Israelis struggle with high cost of living

Tuesday, June 21, 2011 |  Ryan Jones

Much has been made in recent years about Israel's economic strength, particularly after the Jewish state emerged less scathed by the global economic downturn than other Western nations.

But Israel's overall economic strength does not mean it is an easy place to survive financially for the average citizen. In fact, it is far more difficult to survive financially in Israel than in America or most European countries.

To drive home that point, a Knesset member last week handed Prime Minister Benjamin Netanyahu a container of cottage cheese as a "costly gift" during a heated parliamentary debate over rising living costs.

The price of cottage cheese, a staple in Israeli homes, has gone up over 40 percent in the past year, and now costs about US $2 for a small container.

And it's not only cottage cheese causing a problem for most Israeli families.

The prices of all staple food products in Israel are skyrocketing; gasoline has cost more than $8 a gallon for over a year now; a new car costs double what is does in the US; and Israelis can pay in the neighborhood of $500,000 for a tiny 2-bedroom apartment in Jerusalem or Tel Aviv, making it nearly impossible for new families to purchase their first home.

While many of the costs Israelis deal with are comparable to prices in Europe and even in some cases in the US, what's not comparable are the monthy household incomes.

Americans living in big cities earn an average of $4,800 a month, while people in Britain and France take home about $4,300 a month.

Israelis earn an average of just $2,500 a month, and the gap between the middle class and lower class in Israel is very large, meaning a great many people make far less than the average.

The high prices coupled with not earning enough to maintain a decent standard of living has sparked something of a popular uprising, with Israelis imposing a rare boycott on several consumer goods, including cottage cheese.

The situation has also kicked off yet another harsh national debate over whether Israel should return fully to its socialist roots, or continue down the path of free market capitalism. Many have argued that it is the current unbalanced mix of socialsim and capitalism that is creating much of the problem, and that Israel needs to set itself firmly on one path or the other.

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