The Secretary-General of the Organisation of Economic Cooperation and Development (OECD), Mr. Angel Gurria, recently visited Israel as part of Israel’s application process to join the organisation. During his visit he issued a report regarding the current state of Israel’s economy, and improvements that need to be made to bring Israel into line with other OECD member nations.

I was very surprised to discover that, when Israel joins the OECD, it will be the poorest member country of the OECD. A statistic that was quoted is that 20% of Israel’s population is more than twice as poor as the average citizen of the OECD. For me, these statistics were surprising and somewhat frightening. I have always viewed Israel as an economically developed country. Israel has an average GDP (Gross Domestic Product) per capita of more than $28,000 per year which places it 36th on a list of over 200 countries around the world. Somehow, this does not seem the same country that will be the poorest in the OECD when Israel is admitted, hopefully later this year.

This seeming inconsistency has forced me to think a little more about the Israeli economic reality. There can be no doubt that, economically, Israel has produced a miracle in achieving all that it has in the short space of 62 years since independence. In 1948, Israel was a backward, small, underdeveloped country with no economy to speak of. It was reliant upon funding from the Jewish Diaspora and other sources of income from abroad for even the most basic requirements. During the last 62 years , Israel has developed a sophisticated banking and economic infrastructure including sectors and companies that are at the leading edge of their respective fields, and highly sought after around the world. All of this has been achieved while being forced to spend tens, and even hundreds of millions of Dollars on defence and security just to keep the state alive.

On the other hand, there are many in Israel who find making a living an impossible task. The fact that more than half of the work force is paid less than NIS 4,000 (a little more than US$1,000) per month is a frightening statistic. In certain social segments, more than 60% of citizens are living below the poverty line. These are numbers that cannot, and should not, be tolerated in a developed modern society. So even if the average GDP is highly respectable, this average hides a very nasty and important piece of information which is size of the gap between the rich and poor. It is true that the gap between rich and poor is expanding in most countries, and Israel is no exception. The problem is that Israel seems to have a much wider gap, and a much more urgent need to address the problem.

It is a well-known fact that making a living in Israel is harder than in many other countries. This is partially because of the Middle Eastern culture which is very obvious in the business and work environment. Things that are taken for granted in the western countries, from which many of us hail, are not necessarily regarded as normal behaviour in Israel. Add to that the highly bureaucratic way of doing things and the fact that each and every action requires lengthy negotiations and explanations, to contribute to a highly frustrating atmosphere. The punitive tax regime is also well-known, with Israel appearing 34th on a list of those countries having the highest tax burdens. The defence spending, it seems, is being financed by the average worker. A joke which is often told by new immigrants to Israel turns out to be true: How do you make a small fortune in Israel? Arrive with a big fortune !

The thing that bothers me most about the financial hardships suffered by many Israelis, is the fact that Israelis are not generally lazy people. Most of those struggling to make a living are employed, sometimes even working more than one job. The problem is that employees are often not earning a living wage, even to live at a very basic level. The cost of living in Israel is much higher than the average person can afford. Tel Aviv is the 17th most expensive city in which to live in the world according to the Economist Intelligence Unit’s 2009 Cost of Living Survey. This effectively makes Israel a country of working poor.

One of the criticisms of Israel mentioned by the Gurria report, is corruption. Although Gurria refers specifically to the arms and weapons industry in which Israeli companies are very active, the truth is that corruption in Israel goes a great deal further than this. Israel is a small environment where everybody knows everybody, and those who have the right contacts and know the right people seem to be the ones who make a better living. The ordinary man in the street, who works a hard and honest day, does not always seem to come out with enough money to live on. So those with the connections get richer, and those without connections get poorer. This is endemic in Israeli society from the top down. Many well-known politicians and leaders of business and industry have been proved to be acting in a dishonest manner for the purpose of enriching themselves. On many occasions, these individuals are well-off to begin with, so their corrupt behaviour seems difficult to justify. Behaviours and business practices which would never be acceptable in other countries, seem to be absolutely normal in Israel. The corruption and mutual back-scratching that goes on at the upper echelons of society, seem to come at the expense of the ordinary man, whose only objective is to make enough to feed his family.

Despite the financial hardships that plague many people, Israeli society is a surprisingly happy and positive place to live in. The advantages of living in a Jewish environment seem to outweigh the disadvantages for many people. To survive, people show a level of flexibility that appears unparalleled elsewhere. This is epitomised by the Russian immigrants who arrived in Israel with very high levels of training in fields which could not be put to use upon arrival. There were too many scientists, doctors and musicians to employ in a country the size of Israel. So those who could not find jobs in their fields became cleaners, supermarket shelf-packers and anything else that they could find. Many people with second jobs are also working in their spare time on a pet project that they hope will be the next big thing in the Internet or high-tech field. There are numerous non-profit organisations out there helping to make life easier for as many families as they can help. Although this should not be necessary in a country like Israel, it is uplifting that there are so many who go out of their way to help others enjoy an easier life. The proof is in the result, which shows many Israelis returning to live in Israel from abroad, and many new immigrants continuing to make Israel their new home.

The benefits for Israel of joining the OECD have been presented as greater international acceptance, and involvement with a respected international organisation. It is my hope that membership of the OECD may go further, and somehow help the ordinary Israeli. In order for this to happen, institutional corruption needs to be rooted out of Israeli society. In addition, the amount that people earn for a hard day’s work needs to be sufficient to allow an average family to live on. When this happens, Israel will make the real economic progress that is so badly needed to add even more to the quality of Israeli society.