The Rising Cost of Living in Israel

By:Melissa

It’s not cheap to live in Israel. While Israel is one of the most technologically advanced societies in the Western world, it is also one of the most expensive; the lack of market competition and monopolies produced by a handful of companies are increasing the gap between the wealthy and the poor, causing Israel’s Middle Class to slowly disappear. An unusually low minimum wage, stagnant salaries, ever-increasing costs for food & services, and high taxes are choking Israel’s average citizen, and it doesn’t look like it’s going to get better any time soon.

Compared to the United States and Europe, the price of consumer goods and services is approximately double in Israel. Food products alone can cost anywhere from two to three times as much as in other Western countries. Owning a car in Israel can cost six times as much as one’s salary! And let’s not fail to remember that all goods and services come with a 16% VAT (Value Added Tax), causing even the most moderately priced item to become suddenly expensive. This wouldn’t be so problematic if the average salary was enough to compensate for such high costs, but the sad fact is that the average monthly salary is only $2,500, or $3,400 for a two-income household.

So, how do Israelis survive amid such grim numbers? They live on borrowed money – everything in Israel, from cars to vacations to groceries can be paid in monthly installments. Gone are the days when one could actually pay cash for anything; Israelis are swimming in monthly debt just to buy groceries and pay their utility bills. While this may seem irresponsible, it is for many, the only way to survive.

The two most problematic expenses in Israel are housing and food. Housing prices are expected to go up amid a shortage of viable housing, increased immigration to Israel, and wealthy tourists who purchase apartments throughout the country, only to leave them empty most of the year. Two-bedroom apartments alone can cost upwards of $400,000 in Jerusalem and Tel Aviv, which are the most popular (and expensive) areas to live in Israel. Similar apartments in other less-popular cities like Be’er Sheva, Afula, and Haifa can cost anywhere between $150,000 to $250,000. And these aren’t big units, either. The average size of a 2-3 bedroom apartment in Israel is 100sq meters (1,000 sq ft). In short, as Daniel Doron wrote in his article for the Wall Street Journal, “A small apartment can cost the average Israeli worker 12 years in annual salary.” (WSJ, August 3, 2011) And that’s only if he can come up with the 40% cash for the down payment, as required by all banks in Israel…

Skyrocketing food costs are due in large part to the fact that a handful of companies own the various food products found in Israel. Israel does not import much; most of what you buy in the grocery stores in Israel has been produced in Israel. The lack of competition in the marketplace, however, means that Israelis’ hands are tied when it comes to buying food; we really don’t have much choice between the three brands of cottage cheese, as they are all very similar in price (and expensive at that). Here are just a few examples of what Israelis pay for some common food products: 8-oz cottage cheese costs $1.68, 1lb of hummus costs $4.54, and a 2-Liter carton of Israeli-produced Orange Juice costs roughly $6.54! These prices do not reflect the recent 1% increase across the board of prices on goods and service in Israel, either.

Aside from housing and food, the cost of owning and maintaining an automobile is downright decadent. A new car is heavily taxed, which translates to a high sticker price. This means that a Honda Civic, for example, which would sell for around $16,000 in the USA would cost $33,000 in Israel. The gas required to make the car run costs a whopping $8/gallon! The car insurance required to cover that Honda does not run cheap, either.

Thankfully, Israel’s universal healthcare and government subsidized education system – from preschool to University – help to alleviate the burden of these high costs. Otherwise, the prospect of progress in Israeli society would be utterly out of reach entirely.

The work of non-profit organizations and ministries that help Israelis in need is crucial. In fact, many Israelis would starve or be homeless if it weren’t for the generosity of these organizations to feed and help them pay their basic bills. It’s not an issue of people living beyond their means anymore; people simply cannot meet their families’ basic needs due to reasons totally beyond their control.

The future stability of Israeli society is very much at stake. Yet, we know that we do not need to simply stand by and watch it happen helplessly. As people of faith in Messiah Yeshua, we can be proactive in two ways: pray fervently for God’s provision for Israel, and to give generously to those organizations, which act as His hands and feet to bless those in need.

Prayer Points:

• Please pray that God will continue to miraculously provide for and meet the needs of families in Israel who struggle to make ends meet.
• Please pray that the government will be more active in supporting a market-based competition and give incentives to companies to do the same.
• Please pray that organizations like Hope for Israel who support people in need will receive the necessary funds to continue to bless the poor.
• Lastly, please pray that all Israel will recognize her need to rely on Him alone for their daily bread.

“Then the King will say to those on his right, ‘Come, you who are blessed by my Father; take your inheritance, the kingdom prepared for you since the creation of the world. For I was hungry and you gave me something to eat, I was thirsty and you gave me something to drink, I was a stranger and you invited me in, I needed clothes and you clothed me, I was sick and you looked after me, I was in prison and you came to visit me.’” Matthew 25:34-36