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Ex-Bank of Israel official slams Netanyahu's economic policies
By Motti Bassok, Haaretz Correspondent

"Benjamin Netanyahu was wrong. Most poor people work. The welfare cuts actually retard economic growth. More and more poor people are becoming paupers," said Professor Zvi Zussman, former Bank of Israel Deputy Governor.

In a public forum on the war on poverty, Zussman said, "The origin of poverty in Israel is the job market, which has demonstrated, over the past 20 years, growing gaps that have increased the number of poor wage earners. The gaps in the job market in Israel have reached a very high level also in comparison to other countries. Therefore, treating the job market is the foundation of and the key to rescuing many citizens from below the poverty line. This must be done through decreasing the number of low wage earners on the market."

Zussman also said the job market creates social gaps and poverty because of changes in technology that enhance the demand for educated workers while weakening the bargaining power of unskilled workers. Gaps also stem from the increase in the import of foreign workers, the reduction in the influence of labor unions, the rise in unemployment rates among uneducated members of society and inequality in education.


From 1990 to 2004, 977,000 people dropped below the poverty line, Zussman, citing tax figures, said. He added that a large portion of this number comes from wage earning families, which are slipping downwards from the poverty line due to income gaps in the job market. He pointed to a process of proletarianization of poverty and a proletariat of 'foot-dragging.'

Zussman also said: "It is not a poverty of bums and not necessarily of part time workers. More than half of those below the poverty line work full time. The problem is that 67 percent of wage earners in poor families are low wage earners."

There is a need to allocate state services to protect weaker workers, Zussman prescribed, adding that the minimum wage must be raised so that a single wage earner in a family of four will step out of poverty. Unemployment benefits must also be raised, he said.

The public forum acts in cooperation with Friedrich-Ebert-Stiftung, a private non-profit German organization. The forum consists of MKs, public officials and economists.

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