne Azizi writes:

All is not as well as it seems in the Jewish state, according to a report released by the Organisation for Economic Cooperation and Development (OECD).

The report, published on 31 January, highlights the problems of poverty and high cost of living in Israel.

A lack of social investment and weak competition and regulation are exacerbating the gap between the haves and have nots.

Israel’s Arab and ultra-Orthodox Jewish citizens suffer from the poorest education. Investment in education per pupil in Israel is low compared to the other OECD countries.

Poverty is particularly high among the elderly, and pensions are low. This is the case across Israel and is not limited to Arab or Orthodox Jewish citizens.

The cost of living is 20 per cent higher than in Spain and 30 per cent higher than in South Korea, the two countries with a GDP per capita similar to that of Israel. With wages still among the lowest in the OECD, it is becoming increasingly difficult for people to survive.

According to economists, these figures are the result of a lack of competition and low efficiency in the sectors that are heavily protected against imports.

Food prices are acutely high, and reaching similar levels to those which brought the tent protests of 2011.

Prices are many times higher than abroad, especially the price of milk and beef prices. On average, the cost of products is 7 per cent higher.

The OECD notes that the dominance and inefficiency of government companies continue to hurt the Israeli economy. They operate in protected areas and in an environment which elevates political appointees rather than encourage efficiency.

The report points out that the debts of the Israel Electric Company reached 7 per cent of GDP in 2013, or 2.5 times its annual revenue. Maybe it is because the company’s managers were preoccupied with impending indictments for corruption. This is what you don’t hear about abroad.

Meanwhile, the debts of Israel Railways are 13 times higher than the annual income of the company. Perhaps its managers were also distracted by indictments for money laundering and tax evasion.

The OECD report applauds the efforts of the director of the Government Companies Authority, Uri Yogev, to end political appointments. However, these efforts were reputed to have been made over 10 years ago.

Another issue is government procurement policy. The report says there is a significant problem with the government tendering process, where only 20 to 30 per cent of tenders are open, the remainder being closed auctions taking place between pre-selected suppliers or procurement that is exempt from tendering altogether.

The tendering for child protection has not been public, and is collecting millions of dollars from alleged child snatching – documents about this have been submitted to the UN with no response yet.

While there are 9.8 nurses per 1,000 people in the OECD, the figure in Israel is only 4.9 – a very significant difference that affects the health system on a daily basis. There is no sign of this concern in the report.

Israel is slipping in the OECD rankings. The population is suffering from the high cost of living, low wages, brutal family laws, child snatching and catastrophic suicide rates among divorcing men. Citizens have been left with no choice but to lodge lawsuits in the USA and lobby the UN for their human rights.


This is an edited version of an article which first appeared here.

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