Israel has the highest rate of poverty of all developed countries, according to a report released by the 33-nation Organization for Economic Cooperation and Development (OECD) on Wednesday.

A homeless man lies on a sidewalk – Photo: Marc Israel Sellem

The OECD found that Israel’s poverty rate stands as almost 21%.

It also put Israel at fifth place among countries with the widest gaps between rich and poor, after Chile, Mexico, Turkey and the United States, while Iceland, Slovenia, Norway and Denmark were the most egalitarian societies.

Opposition leader Shelly Yacimovich (Labor) said the report’s findings are a severe warning sign to the government that “just yesterday approved an economic plan that will add many more to poverty.”

“Unfortunately, the economic plan includes things that create poverty instead of solutions to get out of poverty,” Yacimovich said. “Decreasing the rates of poverty is a national goal, that needs to be measured, and we should fight for it. It’s not any less important than inflation or the deficit.”

“These worrying findings underline the need to protect the most vulnerable in society, especially as governments pursue the necessary task of bringing public spending under control,” said OECD Secretary-General Angel Gurría.

He added that governments should not neglect fairness when they craft their policies, especially when they reform their tax systems.

A growing divide between rich and poor risks will yawn still wider if cash-strapped governments keep cutting back the welfare state, the Paris-based think-tank warned.

Weighing into a debate on inequality in developed countries, the OECD said welfare spending had mitigated an increase in the wealth gap that emerged with the 2008-2009 financial crisis, but that was running out.

Excluding social transfers and taxes, income inequality rose more in the three years to the end of 2010 than in the previous 12 years, a report by the Paris-based think-tank found.

“As the economic and especially the jobs crisis persists and fiscal consolidation takes hold, there is a growing risk that the most vulnerable in society will be hit harder as the cost of the crisis increases,” it said.

With many developed countries facing the pinch of austerity, economic inequality has become a hot topic especially after an ECB study last month found that households in many peripheral euro zone countries are on average wealthier than those in the bloc’s core due to higher levels of home ownership.

Long a staunch advocate of free-market reforms shunned by some left-wingers, the OECD has become an increasingly vocal supporter of the welfare state for its capacity to soften the blow of hard economic times.

The study said the pain of the crisis was unevenly spread. Poorer households either lost more income from the recession or benefited less from recovery. Children and young people suffered more than the elderly, whose incomes were relatively immune.

View original Jerusalem Post publication at: http://www.jpost.com/National-News/OECD-Israel-is-poorest-country-in-developed-world-313208