1

The distribution of the State budget

Debt servicing

31%

Other17%

Defense18%

Social services

34%

2006 Total budget: NIS 303 billion,

2

The distribution of the social service budget

Income Maintenance

38%

Education31%

Health16%

Personal social

services 6%

Other9%

3

Per capita social expenditure: a slight rise in 2006 after a steady decline since 2001

8

9

10

11

12

13

14

15

16

1990 1994 1998 2002 2006

Current budget, 2005 prices, NIS thousand

4

Average per capita expenditure on transfer payments: stable following a decline

2

3

4

5

6

7

1990 1994 1998 2002 2006

2005 prices, NIS thousand

5

Population distribution by district

Northern18%Southern

15%

Haifa13%

Jerusalem13%

Tel-Aviv18%

Central23%

6

Mixed localities: districts that stand out – Jerusalem and the North

0%

20%

40%

60%

80%

100%

Northern Jerusalem Haifa Southern Central Tel-Aviv

Arabs

Jews

7

Share of immigrants: the South exceeds other districts

Jerusalem Northern Tel-Aviv Central Haifa Southern

9 10 14 1519

24

Immigrants as a percent of total population, by district

8

Age distribution: a younger population in Jerusalem and the North

4

6

8

10

12

14

16

15 20 25 30 35 40

Children

Eld

erl

y

Tel-Aviv

Jerusalem

Northern

Southern

Central

Haifa

Elderly and children as a percent of the total population, by district

9

Fertility rates: differences by district

1.5

2.0

2.5

3.0

3.5

4.0

Jerusalem Southern Northern Central Haifa Tel-Aviv

Average number of children a woman is expected to bear in her lifetime

10

Average government expenditure on education per pupil: a slight rise after a continuous decline since 2001

9

10

11

12

13

14

15

16

17

18

1990 1992 1994 1996 1998 2000 2002 2004 2006

Current budget 2005 prices, NIS thousand

11

Education expenditure: the expected influence of natural growth is marked in Israel

75 80 85 90 95 100 105 110 115

Poland

Czech Republic

Hungary

Japan

Germany

Switzerland

Italy

Finland

Portugal

UK

Sweden

France

Netherlands

Denmark

Norway

US

Israel

Estimated influence of population growth on education spending: 2015 versus 2005 Index: 2005=100

12

The population’s education level: Israel ranks high in international comparisons

0 2 4 6 8 10 12 14

PortugalItaly

SpainGreece

NetherlandsFinlandFrancePoland

JapanSweden

UK

IsraelIreland

SwitzerlandCanada

USDenmarkGermany

Norway

Average years of schooling among those aged 25-64

13

Educational achievement: significant differences in matriculation certificate entitlement by district

36

4243

4547

50

Jerusalem* Northern Southern Haifa Tel-Aviv Central

*excluding East Jerusalem

Entitled to certificate, percent of those aged 16-19, average for 1997-2001

14

Studying for a first degree: differences by district

8

99

1111

12

Northern Southern Jerusalem* Central Haifa Tel-Aviv

Percent of 20-29 year olds studying for their first degree

*excluding East Jerusalem

15

Health expenditure and population growth: since the National Health Law passed, spending has not kept pace

80

90

100

110

120

130

140

1994 1996 1998 2000 2002 2004 2006

Population Health expenditure

Index: 1994=100

16

Financing national health expenditure: a continual increase in household share*

28 28 2931

4742 41 39

1998 2000 2002 2005

Households Gov't spending

*excluding health tax

Percent

17

Infant mortality: rates in the North and South are high compared to a decade ago

9.2

6.0

8.5

7.1

8.4

5.0

7.9

4.6

5.8

3.0

5.0

3.1

Northern Southern Haifa Jerusalem Tel-Aviv Central

1995

2005

Rate per 1000 live births, by district

18

Life expectancy: longer in Jerusalem and shorter in the South

70 72 74 76 78 80 82

Men

Women Jerusalem

Central

Tel-Aviv

Haifa

Northern

Southern

Life expectancy at birth, by district

19

Hospital stays in general wards: a marked decrease in number of beds and average length of stay since 1980

3.02.8

2.62.4

2.2 2.2 2.1 2.1 2.1

0

1

2

3

4

5

6

7

1980 1985 1990 1995 2000 2002 2003 2004 2005

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Av. stay, days Beds per 1000

20

Population density: vast differences between districts

71 265991 1275 1304

6919

Southern Northern Haifa Central Jerusalem Tel-Aviv

Number of people per square kilometer

21

Road accidents: high rates of injuries in the North

0

1

2

3

4

5

6

7

8

Northern Haifa Tel-Aviv Southern Central Jerusalem

Average injuries per 1000 residents, by district

22

Taub Survey - Public health priorities: the public prefers more subsidized medicines and preventive care

Improving the environment - 9%

Other - 2%

Preventive medicine and

education - 32%

Increasing the basket of

medicines - 37%

Improved medical care in periphery - 10%

Including nursing care in the health

basket - 10%

Which of these areas should be a priority to improve the population’s level of health?

23

Distribution of the National Insurance Institute budget: two-thirds goes to old-age and disability allowances

Old-age and survivors

42%

Holocaust survivors

3%

Unemployment5%

Children12%

Disability20%

Other11%

Income maintenance

7%

24

National Insurance: differential development with a sharp rise in general disability allowances

0

50

100

150

200

250

300

350

400

1990 1994 1998 2002 2006

Old-age and survivors Children General disability

Index: 1990=100

25

Taub Survey - National Insurance: most prefer limiting or canceling allowances to high income groups

Cancel completely

26%

Reduce very greatly

9%

Reduce greatly

18%

Reduce slightly

17%

Leave as is31%

Do you think that allowances to those with a high income should be reduced or even canceled?

26

Pensioners: 18% of households in Tel-Aviv and Haifa are pensioners

0 5 10 15 20

Northern

Jerusalem

Central

Southern

Haifa

Tel-Aviv

Pensioners as a percent of all households, by district

27

Recipients of nursing care allowance: low rates in Jerusalem, high in the South

13.215.7 16.1 17.6

18.523.6

Jerusalem Tel-Aviv Northern Haifa Central Southern

Percent aged 65+ receiving nursing care allowance, by district

28

General poverty level: an increase in the number of families under the poverty line

13

14

15

16

17

18

19

20

21

1990 1995 2000 2005

Percent of poor families after transfer payments and taxes

411,000families

29

Poverty by district: an especially high rate of poor families in Jerusalem and the North

3229

24

18

1412

Jerusalem Northern Southern Haifa Tel-Aviv Central

Percent of poor families after transfer payments and taxes

30

Poverty among children: a steep rise – nearly one-third of Israel’s children are living under the poverty line

16

21

26

31

36

1990 1995 2000 2005

Percent of poor children after transfer payments and taxes

769,000 children

31

Poverty among children by district: more than half of Jerusalem’s children are living in poverty

56

4134

28 26

18

Jerusalem Northern Southern Haifa Tel-Aviv Central

Percent of poor children after transfer payments and taxes

32

The working poor: working is not always insurance against poverty

12 13

23

3

Salaried head ofhousehold

Self-employedhead of

household

Single income Dual income

Percent of poor families in different groups, 2005

33

Housing conditions: pronounced crowding in the Jerusalem district

17

9

6 6 4 4

Jerusalem Northern Haifa Southern Tel-Aviv Central

Percent of homes with more than 2 persons per room, by district

34

Computer ownership: 60% of households in Israel have a computer

0 10 20 30 40 50 60 70 80 90

TurkeyBulgaria

GreeceHungary

PolandPortugal

IrelandItaly

FranceSpain

FinlandAustria

IsraelUSUK

AustraliaGermany

SwitzerlandNorway

JapanNetherlands

Iceland

Percent of households with a home computer

35

0 10 20 30 40 50 60 70 80 90

TurkeyHungaryGreecePoland

PortugalSpain

FranceItaly

IrelandIsrael

AustriaSlovenia

FinlandAustraliaCanada

USUK

JapanLuxemburg

GermanyNorway

DenmarkIceland

Internet access: 40% of households in Israel have Internet connection

Percent of households with Internet connection

36

Information and communication technology: Israel leads in terms of ICT product and employment

58111417

Spain

Italy

Germany

Japan

Canada

Belgium

Portugal

France

Denmark

Sweden

Netherlands

Hungary

US

UK

Ireland

S. Korea

Finland

Israel

ICT employment - % of business sector ICT product - % of business sector

0 2 4 6 8 10

Spain

Portugal

Germany

Hungary

US

S. Korea

UK

Canada

Belgium

Italy

Japan

Denmark

France

Netherlands

Israel

Ireland

Sweden

Finland

37

Labor force participation: a continuous rise over time

47

48

49

50

51

52

53

54

55

56

1980 1990 1992 1994 1996 1998 2000 2002 2004 2006

Percent of those aged 15+

38

Participation in labor force by gender: low participation of women in the North and Jerusalem

61

53

6058

6265

40 40

48 49

56 57

Northern Jerusalem Haifa Southern Tel-Aviv Central

Men Women

Percent of those aged 15+, by district

39

Unemployment over time: after peaking in 2003, a decline in the rate of unemployment

Percent unemployed of the civilian labor force

8.9

4

6

8

10

12

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006est.

40

Unemployment by district: higher rates in the North and South

Percent unemployed of civilian labor force, by district

0

2

4

6

8

10

12

Northern Southern Haifa Jerusalem Central Tel-Aviv

41

Wages by district: lower wages in the North and South

3,737

6,551

3,933

6,705

4,663

7,358

8,331

5,266

8,702

5,079

5,787

4,435

Men

Women

Central

Tel-Aviv

Haifa

Jerusalem

Southern

Northern

Average monthly gross wage per employee, NIS

42

Taub Survey - Fear of unemployment: fears have calmed over the past three years but one-fourth are still greatly concerned

25 32 3443 32 32

26

2000 2001 2002 2003 2004 2005 2006

Percent of respondents who feel greatly vulnerable to unemployment