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Standard of living in Israel

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Title: Standard of living in Israel  
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Subject: Economy of Israel, Demographics of Israel, Standard of living, Bituah Leumi, 1985 Israel Economic Stabilization Plan
Collection: Demographics of Israel, Economy of Israel, Israeli People, Standard of Living
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Standard of living in Israel

The standard of living in Israel is high and is constantly improving. As of 2014, Israel ranks 16th among 187 world nations on the UN's Human Development Index, which places it in the category of "Very Highly Developed". Israel also has one of the highest life expectancies at birth in the world. However, Israel still suffers from poverty with roughly 20.5% of Israeli families living below the poverty line in 2008, most of them Israeli Arab and Haredi Jewish families. According to a 2010 study by International Living, Israel has the 47th highest standard of living in the world.[1]


  • History 1
  • Demographics 2
  • In numbers 3
  • Housing 4
  • Health 5
  • Education 6
  • Income distribution 7
  • Poverty 8
  • Infrastructure 9
  • Urban life 10
  • Rural life 11
  • Lifestyle 12
  • See also 13
  • References 14


Following Israel's establishment in 1948 and victory in the 1948 Arab-Israeli War which began immediately afterward, the country was impoverished and lacking in foreign currency reserves. Life was hard, and living standards saw some decline in the first year after independence. Israel had to recover from the effects of the war, and saw a wave of mass Jewish immigration from post-war Europe, as well as Arab and Muslim countries, doubling the Jewish population in three years. The country was financially overwhelmed, and faced a deep economic crisis. As a result, a strict regime of austerity was put in place. Food, furniture, and footwear were heavily rationed. Rationing allowed for a meager 1,600 calories a day, with additional calories for children, the elderly, and pregnant women. Throughout the austerity period, living standards were preserved at tolerable levels, and the regime of strict rationing enabled the Israeli government to ensure that the entire population was adequately fed, clothed, and sheltered.

In 1952, Israel and West Germany signed a reparations agreement. West Germany agreed to pay Israel financial reparations for the Holocaust, ultimately paying over 3 billion marks over a period of 14 years. The agreement went to force in 1953, when the first reparations payments arrived. As a result, most austerity restrictions were lifted that year; some remained in place, and would be gradually lifted throughout the following years. The families receiving the reparations payments saw a considerable increase in their standard of living; on average, they doubled their incomes.[2]

Throughout the 1950s, Israel was heavily reliant on reparations payments from West Germany, and on financial donations from Jews around the world, especially American Jews. Israel used these sources to invest in its infrastructure and in industrial and agricultural development projects, which allowed the country to become economically self-sufficient. Due to this commitment to development in its first two decades of existence, Israel experienced economic growth rates that exceeded 10% annually. Average living standards rose steadily; between 1950 and 1963, the expenditure of an average wage-earner's family rose 97% in real terms.[3] Between 1955 and 1966, per capita consumption in Israel rose by 221,% and in 1963 93% of the population had electricity and 97% had running water.[4]

Israeli historian Tom Segev described the improvement in living conditions during the 1950s due to the rapid development of the country:[5]

The new industrial and agricultural equipment created better conditions for the worker and the farmer. Soon, display windows began showing merchandise long absent; fruits, vegetables, and various food products. People were able to enjoy apples again and spread their bread with butter instead of margarine. Now it was possible to choose from a variety of clothes, shoes, furniture, paper goods, and electrical equipment. The supply did not equal what was available in developed countries, but it was enough to give the impression that the country was finally emerging from austerity... New power stations arrived, and there were fewer electrical outages. People could now have their own telephone lines and travel on railroad cars offering almost European comfort and luxury.

From 1950 to 1976, Israel managed to raise its standard of living threefold. For instance, consumption of animal protein per capita, gr. per day rose from 32.2 to 49.4, while during that same period, the percentage of families owning an electric refrigerator increased from 2.4% to 99.0%. Family ownership of other durables also showed increases. From 1970 to 1976, the percentage of families owning a gas/electric range and oven rose from 5% to 51.8%, and a television set from 49.7% to 89.5%. From 1957 to 1976, the percentage of families owning an electric washing machine rose from 6.9% to 74.6%, and from 1955 to 1976, the percentage of families owning a radio rose from 54.7% to 84.2%. The percentage of families owning a car also increased, from 4.1% in 1962 to 31.2% in 1976.[2]

One aspect of daily life in Israel that set it apart from much of the world for many years was the absence of television, and then of color television. Television was only introduced in 1966, in schools as an educational tool,[6] and regular public transmissions began in 1968. Even then, all television broadcasts were in black and white, at a time when American and European stations were switching to full-scale color transmissions. Color transmissions were initially banned due to fears of social inequality, although ordinary citizens found ways around this ban, and were only gradually introduced around 1980.

In the 1970s, Israeli living standards were comparable with those of some European countries. However, the years following the Yom Kippur War saw stalled economic growth and increased inflation. Economic growth was on average 0.4% annually, and living standards saw minimal growth, and eventually became completely stagnant. This continued into the 1980s; the Israeli economy was in a dire situation following a financial crisis in 1983, and was saved by a 1985 economic stabilization plan which saw market-oriented reforms to Israel's economy, which had previously been heavily regulated.

Despite these reforms, there was no immediate growth in quality of life; by 1989, living standards in Israel had not increased in more than a decade.[7]

In addition to the 1985 stabilization plan, mass Jewish immigration from the former Soviet Union in the 1990s brought many highly educated and skilled immigrants to Israel, and the Israeli government implemented effective macroeconomic policies. As a result, Israel experienced an economic boom, and living standards rose. In 2002, living standards in Israel began climbing rapidly, and the gap between Israel and many other Western nations in quality of life began to narrow.[8]

Israel's living standards have been continuously rising since. In 2006, Israel was rated as having the 23rd-highest quality of life in the world by the United Nations Human Development Index.[9] In 2010, Israel was ranked 15th in quality of life.[10] In 2011, Bank of Israel Governor Stanley Fischer said that Israel had a standard of living two-thirds as high as that of the United States.[8]

In 2011, social justice protests broke out across the country over the high cost of living. In 2012, a report issued by the Taub Center stated that while living standards in Israel were rising, they were rising more slowly than those of other Western countries.[11]

In late 2013, the Israeli government approved a series of measures to lower the country's high cost of living. A law was passed to break up large conglomerates and end economic concentration, so as to encourage economic competition. A new committee was also formed to remove import barriers and lower prices, making them more comparable to prices abroad.[12][13]


According to census, Israel's population is 75.4% Jewish, and 20.5% Arab, predominantly Palestinian, as well as Bedouins and Druze. About 4,000 Armenians and 4,000 Circassians live in Israel. There are smaller numbers of people of Jewish heritage or spouses of Jews, non-Arab Christians, and non-Arab Muslims. 3.7% of people are not classified by religion.[14]

In numbers

Israel was ranked 47 out of 194 nations in the Annual Standard of Living Index published by the International Living Magazine in 2010. This index is produced by a consideration of "nine categories: cost of living, culture and leisure, economy, environment, freedom, health, infrastructure, safety and risk, and climate, and also its editors opinions"[1] Each of these is scored on a scale of 0-100, with 100 marking the highest standard. Israel’s lower scores were for infrastructure (36) cost of living (39), economy (61), environment (68) and safety (71). Its higher scores were for freedom (92), health (85), climate (84), and culture and leisure (83).[1]

Israel was ranked 17th out of 194 nations in the Human Development Index (HDI) 2011 ranking.[15]


Since its establishment, the State of Israel has declared that adequate housing for all residents is a matter of the highest priority. Massive budgets have been invested in solving housing problems, and construction is one of the country's most important industries.[16] Residential construction accounts for a large share of the economy in terms of both investment and product. Nearly half of the state's development budget is earmarked for housing. In 1992, residential construction investment consumed 6.2 percent of the GNP.[16]

Most Israelis live in apartments. According to the Israeli Central Bureau of Statistics, 33% live in three-room apartments, 28% in four-room apartments, and 13% in five-room apartments. CBS statistics also showed that 5% live in one-room apartments, while only 0.6% of Israelis live in a property with eight rooms or more.[17]

In 2006, it was reported that approximately 3,000 Israelis are known to be homeless. According to the Social Affairs Ministry, 70% of homeless people are childless Soviet immigrants and alcoholics, while the remaining 30% are either homeless due to their economic situation, or were mentally unable to live in a home due to irritation with being surrounded by walls and ceilings. The survey also found that every year, 2,000 families are evicted from their apartments following their inability to repay mortgage payments.[18]


Israel has a system of [19] Israel has one of the highest life expectancies at birth in the world, ranking 8 out of 224 nations (2009), with an average life expectancy of 80.73.[20] However, Israel's Arab population has a life expectancy of 75.9 years for males, and 79.7 years for females. Israel's infant mortality rate is also extremely low, with 3.6 per 1,000 live births for Jews, and 8.6 per 1,000 live births for Arabs. Emergency medical services are generally provided by Magen David Adom, Israel's national emergency medical, disaster, ambulance, and blood bank service. In some areas, it is supplemented by Hatzalah and the Palestine Red Crescent Society.

Israel's medical facilities are recognized worldwide for their high standards of health services, top-quality medical resources and research, modern hospital facilities, and an impressive ratio of physicians and specialists to the population. Israeli doctors make [19]


Israel’s educational expenditures comprise 6.9% of its GDP (2004), placing Israel 25th out of 182 on the CIA World Factbook’s country comparison of educational expenditures as a percent of GDP.

23.9% of Israel’s adult population (age 25+) has achieved a low attainment level of education, 33.1% has achieved a medium attainment level of education, and 39.7% has achieved a high attainment level of education. Israel’s literacy rate is 97.1% (2004 est.)[21][22]

Israeli schools are divided into four tracks: public, state-run schools, state-funded yeshivas, Arab schools, and bilingual schools for both Jewish and Arab children. Secondary education prepares students for matriculation exams known as Bagrut. If a student passes, he or she receives a matriculation certificate.

Many Jewish schools in Israel have highly developed special education programs for disabled children, libraries, computers, science laboratories, and film editing studios.[23]

Typically, after a student graduates, he or she will be conscripted into the Israel Defense Forces, Israel Border Police, or Israel Prison Service, although most Arabs are exempt. A student may, however, request to be drafted at a later date to study at a college or university, or a school known as a Mechina, which prepares them for military or national service. Those who study in a university at this stage do so under a contract in which the Army will pay for their Bachelor's degree, but will extend their service by 2–3 years. Universities generally require a number of matriculation units, a certain grade point average, and a good grade on the Psychometric Entrance Test. Israel currently has eight universities, and a number of smaller colleges. According to Webometrics, six Israeli universities are among the top 100 universities in Asia.[24]

Income distribution

In 2008, a study found that the average family income for Israel's Jewish majority was NIS 14,157.(USD $3,795) per month, while the average income for Israel's Arab minority was NIS 8,151 (USD $2,185) per month.[25] In 2012, a similar study showed that more than half of all Israelis earn under 5,812 NIS per month, approximately $1,557.25 USD per month.[26]


Stats of current poverty rates in Israel
Poverty rate in Israel compared to selected countries

While the overall standard of living in Israel is rising, a report published by the National Insurance Institute (NII) indicated that poverty in Israel has not shown a commensurate decline.[27] The majority of the poor are from the Arab minority. Many Ultra-Orthodox Jews also live below the poverty line; a large percentage do not work, devoting their time to religious study, and rely on welfare.

Despite Israel being a highly urbanized western country, its poverty levels are still moderately high in comparison with other developed countries.[28]

During the late 1980s and 1990s, poverty rates in Israel fluctuated (according to one estimate) from 12.8% in 1989 to 18% in 1994, before falling to about 16% in 1997.[29] The report published by the National Insurance Institute (NII) indicates that poverty levels remained relatively stable in 2006-2007. Roughly 20.5% of Israeli families lived below the poverty line in 2008, a slight increase from the previous year’s 20%. Moreover, 24.7% of Israel’s residents and 35.9% of its children lived in impoverished conditions.[27]

Data for the 2006-2007 NII survey indicates that 420,000 [30]), including some 805,000 children. Poverty indicators for families with a single wage-earner have risen from 22.6% during the last NII survey to 23.9% in the current one.[27] According to a March 2011 report by Adalah, over half of all Arab families in Israel lived in poverty.[31] Furthermore, of the 40 towns in Israel with the highest unemployment rates, 36 were Arab towns. The total employment rate for Arabs is 68% of the employment rate for Jews. Druze and Christian Arabs have a higher employment rate than Muslims do. Poverty is also high among Israel's Haredi population, which is isolated from the rest of Israeli society.

Israeli newspaper Haaretz's staff comment: "The report also revealed another harsh reality: More and more Israelis are working, and staying poor regardless."[32]


Israel has 42 designated highways, and an advanced road network which spans over 17,870 kilometers, including over 230 kilometers of highway. Israel Railways is Israel's government-owned railway network, which is responsible for all inter city and suburban passenger railways, and for all freight rail traffic in the country. The network is centered in Israel's densely populated coastal plain, and runs through the entire country. There are also six cable car systems, and 47 airports in Israel, as well as seven seaports. Israel also has 176 kilometers of gas pipelines and 261 kilometers of pipelines for refined products. Buses are the country's main form of public transport, and the country has a popular share taxi service. Jerusalem currently has the country's only tram system - the Jerusalem Light Rail, while a second system, the Tel Aviv Light Rail is currently under construction. Haifa has the country's only subway system - the Carmelit.

Israel has tapped conventional water resources, but relies heavily on reclaimed water treated in the 120 wastewater treatment plants across the country, and desalinated seawater. 57% of water in Israel is for agriculture, 36% for domestic and public use, and 7% for industrial use. Average domestic water consumption in Israel is 250 liters per person per day, which is higher than in most of Europe, but lower than the United States.[33] According to the Ministry of Environment, 97.9% of all tests of water complied with drinking water standards. Israel also has a modern sanitation system, particularly in major Jewish cities and towns. An estimated 500,000 homes in Israel are not linked to a sewage system, the vast majority of them Arab homes, where waste is expelled into cesspits or the environment.[34]

Urban life

Israel is a highly urbanized nation, with 92 percent of its population living in urban areas. To be granted city status, a municipality must have a population of at least 20,000.[35] There are currently 78 cities in Israel, and 14 of them have populations over 100,000. Other urban municipalities are towns. Towns in Israel are given local council status if they have a population over 2,000.[36]

In urban areas, most residential areas are separated from industrial and commercial zones, and there are also numerous, well-tended parks and playgrounds within the city or town limits.[37]

Rural life

Israelis who live in rural areas primarily live on kibbutzim or moshavim. A kibbutz is a collective communities, where the residents work for the benefit of the community. Although many kibbutzim have been privatized, residents typically live communally. Kibbutzim are for the most part self-sufficient, and have their own schools. Most kibbutzim are agricultural, though some have switched to industry.

A moshav is also a collective community, but the land is divided among the residents, who each receive an equal amount, and must grow their own produce. The community is supported by a collective tax, which is equal for all the residents, thus leaving good farmers better off than bad ones.

A moshava is another type of rural agricultural community in Israel, but unlike kibbutzim or moshavim, all the land is privately owned. A moshav shitufi is another type of cooperative village in Israel, where all production and services are handled collectively, while consumption decisions remain the responsibilities of individual households.

cooperative, and can veto the sale of any home or property to an undesirable buyer, typically work outside the town, and must pay only a small property tax to sustain the town and its public facilities. Most homes are single-family homes, although some have apartments. Due to the rigorous selection process when selling property, most residents of a communal settlement share a single shared ideology, religious perspective, desired lifestyle, and some will only accept young couples with children. Other Israelis who live in rural areas live in homes and small communities founded by the Jewish National Fund and located in the Negev.


According to the CBS, 71% of Israelis have a computer at home, and 91% surf the Internet. Statistics also show that that an average Israeli family has 2.1 cell phones.[17]

Some 86.2% of working Israelis are salaried employees, 12.7% are independent, and 1.1% are defined as others. Some 8.5% of Israeli teenagers between the ages of 15 and 18 work. The average Israeli man works 45.2 hours a week, while the average woman works 35.5 hours.[17]

A large number of Israelis also own private cars, though most Israelis still rely on the country's extensive public transportation network. There are about 316 motor vehicles for every 1,000 people in Israel.

Israel enjoys a booming Film Industry. Israeli Television, Internet services, and Israeli Radio provide entertainment, news, and education.

Average Israeli citizens can afford to take vacations abroad. It is also customary for Israeli youths to go on backpacking trips abroad in groups after completing their military service. However, travel options for Israelis are limited compared to citizens of other Western nations, as Israeli passports are widely banned throughout the Arab and Muslim world.[38]

See also


  1. ^ a b c,7340,L-3830832,00.html
  2. ^ a b
  3. ^ The Challenge Of Israel by Misha Louvish
  4. ^ Israel: A History by Anita Shapira
  5. ^ Segev, Tom: The Seventh Million: The Israelis and the Holocaust. (2000, ISBN 0-8050-6660-8)
  6. ^ Good evening from Jerusalem
  7. ^ Israel is a socialist basket case
  8. ^ a b Israel Narrowing Standard of Living Gap with US
  9. ^ UN report: Israel 23rd on quality of life list - Ynetnews
  10. ^ Israel ranked 15th in quality of life - Ynetnews
  11. ^ 'Israel falling behind Western living standards'
  12. ^ Competition committee to fight high cost of living
  13. ^ Finance panel okays plan to end economic concentration
  14. ^ "Israel in Figures 2011".  
  15. ^ "Human Development Index and its components".  
  16. ^ a b Housing policy.(and standard of living assessment)(Statistical Data Included) find articles (undated), accessed 18 August 2008
  17. ^ a b c,7340,L-3884633,00.html
  18. ^,7340,L-3313651,00.html
  19. ^ a b
  20. ^ CIA Country Comparison: Life expectancy at birth®ionCode=me&rank=13#is date accessed: Jan. 14, 2010
  21. ^ CIA World Factbook: Israel date accessed: Jan. 14, 2010
  22. ^ Human Development Report 2009: Illiteracy Rate date accessed: Jan. 14, 2010
  23. ^
  24. ^
  25. ^,7340,L-3850294.html
  26. ^ Lior Dattel (Jul 25, 2012). "Tax data: Half of all Israelis earn under NIS 5,812 a month". Haaretz. Retrieved January 30, 2013. 
  27. ^ a b c ynet ynet (02.14.08, 17:31), accessed 18 August 2008
  28. ^
  29. ^
  30. ^ (02.14.08, 17:31), accessed 18 August 2008
  31. ^
  32. ^ haaretz haaretz (04:51 21 February 2008) date accessed: Jan. 14, 2010
  33. ^
  34. ^
  35. ^ Israeli Democracy – How does it Work?
  36. ^ Troen, Selwyn Ilan; Noah Lucas. Israel: The First Decade of Independence. SUNY Press, p. 496
  37. ^ Looking at Israel- Urban and Rural Life - Israeli Foreign Ministry (2 December 2007)
  38. ^
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