2006 Poverty Report: The Need for Human Capital Development

Poverty Report calls for policies to develop human capital to meet market demand. The policies will increase the individual's ability to economically support himself and his family.

The National Insurance Institute of Israel recently published the 2006 Poverty Report. According to the report, Israel still has the highest poverty rate and income inequality among developed countries. Israel experienced moderate poverty reduction due to an increase in social benefits, employment, and minimum wage.

The Poverty Report and supporting data indicate that employment alone cannot guarantee an individual's ability to economically support himself and his family:

  • Working poor - According to the report, 43% of poor households have at least one currently employed member.

  • Low Wage Workers - Many employees are close to the poverty line: one third of employees in Israel earn 2,500 NIS per month, barely above the one-person-household poverty line of 1,900 NIS. These individuals are highly susceptible to becoming poor.

Israel has a high rate of unused working potential:

  • Part-time workers seek full-time employment - One quarter of the part-time workers employed in jobs created within the past three years want to work longer hours, but are unable to find suitable jobs. According to Adva Institute, in comparison to OECD countries, Israel has three times more part-time workers that seek longer hours.

  • Low workforce participation rate - Relative to OECD countries, Israel has a low workforce participation rate of 69.1%.

The Government of Israel incorporated two concrete socio-economic goals: reduce poverty and increase the employment rate. Policies aimed at developing human capital to meet market demand will support these goals and increase the individual's ability to financially support himself and his family.

Increasing the supply of human capital

  • Developing human capital improves economic security - Acquiring education and training that is relevant to the job market improves an individual's employment opportunities. This often leads to acquiring a better paying job, increasing savings, and ensuring economic security.

  • Developing human capital allows for employment flexibility - Developing new skills and knowledge relevant to the job market, enables a person to apply to a wider variety of jobs.

Increasing the demand for human capital

  • Developing industries with competitive advantages - The economy benefits from policies that increase competitiveness of business sectors, for example by promoting innovation and sophistication in traditional industries. These initiatives create more and higher paying jobs.

  • More demand for full-time jobs - The growth of competitive sectors will increase the demand for human capital. This will raise employment rates and market productivity and will lower the poverty rate.

For further information, see:

Israeli government unites under socio-economic goals

Sources

Sinai, 9/4/2007, Haaretz, Full Article (Hebrew Only)

Sinai, 9/5/2007, Haaretz, Full Article (Hebrew Only)

Levy, 'Mehalev' Welfare to Work Pilot Project, Knesset Research and Information Center, 2007

Swirski and Konor-Attias, Workers, Employers and the Distribution of Israel's National Income - Labor Report: 2006. Adva Center, 2007. (Hebrew Only)