POVERTY: Israel admitted to OECD

JERUSALEM — The OECD on Wednesday said prospective new member Israel was expected to enjoy healthy 3.8 percent economic growth this year, with a fall in inflation in the near term.
Israeli Prime Minister Benjamin Netanyahu is to formally accept the invitation to join the Organisation for Economic Cooperation and Development at its Paris headquarters on Thursday.
In its outlook released on Wednesday, the organisation forecast a further rise in Israel's gross domestic product (GDP) of 4.2 percent in 2011.
Israel's GDP grew by 0.7 percent in 2009, compared to an OECD average of minus 3.3 percent.
The organisation predicted that the rise in Israeli consumer prices would slow to 1.7 percent in 2010 from 3.3 percent last year, but would speed up again in 2011 with a 2.6 percent increase.
In the late 1970s and early 1980s, Israel was plagued by triple-digit inflation and forced to repeatedly devalue its currency.
Emerging from the doldrums, Israel in 1994 sent observers to the OECD in what was the first step on a long road to membership.
After the invitation was announced on May 10, Netanyahu said joining the group would open up new sources of capital for Israel.
With membership, Israel's status with foreign investment funds switches from an emerging economy to a developed one.
In a special press conference to mark the invitation Netanyahu, said there was also a diplomatic and perceptual dividend for Israel in being recognised for its technological and economic achievements rather than being seen only in the context of its conflict with the Palestinians.
And he pointed out that Israel's accession had been agreed by a consensus of the 31 existing OECD members -- any of which could have cast a veto.
Israel's per capita gross domestic product (GDP) was estimated at 28,400 dollars (23,000 euros) in 2009, which would place it 22nd among the organisation's 31 members.
This is behind Italy but ahead of South Korea, New Zealand, the Czech Republic, Portugal, Slovakia, Hungary, Poland, Chile, Mexico and Turkey.
Netanyahu says Israel's goal is to be in the top 15 countries within a decade.
Unlike most economies, Israel managed to withstand the economic downturn which has been sweeping the global economy, with the OECD praising the government's response to the slump in a report published in January.
Bank of Israel Governor Stanley Fischer said Israel's "conservative and closely supervised banking system" and the absence of mortgage-backed assets in capital markets had cushioned it from the worst of the global economic turmoil.
But there are still many challenges ahead.
By the OECD's definition, 20 percent of Israel's population of 7.6 million currently live below the poverty line -- more than in any member state.
And about 40 percent of people of working age have no jobs, compared to about 33 percent in OECD countries, the organisation reported in January.
This is largely due to cultural traditions among Israel's large Arab and ultra-Orthodox Jewish minorities -- each of which has low participation in the workforce but higher than average birthrates.
"All told, nearly half of children entering primary school belong to one or other of these communities," the OECD said.
"Israel will have to take action on a number of fronts including education, training, childcare, support for jobseekers and working conditions if it is to ensure these children do not inherit their parents? economic disadvantage," the OECD said.
Jerusalem's Taub Center for Social Policy Studies said the current trend must change, or Israel will find it hard to survive.
"In order for tomorrow's adults to be employed 30 years from now, then today's pupils need to receive an education befitting the needs of a modern economy," it said last week.
"This is not the situation today in Israel. The country's level of education in the core curriculum subjects is the lowest among advanced Western countries and among (ultra-Orthodox) and Israeli Arab pupils, it is even lower."
The centre's director, Daniel Ben-David said one benefit of OECD membership would be having to regularly supply economic data which would be published and compared with that of other members.
"It will hold a mirror up to our faces," he told AFP on Tuesday. "Reporters who watch these things will write about our performance and that will put pressure on our policymakers."
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