Israel’s Families Sinking in Debt: Inflation Crushes Wage Hopes
Inflation in Israel is outstripping wage increases, plunging families into debt and exacerbating poverty, with 2.76 million people affected, including vulnerable children and elderly. Despite tech sector gains, rising costs and limited job growth for locals highlight a growing economic divide.
Israel’s booming tech sector and “Startup Nation” reputation mask a grim reality for many families grappling with soaring costs and stagnant wages. In June 2025, the Central Bureau of Statistics reported an average monthly wage of NIS 14,201, a modest 2.5% rise from the previous year, but inflation, running at 3.3%, erased these gains, leaving families struggling to afford basics. Employment figures show 4.32 million salaried jobs, up 0.9% year-over-year but down 0.6% from May, with growth driven by foreign workers rather than Israelis, whose job count held steady at 4.1 million.
Tech workers fared better, earning an average of NIS 31,366 in May, a 5.8% increase that outpaced the 3.1% inflation rate that month, though below March’s peak of NIS 36,700. The sector, employing 399,800 or 9.7% of the workforce, remains a bright spot amid a broader economic squeeze. However, Latet’s 2024 poverty report paints a dire picture: 2.76 million Israelis, including 678,200 families and 1.24 million children, live in poverty. A family of four needs NIS 13,617 monthly for basic survival, a 6.9% increase adding NIS 10,500 annually, while middle-class households require NIS 22,181.
For aid-dependent families, expenses averaging NIS 10,367 far exceed their NIS 6,092 income, with 78.8% mired in debt. Children suffer profoundly, with 44.6% showing academic decline, triple the rate of peers, and 48% facing mental health issues. Alarmingly, 22.8% of families report children dropping out of school, and 18.9% send kids to boarding schools to cut costs. Food insecurity affects 80% of supported households, with half forgoing baby formula. Among the elderly, 81.7% live in poverty, 52.6% in extreme poverty, and 60.4% skip medications due to cost, while 34.8% face severe food insecurity.
Israel’s 28.6% poverty rate far exceeds the U.S. (17.8%) and Germany (9%), worsened by rising VAT, social security, health insurance, and utility costs, alongside high inflation and interest rates. Latet’s CEO, Eran Weintraub, warned, “The combination of inflation, high interest rates, an anti-social government budget, and the ongoing costs of recovery from the war, will likely push thousands more low-middle-class families into severe deprivation.” Social media on X reflects despair, with one user stating, “Inflation’s eating us alive, families can’t survive on these wages.”