Key Challenges

Declining trust in
political institutions
Overall, Israel performs well in some spheres, but poorly in others. In the period under review, public trust in Israel’s democratic institutions has weakened. Although the declining level of trust in political institutions is not unique to Israel, the current government’s recent attempts to weaken the gatekeepers of Israeli democracy, especially the media, the Supreme Court and the police, are seen as a real democratic danger. In this context, virtually every action and entity in the public sphere is viewed through a political lens. In light of these developments, the current Israeli government should act more responsibly and with greater respect for fundamental democratic practices, strengthening the gatekeepers of Israeli democracy rather than undermining their activities and status.
Poverty requires more targeted approach
The second main challenge is related to the high level of poverty in Israel. For several years, Israel has had the highest poverty rates in the OECD. According to the National Insurance Institute, approximately 1.8 million Israelis were living in poverty in 2016. Disadvantaged groups such as Israeli Arabs, elderly persons and Haredi (ultra-Orthodox) populations experience higher-than-average poverty rates. In line with OECD poverty-reduction recommendations, Israel should increase education funding for Haredi and Israeli Arab schools and increase the basic pension rate without creating work disincentives.
Rising cost of living a serious challenge
A third, serious challenge is the rising cost of living, including rising housing-market prices. Finance Minister Moshe Kahlon promised to combat cost increases during the 2015 election campaign, and as minister he has tried to make a mark through reductions in home prices, food costs and bank fees. However, while some of these plans have moved in a positive direction, others can be regarded primarily as electioneering tactics. Long-term, genuinely strategic plans should instead be made. Lowering home prices is also important to the financial system, as credit for construction and residences comprises more than half of all non-financial-sector private sector loans.
Civil service must be strengthened
Fourth, the Israeli government should strengthen its weakened Civil Service, and work to improve staffers’ capacities. As of December 2017, Israel had had no permanent Civil Service commissioner for six months, though this figure is the most senior official in the government administration, and plays a crucial role in managing the 80,000 government employees. Other top officials have also left the Civil Service in recent years. Separately, the government approved a new jobs law, allowing ministry directors-general to appoint their deputies without tender. The Israeli government should be actively encouraged to strengthen the Civil Service’s human resources, rather than undermining administrative professionalization.
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Lev, Tzvi, “Cost of living higher in Israel than rest of the OECD,” Artuz Sheva, 7.8.2017:

Newman, Marissa, “1.8 million Israelis, 842,000 of them children, under poverty line – report,” The Times of Israel, 6.12.2017:

“Netanyahu Weakening Israel’s Civil Service,” Haaretz, 12.9.2017:

“Where does Israel rank in this years UN Happiness Index report?,” The Jerusalem Post, 20.3.2017:
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