Jerusalem consolidates status as Israel’s capital of poverty

Jerusalem’s relegation to Israel’s second lowest socioeconomic tier is no surprise. The city has been swiftly slipping in the country’s socioeconomic rankings for decades and the government has been mainly engaged in papering over the problems and finding sources of funding for projects that cover up the bitter truth.

But the data cannot be covered up. Israel’s capital is the capital of poverty and the fact is that the haredi (ultra-Orthodox) are among the poorest in the country in economic terms.

The extent of the gap between the desired image and the grim reality of what is happening in the capital was seen last week was seen last week when the envelopes (to be more accurate the envelope) were opened for one of the flagship tenders for the state’s land – three lots for the construction of three towers opposite Jerusalem’s Binyanei Ha’ooma International Conference Center. This is at the core of what will become the new business district at the western entrance to the city with offices, commerce, and housing supported by employment, hotels and tourism, leisure culture, entertainment and recreation, in hundreds of thousands of square meters of new high-rise buildings.

There were big expectations for the tender and consequently a big disappointment. Only one bid was received from a consortium of JLTV Fund, BSR Engineering and Development and Yehuda Rahamim Building Co. That was the first disappointment. The second disappointment was that the price bid of NIS 120 million was only NIS 7 million above the minimum price for bids and half of the appraisers’ assessment that the lots were worth NIS 249.4 million.

Many explanations can be given for the tender’s results. The economic situation deterred developers from embarking on adventurous projects. Banks and investment institutions are becoming more cautious in the projects that they are financing. But even taking into account all the extenuating circumstances, it is hard to believe that such a flagship tender in Tel Aviv would have attracted just one bidder and at half of the appraiser’s valuation.

One way or another, the tender ended the way it did because that is how the private market sees the viability of investing in Jerusalem at the end of 2022.

Gradual decline since the 1990s

If there is a surprise regarding the socioeconomic index it is the swiftness and power of Jerusalem’s decline. In 1995 the Central Bureau of Statistics ranked the city in the country’s fifth socioeconomic tier (ten is the highest and one is the lowest). Jerusalem fell to the fourth tier after 2000 and to the third tier in 2013. In 2015, the city fell further to the second tier but in 2017 managed to clamber back up to the third tier. In 2019, (the latest figure published last week by the Central Bureau of Statistics), Jerusalem again fell to the second lowest socioeconomic tier. The Central Bureau of Statistics occasionally changes the methodology for its calculations but regardless, Jerusalem is in consistent socioeconomic decline.

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The Central Bureau of Statistics measures not only the socioeconomic tier of the cities, but also the individual neighborhoods within the cities. According to this measurement, it turns out that out of about 1,630 neighborhoods measured all over Israel, 115 were ranked in the lowest tier, of which 54 were in Jerusalem (in 1995 only five neighborhoods were in the lowest tier), followed by Bnei Brak with 16 neighborhoods, and Rahat and Modi’in Illit with 9 neighborhoods each in the lowest tier.

Of the six poorest neighborhoods in Israel, three of them are in Jerusalem (south Geula and two neighborhoods near Mea Shearim), two neighborhoods are in Beit Shemesh and one is in Bnei Brak).

The high Haredi birthrate influences the ranking

“What really shocks me in the data is the fact that half of Jerusalem’s residents live in tier 1 neighborhoods,” observes Jerusalem Institute of Policy Research head of data analysis and services Yair Assaf-Shapira. In fact 491,000 Jerusalemites live in the lowest socioeconomic tier.

Assaf-Shapira explains, “One of the reasons that the neighborhoods in East Jerusalem (Arab neighborhoods) are ranked higher than some of the Haredi neighborhoods is the number of children. We see a trend in Arab society both in Israel and East Jerusalem for a smaller number of children.”

The reason for the fall of Jerusalem in the socioeconomic index since 1995, adds Assaf-Shapira, is that the statistics from 27 years ago included the immigration to the city from the 1970s, which was a strong population.

Even the well-to-do neighborhoods are shining less

Nor are the well-to-do neighborhoods, once the domain of university professors and Supreme Court judges, immune to what is happening. Of Jerusalem’s 227 neighborhoods, not a single one is in the top (10) socioeconomic tier. Beit Hakerem, Nayot and Neve Sha’anan are in the ninth tier while Rehavia is in the seventh. In the latest ranking prestigious neighborhoods like Ramat Beit Hakerem, Malkha, Mordot Malkha and Motza Tahtit have fallen from the ninth tier to the eighth.

“Here too demography has a lot to say,” says Assaf-Shapira. “In Nayot and Ramot Denya, there are a lot of families with three children and that lowers their mark, compared with neighborhoods in central Tel Aviv, for example, in which in many instances chouseholds are just two people. But if you examine the number of Jerusalemites living in neighborhoods in high tiers like eight and nine, you will see that it is similar in size to a city like Ness Ziona.”

One way or another, 50,000 residents in strong neighborhoods is not much consolation in a city of 1 million people.

The conclusions that can be drawn from the index are clear. Jerusalem’s decline in the rankings to the second-lowest socioeconomic tier means that it is widening its lag behind the Israeli average and that it has too many poor neighborhoods, while the well-to-do neighborhoods are gradually disappearing. Examining the data clearly indicates that the problem lies mainly in the ultra-orthodox neighborhoods and that the socioeconomic index of these neighborhoods is the lowest in the country, not only compared to other neighborhoods, but even to Arab towns and neighborhoods that are at the lowest socioeconomic levels.

Jerusalem Municipality: The city is in a process of growth

Jerusalem Municipality said in response to the Central Bureau of Statistics socioeconomic rankings: “The report does not reflect the economic and social life of Jerusalem as it is. This is due to the demographic composition of Jerusalem, which is unique and different from other cities, and includes particularly large population groups, leading a unique and different lifestyles. The inclusion (as required) of these groups, within the report, and the creation of an average that reflects the entire report, skews the report extremely downward. Jerusalem is in the midst of a process of flourishing and growth that has not been seen for decades. The results of the revolutionary process will be seen in the reports in the years to come.”

Arab neighborhoods in Jerusalem are on the rise

In many places, the Arab population is in a better place economically than the Haredi population – something that is also reflected in the Central Bureau of Statistics index. Six neighborhoods in Bnei Brak, Jerusalem and Beit Shemesh are poorer than the weakest local Bedouin councils, which are Neve Midbar, Arara, Tel Sheva and Kaspia, while Arab cities and councils such as Baka al-Gharbia, Sakhnin, Deir Hana, Kafr Bara, Devoriya and Jish have risen to higher socioeconomic tiers.

The Arab population, including in East Jerusalem, has cut its birth rate, which according to Assaf-Shapira, improves the ranking of Jerusalem’s Arab neighborhoods. “One of the reasons why the neighborhoods in East Jerusalem are located higher than some of the Haredi neighborhoods is the number of children. We see a trend in the Arab sector, both in Israel and in East Jerusalem, of reducing the number of children. Thus, the average number of children in an East Jerusalem household is three children, while in ultra-Orthodox families it is double.”

Another matter he mentions, although he emphasizes that no data has yet been gathered about it, is higher education among the Arab population, which is progressing faster than the Haredi population.

Another factor that contributes to the improvement of the situation of the Arab communities in Israel is Resolution 922 introduced by the Netanyahu government in 2015, which included economic treatment of a number of factors that affect the socioeconomic situation of the Arab population, especially on employment. Since then the rate of employment in the Arab sector in Israel has increased, as has the average salary – something that is also shown in the Central Bureau of Statistics data.

Published by Globes, Israel business news – en.globes.co.il – on November 28, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.