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Rich Man, Poor Man
Israel's booming trickle-up economy is widug the
gap between the haves and the have-nots.
LARRY DERFNER ISRAEL CORRESPONDENT
NOVI VILLAGE RETIREMENT COMMUNITY
"The Peace of Mind You and Your Family Deserve!"
y most measures, the Is-
raeli economy continues to
rocket along. Inflation is
running at an annual rate
of 8 to 9 percent, the lowest in
more than a quarter-century. Un-
employment stands just above 7
percent, down from more than 11
percent at the end of 1992. There
is a nationwide construction
boom going on, people are buying
yuppie jeeps for $50,000 (with
about 60 percent of the cost go-
ing to taxes), roller blades for up
to $500 and Haagen-Dazs for
nearly $7 a pint.
Yet all this wealth and pros-
perity is not trickling down; it is
trickling up. The Bureau of Sta-
tistics reported in July that the
gap between rich and poor in-
business is on the left end of the
national political spectrum, main-
ly because peace with the Arabs
is good for business.
But when it comes to econom-
ics, Israeli business is solidly con-
servative, and the Labor Party
has shifted accordingly. A few re-
maining economic liberals are
trying to raise Israel's minimum
wage law, but Mr. Rabin, Mr.
Shochat and their business allies
are utterly unsympathetic.
The law requires employers to
pay workers at least $590 a
month, or 45 percent of the av-
erage wage. Yet according to Is-
rael's National Insurance
Institute (the equivalent of the
U.S. Social. Security Administra-
tion), some 20 percent of em-
creased substantially in 1994.
The average income of the rich-
est tenth of the population was
11.6 times higher than that of the
poorest tenth; in 1993 the multi-
plier had been 9.4. Israel is be-
lieved to have the second widest
income disparity of any country
in the industrialized world, after
the United States.
Managers' salaries went up
last year by 15 percent, scientists
and academics by 8.3 percent.
But at the bottom end of the work
scale, unskilled laborers saw their
income diminish by 7 percent.
The Labor Party, which once
stood for economic equality, is do-
ing little to reverse this trend. In
fact, Prime Minister Yitzhak Ra-
bin and Finance Minister Avra-
ham Shochat are fighting back
attempts at progressive change
in the economy.
The party leadership no longer
identifies with the Histadrut na-
tional union, but rather with the
chiefs of the business sector. Un-
like in most countries, Israeli big
ployees earn less than the legal
minimum. Enforcement of the
law is virtually nonexistent.
"Israelis in menial jobs are will-
ing to work for just about any
salary, in large part because they
are in competition with so many
foreign workers and Palestinians
who take those jobs for very low
wages," said Labor Knesset mem-
ber Rafi Elul, chairman of the
Knesset's Social Caucus. The hard-
est-hit Israeli's are new immi-
grants and Israeli Arabs, he noted.
At a recent party discussion of
the issue, Mr. Rabin invited his
friend Dan Propper, head of the
giant food company, Osem, and
president of the Israel Industri-
alists Association, to argue
against raising the legal mini-
mum from 45 percent to 50 per-
cent of the average wage, as the
Social Caucus demands.
Mr. Propper gave-the classic
businessman's warning against
higher wages, saying they would
force many companies to fire
masses of workers, or even to fold.
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