Bank of Israel Report on the socioeconomic impact of the COV...

Bank of Israel Report on the socioeconomic impact of the COVID-19 crisis on Arab society

April 27, 2021

Bank-of-IsraelAs part of its 2020 annual report, the Bank of Israel conducted an in-depth review of the socioeconomic impact of the COVID-19 crisis on Arab society as part of the welfare chapter (pages 241-263 in Hebrew). They examined the impact of the pandemic on financial security, food security, and education. Their findings indicate that Arab citizens of Israel faced significant challenges across these areas and were overall more severely impacted by the pandemic than Jewish citizens. Comparing current data with the Central Bureau of Statistics 2018 Household Expenditure Survey, the report concludes that longstanding under and unemployment, and poverty in Arab communities led to decreased preparedness and resilience among Arab communities faced with a prolonged and unexpected crisis. 

The Bank of Israel referenced data from Civil Strength During the COVID-19 Pandemic, a survey conducted by the Central Bureau of Statistics in November 2020. Key findings on Arab society include: 

  • 54% of Arabs reported that their financial situation became worse during the pandemic compared to 42% of Jews. 

  • 17% of Arabs reported that their financial situation became significantly worse during the pandemic, nearly three times that of Jews. 

  • 26% of Arabs reported they had to decrease their food consumption compared to 14% of Jews. 

  • Families with children and households with adults who did not receive formal education had the most acute food insecurity.  

  • Both households that faced unemployment and household that experienced cuts to wages and work hours experienced financial and food insecurity.  

Additionally, the shutdown of physical schools and academic institutions harmed Arab young adults’ well-being and education: 

  • Only 30% of Arab families had adequate internet infrastructure for remote learning compared to 75% of Jewish (non-Haredi) families.  

  • 41% of Arab parents reported that their children did not regularly participate in remote learning, and 15% reported that there were not remote learning options. 

  • An estimated 85% of Arab children did not go back to school once in-person schooling reopened in Israel because Arab schools did not have the physical capacity or infrastructure to meet Ministry of Health guidelines. 

  • Regarding higher education, 35% of Arab students reported that the internet infrastructure in their hometown did not allow them to sustain a regular academic routine compared to 12% of Jewish students. 31% of Arab students had a personal computer 83% of Jewish students. 

The report identified numerous reasons why Arab households were more vulnerable to economic crises during the COVID-19 pandemic than Jewish households, most anchored in long-standing gaps. First, Arab society has higher unemployment than Jewish society; those with jobs on average have lower wages than Jewish citizens. Because Arab citizens often hold low-wage jobs and 71% of households only have a single breadwinner, many families did not have savings available for a rainy day. According to a 2018 survey from the Central Bureau of Statistics, 40% of Arab households reported that they are in debt, compared to only 10% of Jewish households. Only 11% of Arab households reported that they can save some of their income compared to 38% of Jewish families. 

Additionally, many Arab citizens hold seasonal or temporary jobs: in 2016, 56% of Arab workers reported being employed without a contract or through a temporary staffing agency compared to 26% of Jewish workers. These jobs are unpredictable and vulnerable to a volatile market, limiting the ability of workers to develop a stable income stream or engage in long-term financial planning. Many temporary or seasonal jobs were among the first lost during the COVID-19 crisis.  

On top of these vulnerabilities, Arab households have less access to loans and credit: 12% of Arab households do not have a bank account and 6% of Arab bank accounts are frozen. These families also faced trouble receiving governmental financial aid which is normally wired directly to bank accounts. Lack of access to financial instruments is widely considered a major contributor to the rise in violent crime in Arab society over this period.  

Due to the high number of COVID-19 cases and deaths within Arab communities, and the strong impact that the crisis had on the economy in Arab communities and individual households’ wellbeing, Arab society is likely to experience a slow and challenging recovery from COVID-19.  

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