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Troubling Figures

Middle class. Quite different from prevailing image (illustration) Photo: Shutterstock
Middle class. Quite different from prevailing image (illustration) Photo: Shutterstock
 
Social protest of summer of 2011. Who stands to gain from election results? Photo: EPA
Social protest of summer of 2011. Who stands to gain from election results? Photo: EPA
 
 

Report: Israel's middle class shrinking

Adva Center research shows middle stratum's share of income has declined from 24.7% in 1992 to 21.3% in 2010. Israel's middle class now resembles more closely sociological characteristics attributed to working class in West, study's authors note

Avital Lahav
Published: 01.28.13, 14:28 / Israel Business

The phrase "middle class" was the star of the recent Knesset election campaign, as many politicians claimed to speak on the class' behalf, vowing to put its interests before any other if elected.

 

A new study on the state of the middle stratum in Israel, published by the Adva Center, may come as a surprise to those new "messengers" of the middle class.

 

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Those who think, for example, that the middle class stands to benefit from cuts in the public sector, should take a look at the following figure: About 30% of household heads in the middle stratum (defined by international convention as households whose income is between 75-125%) worked in public services in 2010.


שביתת האחיות. לא כולם ירוויחו מהקיצוץ (צילום: גיל יוחנן  )

Nurses' strike. Not everyone stands to gain from cuts (Photo: Gil Yohanan)

 

These include government employees, hospital workers, welfare services workers, local authority workers and workers of the voluntary sector. They are all workers whose economic situation could be negatively affected by budget cuts, especially if accompanied by wage cuts or employee downsizing.

 

While the public sector is seen as a clear stronghold of the middle class, it's hard to point to a certain profession dominated by this class. In contrast, academic and administrative professions are characteristic of the top stratum (60% and 74%, respectively), while members of the lower class make up 62% of non-skilled workers and about 46% of salespeople and service providers.

 

The Adva Center is a "non-partisan policy analysis institute whose mandate is to examine Israeli society from the perspective of equality and social justice.

 

"Adva's studies of Israeli society present critical analyses of public policy in the areas of budgets, taxation and social services – education, health, housing, social security and welfare and transportation – including their implications for Israeli society as a whole and for each of its major social groups."

 

More salespeople, fewer farmers

A comparison to the situation in 1992 reveals a change in the most common vocations of household heads in the middle stratum, following a general change in the Israeli labor market.

 

In 1992, only 6.2% of household heads in the middle class worked as sales and service personnel, while in 2010 the percentage of workers in this industry reached 20.7% of the middle stratum.

 

At the same time, a dramatic drop was recorded in the percentage of manufacturing and agriculture workers in the middle class, from 50.1% in 1992 to 24.3% in 2010.

 

This change points to a general reduction in the number of workplaces and drop in employment conditions in manufacturing and agriculture, as a result of growing international competition in these fields and the relocation of the manufacturing centers to Southeast Asian countries.

 

On the other hand, the past two decades saw an increase in the demand for sales agents and service personnel in the cellular phone and Internet industries. This trend led to the disappearance of one of the most outstanding historical characteristics of the Israeli middle class – being the class of skilled manufacturing and agriculture workers.


מוקד שירות לקוחות של פלאפון. ענף חדש וצומח

Pelephone call center. New growing industry

 

This phenomenon should also arouse the curiosity of decision makers who claim to care for the middle class, which has an increasing number of household heads working in relatively young industries, lacking job security or any support relationship with the government – as opposed to the manufacturing and agriculture industries, where the government is involved in a variety of ways, from manufacturing and price supervision to employment training and subsidies.

 

No longer just 'Ashkenazi'

Those who speak on behalf of the middle class are usually accused of appealing to Ashkenazi Jews. The Adva Center's new study refutes this claim, showing that there has been a significant change in the links between ethnic origin and economic status in the past two decades.

 

During the period examined, one of the most outstanding changes was the increase of the share of households headed by new immigrants from the former Soviet Union in the middle and upper stratums, while their share in the lower stratum declined.

 

In 1992, 56.7% of immigrants were found in the lower class, 32.7% in the middle class, and only 10.6% in the upper class. In 2010, only 38.7% of new immigrants belonged to the lower class, 34% to the middle class, and 27.2% to the upper class.

 

At the same time, the absorption difficulties of immigrants who arrived in Israel in the 1950s from Islamic countries are no longer affecting the economic situation of their offspring.

 

In the past two decades, the share of households headed by second-generation Mizrahi Jews in the upper stratum jumped from 24.9% to 45.3%. Accordingly, the share of Mizrahi Jews belonging to the middle and lower stratums declined.

 

On the other hand, the share of households headed by Ashkenazi Jews whose parents immigrated from North America and Europe has increased in the middle class and fallen in both the lower and upper class.

 

The only two ethnic groups which experienced a drop in the number of households belonging to the middle and upper class, alongside an increase in the number of households belonging to the lower class are the veteran groups – Jews whose parents were born in Israel and Arabs.

 

The percentage of Jews whose parents were born in Israel who belong to the lower class increased from 31% in 1992 to 33.7% in 2010, and the number of Israeli Arabs who belong to the lower class increased from 56.4% to 64% of the population.

 

While among Jews the shrinking of the middle stratum was accompanied by an enlargement of the upper stratum and a closing of the gaps between the veteran population and immigrant populations, among Arabs it was accompanied by a clear drop in their economic status and an enlargement of the lower stratum.

 

In addition, the comparison between veterans and immigrants based on income from work only may be misleading, the research authors note. This comparison does not refer to accumulated assets, especially real estate.

 

A citizen whose parents were born in Israel may earn less than a citizen whose parents immigrated from another country, but his economic situation will be better if he inherited property from his parents or if they helped him buy an apartment.

 

Middle class or working class?

Whether politicians claiming to represent the middle class take these figures into account or not, they will find it difficult to ignore one figure: The Israeli middle class is shrinking and its share of income is declining.

 

The size of households whose income is between 75-125% (the middle class) shrunk from 30.8% to 27.8% of households between 1992-2010, while Israel is defined to begin with as having a very small middle stratum, especially compared to a liberal democracy.

 

In Scandinavian countries more than 60% of households belong to the middle class, and in northern and central European countries – around 50%. In southern Europe, Australia, Britain and Ireland the middle class makes up more than 40% of the population.

 

The size of the Israeli middle class is similar to its size in countries like Russia, the United States, Mexico and Brazil.

 

But the size of the middle class is not the only thing that's shrinking; so is its income. The middle class' share of income has declined in the past two decades from 24.7% in 1992 to 21.3% in 2010. The drop in income is also reflected in a decline in property ownership.

 

According to the report's authors, "The middle stratum in Israel is quite different from the prevailing image of the middle class to be found in literature, sociology and the Western mass media. It resembles more closely the sociological characteristics attributed in the west to the working class."

 

 

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