Income gap widened in 2004

Following a respite in 2003, the income gap again widened in 2004, as the country's Gini inequality index rose 2.4 percent to 0.379 from 0.370 the year before, the Central Bureau of Statistics reported Wednesday.

The Gini index has been climbing steadily since 2000, indicating increasing inequality in Israel's economy. Falling 2.2% from 1999 to 2000, as economic equality increased, the index then rose 2% in 2001, 2.8% in 2002, as the income gap widened, and held steady in 2003.

Poorer wage earners took in a smaller percent of total income in 2004 than the previous year, while the wealthier employees earned a bigger chunk, the data showed. The upper tenth of the wage-earning population earned 27.8% of total wages, up from 27.7% in 2003, as the lower tenth's cut fell to 2.3% in 2004 from 2.4% the previous year.

The highest-earning three-tenths of wage earners took in 56.9% in 2004, up from 56.5% in 2003, while the lowest-earning three-tenths saw their part drop to 10.8% from 11.1%, and the middle four-tenths earned 32.3% of wages, down slightly from 32.4% in 2003. The gap among wage-earners therefore resumed its expansion in 2004, having narrowed in 2003.

In response, the Finance Ministry argued that in 2004, Finance Minister Binyamin Netanyahu's tax reform had yet to be implemented in full, including increased welfare payments to the elderly poor. "In 2005, an increase in employment has already been recorded, improving the chances of households without wage earners to improve their condition," the ministry said.

The average Israeli household – with 1.2 breadwinners and 3.3 total individuals – earned NIS 11,220 per month in pre-tax income, and NIS 8,953 after taxes and other compulsory payments (National Insurance and health insurance). Compulsory payments constituted roughly one fifth of total gross income, the CBS said. The standard net income per capita – an accepted index of standard of living – was NIS 3,267 in 2004.

Households led by a wage-earner made NIS 13,613 in gross income – up 2.2% since 2003 – and NIS 10,702 after compulsory payments, while those led by independent workers earned NIS 14,679 – down 1.1% from the year before – and NIS 11,006 after compulsory payments.

Standard net income per capita for wage-earning households (counting 3.7 individuals on average) was NIS 3,621 monthly, and NIS 3,571 in households by an independent worker (with 3.9 members on average). In both groups, the average household included 1.7 breadwinners.

While the average individual wage earner made NIS 6,972 monthly, wages earned ranged from NIS 3,454 for unskilled workers, NIS 4,377 for skilled agricultural workers, and NIS 4,539 monthly for sales agents and service providers, to NIS 11,069 for university-trained professionals and NIS 14,535 for managerial staff, on average. In the middle range, skilled industrial and construction workers earned NIS 6,002 monthly, clerical staff NIS 6,107 and professionals in the free trades and technical fields NIS 7,124.
NB for non-Xaxamians: Today 4.5 NIS approx. 1 USD.