Anyone who wants to know something about Israeli politics and the quality of public debate on social and economic issues should connect two recent reports about Israel with the statements made by ministers and the headlines in the media. The two reports are by OECD on poverty and by the State Revenues Administration.
The OECD report states a sharp rise in the prevalence of poverty in Israel, which reached 21% in 2010. The second report described the widening gap in employee income and that half of employees do not meet the income tax threshold. If anyone thought that these reports would make an impression on the politicians, especially ministers, he is sadly mistaken. Instead of a deep and wide-ranging public debate on the findings, we received a string of battle cries against the ports' workers. According to Israel's ministers, if Israel had a private port, the power of the workers committees would be curtailed, and the problems of poverty and social gaps would be solved. The more zealous add another condition: economic harm to the haredi (ultra-orthodox) and Arab communities.
Reading the reports results in a conclusion that "Globes" has already noted several times: Israel's problem is not strong unions operating in the economy. Israel's problem is that there are poor workers, in part because of the lack of organized labor among them. Israel's problem is not workers who block competition, but a labor market which both perpetuates poverty and perpetuates wealth. Moreover, as a result of the struggles waged by mid-level and low-level wage-earners, it is possible to assume that although those who espouse the cause of competition talk about the ports' workers committees, they are really trying to prevent unionization of labor in general.
According to the State Revenues Administration's report, 3% of Israeli employees earn more than NIS 35,000 a month. It can be assumed that these are the workers targeted by the pathos-ridden headlines which talk about "special interests". In other words, Israel's problem lies with these 3% of workers who are guilty for the condition of the country's other employees. What is the "ports reform" supposed to achieve in this regard? Will a reduction in the number of employees earning NIS 35,000-50,000 a month be the basis for increasing equality and reducing poverty?
Israel's problem is not a small group of ports' workers who earn tens of thousands of shekels a month; Israel's problem is that its labor market is divided into two rigid segments, with no transition between them. One segment is characterized by workers with specialized and unique skills who earn high salaries and who switch jobs voluntarily. The second segment, which includes most workers, is characterized by employees with general skills, which can be quickly and easily replaced, and low to mid-level salaries.
The State Revenues Administration's report took a snapshot of this reality, and revealed the dimensions of the two segments.
If it were possible to monitor workers in the two segments over a period of years, we would almost certainly discover that the border between them has become far more rigid in recent years. Almost everyone born into the lower segment will live their all their lives, and the chances that their children and grandchildren will live there too is growing. The "ports reform" and/or increasing competition in the economy cannot solve this phenomenon. When there is an overlap between the sector in which a person is found in the labor market and the quality of social services he or she receives, the education received by their children, the chances of accumulating savings, the environment in which he lives - talk about "increasing competition" is like a cup of water to a dead man.
Increasing competition is a worthy goal, for which efforts should be made. But in the current circumstances of Israeli society, most of the fruits of "increased competition" will accrue to the stronger and richer parts of society.
Published by Globes [online], Israel business news - www.globes-online.com - on May 21, 2013
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