About - Minimizing Poverty - A National Goal |
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The NII serves as an instrument for re-distribution of the national income. The most important social goal the National Insurance Institute has set for itself is to reduce the scope of poverty and the socio-economic gaps in Israel. This goal is achieved by paying benefits to those eligible and providing other services
Alleviating Distress
85% of all benefits provided by the State of Israel to its residents are paid by the National Insurance Institute. The main share of these benefits is paid to financially weak families: approximately 42% of all benefits are paid to families in the lower two deciles and only 9% to those in the upper two deciles.
The benefits help 50% of poor families extricate themselves from poverty, or in other words, raise the income of every other poor family to above the poverty line. Approximately 332,000 families in Israel are under the poverty line even with the benefits. Without the benefits, however, the number of poor families would reach approximately 663,000. The contribution of the benefits to reducing poverty is particularly evident among the elderly: close to 72% of the poor elderly are extricated from poverty thanks to the benefits.
Just Allocation
NII benefits play an important role in a more equitable allocation of the national income. 60% of all national insurance contributions are collected from families in the top two deciles. The distribution of the benefits increases the share of families from the lower deciles in the national pie and decreases the share of the upper deciles, thus contributing to a reduction of the gap between the poor and the wealthy. After payment of benefits and direct taxes, the inequality in income distribution (based on the Gini index) is reduced by 27%. Two-thirds of this reduction is due to the benefits only.
Poverty Rates
Incidence of Poverty among Families, by Family Type, 2004 (percentages)
|
Poverty Rate |
Population Group |
|
After Transfer Payments and Taxes |
Before Transfer Payments and Taxes |
|
20.3 |
33.7 |
Total population |
|
25.1 |
59.2 |
Elderly head of family |
|
24.5 |
31.8 |
Families with Children |
|
18.5 |
25.2 |
Families with1-3 children |
|
54.7 |
64.8 |
Families with 4 or more children |
|
11.4 |
17.6 |
Head of family working |
|
10.8 |
17.5 |
- employee |
|
15.6 |
17.8 |
- self-employed |
|
64.8 |
91.2 |
Non-working (of working age( |
|
20.8 |
32.6 |
Families with one earner |
|
3.3 |
4.7 |
Families with two earners |
|
18.8 |
43.0 |
Immigrants (from 1990( |
|
15.9 |
30.3 |
Jews |
|
49.9 |
57.5 |
Non-Jews |
|
31.4 |
51.9 |
Single mothers |
The Effect of Transfer Payments (Benefits) on the Poverty Rate – 2004
The decrease of the incidence of poverty among families in specific population groups after transfer payments and taxes ( in percentages) is as follows:
|
Decrease in
Poverty Rate (%)
|
Population Group (Families)
|
|
39.8 |
Total population |
|
57.6 |
Elderly head of family |
|
22.5 |
Families with Children |
|
26.9 |
Families with1-3 children |
|
12.3 |
Families with 4 or more children |
|
36.2 |
Head of family working |
|
38.3 |
- employee |
|
12.4 |
- self-employed |
|
28.9 |
Non-working (of working age( |
|
36.2 |
Families with one earner |
|
29.8 |
Families with two earners |
|
56.2 |
Immigrants (from 1990( |
|
47.9 |
Jews |
|
12.3 |
Non-Jews |
|
40.6 |
Single mothers |
The share of each decile* in total transfer payments and direct taxes, general population (percentages), 2003, 2004, July 2004- July 2005:
|
Decile |
Share of Total (percentages) |
|
Direct Taxes |
Transfer Payments |
|
2003 |
2004 |
2004/5 |
2003 |
2004 |
2004/5 |
|
Bottom |
0.7 |
0.8 |
0.8 |
17.1 |
18.0 |
18.6 |
|
2 |
1.0 |
1.0 |
1.1 |
23.9 |
23.6 |
23.5 |
|
3 |
1.2 |
1.2 |
1.3 |
10.7 |
9.9 |
9.9 |
|
4 |
2.0 |
2.0 |
2.0 |
9.7 |
9.3 |
9.5 |
|
5 |
3.1 |
3.2 |
3.2 |
8.6 |
9.1 |
8.9 |
|
6 |
4.6 |
4.7 |
4.6 |
8.1 |
8.0 |
8.4 |
|
7 |
6.8 |
7.0 |
6.9 |
6.8 |
6.8 |
6.8 |
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