OECD urges Israel to fight unemployment among Arab, ultra-Orthodox citizens

Secretary-General of the Organization for Economic Cooperation and Development (OECD) Angel Gurria urged Sunday the Israeli government to promote employment among the country's Arab and ultra-Orthodox citizens "Israel's economy is in a good shape with strong growth and historical low-level unemployment," Gurria said in a business conference in Tel Aviv in which he presented Israeli Finance Minister Yair Lapid the OECD's economic survey of Israel. "But there's still a lot of work to be done in order to bridge the gap in living standards compared with other leading countries," he added. Gurria said the gap especially stem from high poverty rates among the country's Arabs and ultra-Orthodox, which represent about a quarter of the population. Despite the continuing economic growth, projected to reach 3.7 percent this year, Israel has the highest poverty rates among the OECD countries, Guirra said. The incomes of about one in five Israeli households drop below the poverty line, and the poverty rate is over one in two among Arabs and the rapidly growing ultra- orthodox Jewish community. The survey attributes the phenomenon mainly "to low employment rates among Arab women and ultra-orthodox men, which are far below those of the rest of the population." "Israeli Arabs and ultra-Orthodox remain outside the mainstream of the benefits, and the main problem is with Arab women," Gurria said, adding that almost 80 percent of the Jewish women are employed, while merely 29 percent of Arab women are employed. Gurria said in order to improve employment rates, Israel should improve its educational standards that would lead to better earning capacities. On the fiscal front, the OECD warns that Israel should take required measures to raise its revenue, particularly beyond 2014, to meet its deficit control target. The survey also encourages Israel to prioritize environmental taxes, and if needed, to raise the rate of VAT rather than income-tax and corporate-tax rates, which are already among the highest in the OECD members.