The Israeli economy has been suffering from a continuous slump since 1996. One year alone, 2000, saw a spurt of economic activity and that was confined to the hi-tech sector.
The indicator that might best reflect this economic decline, per capita GDP, shows that Israel has slipped from a respectable position among other industrialized countries to one of a lesser status. Unfortunately, this economic downturn has carried with it a marked deterioration in the individual and societal sense of well-being.
The immediate social price has been increased unemployment, which has persisted at a rate of more than ten percent for a longer time than Israel has ever known before. Another effect has been a marked decline in the standard of living.
This year’s annual review of Israel’s social services points to a mixture of achievements and failures. Foremost among the latter are poverty and unequal income distribution.
The Report has not taken an explicit side in the social welfare debate. It is clear, however, that a special effort will be required to maintain the achievements of the Israeli welfare state. Much of the legislation and decisions of the past year serve to undermine the basic premises of the Israeli welfare state, which, with all its drawbacks, has contributed to maintaining social cohesiveness. Even if the current social and economic problems make budget cuts unavoidable, these restraints should be applied with great caution to insure that they do not do more harm than good. To be more precise, unless the government proceeds with caution, the negative effects suffered by a segment of society will exceed the more limited gains for the public at large.