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Policy Brief September 2020

www.shoresh.institute

Changing the paradigms SHORESH Institution for Socioeconomic Research

Anarchy at the helm with Covid-19 on deck Israel’s lethal and horizon-less mix at the half year mark

Dan Ben-David and Ayal Kimhi

Abstract

Israel’s health system entered the Covid-19 pandemic with the developed world’s

most overcrowded hospitals, a relatively small and aging healthcare workforce, and

mortality rates from infectious diseases far higher than in every other developed country.

These opening conditions mandated a nationwide lockdown quickly after the pandemic

reached Israel, which in turn led to a near eradication of the virus within the country by

the end of May. Instead of utilizing this opportunity to implement policies in preparation

for future waves, while gradually opening the economy, the government developed no

strategic plan for the future. Significantly compounding the situation, the prime minister

broadly announced that it was then possible for the public to resume its normal activities.

Almost immediately thereafter, the second, considerably deadlier, virus wave began, with

almost twice as many deaths in August alone as in the entire first wave, while Israel

plunged into the worst recession in its history.

Extensive governmental dysfunction and a complete lack of leadership led to

often contradictory – and completely ineffectual – patchwork policies costing huge

amounts of public money. The policy disarray at the top led to considerably less

compliance among the Israeli public, particularly in ultra-Orthodox and Arab-Israeli

communities who lead the list of most infected municipalities. Only after nearly five

months into the pandemic did the government appoint a person to coordinate its policies

for combating the virus. Within days, cabinet ministers and other leading politicians

from the governing coalition began to undercut his authority and call for his firing.

Professor Dan Ben-David is President of the Shoresh Institution for Socioeconomic Research and a member of the

faculty of Tel Aviv University’s Department of Public Policy. Professor Ayal Kimhi is Vice President of the Shoresh Institution for Socioeconomic Research and Head of the Department of Environmental Economics and Management at the Hebrew University.

2 www.shoresh.institute

Policy Brief September 2020 SHORESH Institution for Socioeconomic Research

Anarchy at the helm with Covid-19 on deckDan Ben-David and Ayal Kimhi

Introduction

As the world awaits a vaccine for Covid-19, countries struggle to find a balance between

minimizing the number of deaths from the contagious disease and minimizing the economic

damage wrought by the health safety measures. The degrees of success on both counts vary

widely across countries and even within countries over time.

At the six-month mark, the number of Covid-19 deaths per capita in Israel place the

country at the center of the OECD, with 108 persons per million population dying from the

disease (Figure 1). There are developed countries with 5-fold (and above) more deaths per capita

and there are developed countries with 5-fold (and above) fewer deaths per capita.

While there is no particular

difference in mortality rates between large

and small countries, half of the eight

OECD countries with the lowest mortality

rates are island countries (New Zealand,

Japan, Australia and Iceland). Ireland and

the UK are major exceptions to this general

rule of thumb since relative isolation alone

is no substitute for public health policies.

While not island countries, Israel and

Korea’s geopolitical circumstances provide

them with degrees of physical isolation

relatively similar to those of the island

countries.

New ZealandSlovakia

KoreaJapanLatvia

GreeceAustralia

IcelandLithuania

Czech RepEstoniaNorwayPolandFinland

SloveniaHungary

TurkeyAustria

DenmarkIsrael

GermanyPortugal

LuxembourgSwitzerland

CanadaIreland

NetherlandsFranceMexico

United StatesSweden

ItalyChile

United KingdomSpain*

Belgium

New ZealandSlovakia

KoreaJapanLatvia

GreeceAustralia

IcelandLithuania

Czech RepEstoniaNorwayPolandFinland

SloveniaHungary

TurkeyAustria

DenmarkIsrael

GermanyPortugal

LuxembourgSwitzerland

CanadaIreland

NetherlandsFranceMexico

United StatesSweden

ItalyChile

United KingdomSpain*

Belgium

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7681

108108111

179198199

242360363

469500

555575

587591

611622

854

56610182626293240484954616264

7681

108108111

179198199

242360363

469500

555575

587591

611622

854

Figure 1

Covid-19 deaths in OECD countries Total deaths per million persons, as of September 1, 2020

* August 31, 2020.

Source: Dan Ben-David and Ayal Kimhi, Shoresh Institution

Data: Our World in Data




Background

The case of Israel is particularly unique when it comes to infectious diseases in recent

years. Prior to the recent coronavirus outbreak, the country’s recent mortality rates from

infectious diseases made it an outlier in the developed world as a result of increasing prolonged

neglect and mismanagement of its healthcare system.

This was not always the case in Israel. For example, the country’s founding generation

managed to increase the number of hospital beds at roughly the same pace as Israel’s

extraordinary population growth during the early decades. Thus, the number of hospital beds per

capita remained relatively steady from

Israel’s birth in 1948 until 1977 (Figure

2). Since then, the number of hospital

beds per capita has been in a continuous

multi-decade free-fall. This was part of

an overall shift in national priorities as

Israel moved to new, and similarly

steady, multi-decade socioeconomic

trajectories in additional realms, such as

productivity, education and physical

infrastructures – trajectories that are

unsustainable in the long run (Ben-David

and Kimhi, 2017).

While many other developed countries have implemented alternative healthcare policies

that enabled them to reduce the number of hospital beds, the extent of the decline in Israel, and

the concurrent ineffective development of alternative options raised the country to the top of the

OECD in terms of hospital occupancy (Figure 3). An average 94.4% occupancy rate for an

entire country over the course of an entire year means that there are some hospitals with

1.7

1.9

2.1

2.3

2.5

2.7

2.9

3.1

3.3

3.5

1.7

1.9

2.1

2.3

2.5

2.7

2.9

3.1

3.3

3.5

1948 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2018

1977

2015

* Curative (acute) care hospital beds.

Source: Dan Ben-David, Shoresh Institution and Tel Aviv University

Data: Israel’s Central Bureau of Statistics

Figure 2

Hospital beds in Israel* per 1,000 population, 1948-2018




occupancy rates well over 100% capacity

over the course of the year – especially

during the flu season. This entails the

placement of patients in hospital corridors,

dining areas and a host of other non-

hygienic and non-sterile areas.

As if these hospitalization

conditions were not enough, Israel has also

invested minimally in the training of health

care professionals. While its physicians

and nurses are among the world’s best in

terms of their training and personal

abilities, there are simply not enough of

them.

Instead of investing in its future, the

country relied on the influx of physicians

from the former Soviet Union in the 1990s

to bolster its ranks. As the country’s

physicians age, the number of medical

school graduates in Israel fell to the bottom

of the OECD (Figure 4). Not only is the

number of practicing physicians per capita

in Israel below the OECD average, the

country’s stock of physicians is aging

rapidly. While the share of physicians that

are 75 years old and above is 1.3% in the

OECD, that share is 10.3% in Israel.

52.4%63.2%

65.1%66.8%67.4%

68.3%69.4%69.6%70.3%70.9%71.4%71.6%

73.1%73.6%74.0%

74.8%75.0%75.3%75.8%

77.3%77.5%77.8%78.3%

79.6%81.2%

82.5%83.3%

84.0%84.3%

91.4%93.7%

94.4%

40% 50% 60% 70% 80% 90%

52.4%63.2%

65.1%66.8%67.4%

68.3%69.4%69.6%70.3%70.9%71.4%71.6%

73.1%73.6%74.0%

74.8%75.0%75.3%75.8%

77.3%77.5%77.8%78.3%

79.6%81.2%

82.5%83.3%

84.0%84.3%

91.4%93.7%

94.4%

52.4%63.2%

65.1%66.8%67.4%

68.3%69.4%69.6%70.3%70.9%71.4%71.6%

73.1%73.6%74.0%

74.8%75.0%75.3%75.8%

77.3%77.5%77.8%78.3%

79.6%81.2%

82.5%83.3%

84.0%84.3%

91.4%93.7%

94.4%

40% 50% 60% 70% 80% 90%40% 50% 60% 70% 80% 90%

NetherlandsUnited States

PortugalTurkey

LuxembourgSlovak Rep

LatviaHungaryEstonia

SloveniaCzech Rep

Korea2Lithuania

GreeceFinland5AustriaJapan

FranceSpain

MexicoSweden4

ItalyChile

GermanyBelgiumNorway

SwitzerlandDenmark3

United Kingdom1CanadaIrelandIsrael

NetherlandsUnited States

PortugalTurkey

LuxembourgSlovak Rep

LatviaHungaryEstonia

SloveniaCzech Rep

Korea2Lithuania

GreeceFinland5AustriaJapan

FranceSpain

MexicoSweden4

ItalyChile

GermanyBelgiumNorway

SwitzerlandDenmark3

United Kingdom1CanadaIrelandIsrael

1 2010, 2 2003, 3 2001, 4 1996, 5 1995


Data: OECD

Figure 3

Hospital occupancy rates in OECD countries as percent of available beds, average for 2012-2016

6.86.8

7.67.77.7

8.99.49.5

10.110.2

10.710.810.910.911.1

11.912.0

12.913.113.3

13.914.214.3

15.215.715.7

16.116.316.516.7

17.718.6

19.321.5

24.7

6.86.8

7.67.77.7

8.99.49.5

10.110.2

10.710.810.910.911.1

11.912.0

12.913.113.3

13.914.214.3

15.215.715.7

16.116.316.516.7

17.718.6

19.321.5

24.7

6.86.8

7.67.77.7

8.99.49.5

10.110.2

10.710.810.910.911.1

11.912.0

12.913.113.3

13.914.214.3

15.215.715.7

16.116.316.516.7

17.718.6

19.321.5

24.7

IsraelJapanKorea

United StatesCanada

ChileNew Zealand

FranceTurkeyGreecePoland

SwedenSwitzerland

EstoniaNorway

GermanyFinland

United KingdomMexico

ItalySpain

AustriaHungaryIceland

NetherlandsAustralia

Czech RepublicPortugal

Slovak RepublicSloveniaLithuania

LatviaBelgium

DenmarkIreland

IsraelJapanKorea

United StatesCanada

ChileNew Zealand

FranceTurkeyGreecePoland

SwedenSwitzerland

EstoniaNorway

GermanyFinland

United KingdomMexico

ItalySpain

AustriaHungaryIceland

NetherlandsAustralia

Czech RepublicPortugal

Slovak RepublicSloveniaLithuania

LatviaBelgium

DenmarkIreland


Data: OECD

Figure 4

Medical school graduates in OECD countries per 100,000 population, averages for 2016-2018




The picture with regard to practicing

nurses is even bleaker. The number of nurses

per capita in Israel is near the bottom of the

OECD (Figure 5). As if this were not

enough, the inflow of new nurses is also

minimal, with the number of nursing

graduates per capita in Israel among the

lowest in the OECD.

Under such cirumstances – with

overcrowded hospitals and less than hygienic

hospitalization conditions, and with minimal

healthcare staff that is overworked and

unable to handle the lack of capacity – it

should come as no surprise that deaths from

infectious diseases in Israel have risen

significantly over the years.

While the number of deaths per capita

from infectious and parasitic diseases in

Israel was never low in comparison with the

rest of the developed world, the take off in

recent years has been extraordinary (Figure

6). In just two decades, mortality rates have

doubled. Consequently, Israel’s death rates

from infectious diseases became unparalleled

in the developed world. It is perched far

above all other OECD countries, with 69%

more deaths per capita from infectious

2.9

3.3

4.6

5.0

5.1

5.6

5.6

6.1

6.5

6.8

6.9

7.7

7.8

8.1

9.8

9.9

10.0

10.2

10.8

10.9

11.0

11.3

11.6

11.7

12.9

14.3

14.5

17.1

17.7

2.9

3.3

4.6

5.0

5.1

5.6

5.6

6.1

6.5

6.8

6.9

7.7

7.8

8.1

9.8

9.9

10.0

10.2

10.8

10.9

11.0

11.3

11.6

11.7

12.9

14.3

14.5

17.1

17.7

2.9

3.3

4.6

5.0

5.1

5.6

5.6

6.1

6.5

6.8

6.9

7.7

7.8

8.1

9.8

9.9

10.0

10.2

10.8

10.9

11.0

11.3

11.6

11.7

12.9

14.3

14.5

17.1

17.7

MexicoGreece

LatviaIsrael

PolandItaly

SpainEstonia

HungaryAustriaKorea

LithuaniaUnited KingdomCzech Republic

SloveniaCanada

DenmarkNew ZealandNetherlands

SwedenBelgium

JapanAustralia

LuxembourgGermany

Finland*

IcelandSwitzerland

Norway

MexicoGreece

LatviaIsrael

PolandItaly

SpainEstonia

HungaryAustriaKorea

LithuaniaUnited KingdomCzech Republic

SloveniaCanada

DenmarkNew ZealandNetherlands

SwedenBelgium

JapanAustralia

LuxembourgGermany

Finland*

IcelandSwitzerland

Norway


Data: OECD

Figure 5

Practicing nurses in OECD countries per 1,000 population, averages for 2016-2018

10

15

20

25

30

35

40

10

15

20

25

30

35

40

1975 1980 1985 1990 1995 2000 2005 2010 20161975 1980 1985 1990 1995 2000 2005 2010 2016

Israel

OECD

Israeli mortality rates doubled

in last two decades alone

* Adjusted by the ratio of standardized population to actual population.


Data: OECD

Figure 6

Deaths from infectious and parasitic diseases per 100,000 population*, 1975-2016




diseases than the OECD’s number two

country, Greece (Figure 7).

To put this in perspective, while

250 to 350 Israelis are killed in traffic

accidents each year, the country’s

comptroller’s office reports that 4,000 to

6,000 Israelis die annually (prior to the

Covid-19 outbreak) from infectious and

parasitic diseases. This is some 16 orders

of magnitude greater than the traffic

fatalities toll.

The first and second Covid-19 waves

These were the underlying conditions when the worldwide Covid-19 pandemic struck

Israel. As its lethal combination of an extremely contagious disease with very high mortality

rates became increasingly clear, Israel was faced with some particularly difficult decisions to

make. Already home to one of the most neglected healthcare systems in the developed world,

the degrees of freedom available to Israel were extremely limited. It did not have any excess

capacity to deal with extraordinary emergencies – with a looming healthcare crisis about to

become the world’s most severe since the Spanish flu a century ago.

Thus, when the coronavirus reached Israel in early March, the country shut down quickly

and extensively to minimize contagion as much as possible. The lockdown was thorough and

relatively effective healthwise. The epidemic peaked during the first half of April and then

receded just as quickly as it had initially escalated. 198 people died from Covid-19 in April, and

that number fell to 69 in May and 35 in June.

FinlandPoland

SloveniaHungary

Slovak RepIcelandAustria

SwitzerlandEstonia

New ZealandUnited Kingdom

IrelandLuxembourg

JapanSpain

AustraliaFrance

CanadaLatvia

DenmarkPortugalNorway

GermanyItaly

BelgiumSweden

Czech RepNetherlands

TurkeyKoreaChile

MexicoLithuania

United StatesGreece

Israel

FinlandPoland

SloveniaHungary

Slovak RepIcelandAustria

SwitzerlandEstonia

New ZealandUnited Kingdom

IrelandLuxembourg

JapanSpain

AustraliaFrance

CanadaLatvia

DenmarkPortugalNorway

GermanyItaly

BelgiumSweden

Czech RepNetherlands

TurkeyKoreaChile

MexicoLithuania

United StatesGreece

Israel

4.04.7

6.17.37.47.57.57.7

8.38.48.58.7

10.111.311.511.712.2

13.213.914.2

15.315.615.815.915.9

16.716.716.7

17.818.4

19.419.8

21.521.9

23.439.6

4.04.7

6.17.37.47.57.57.7

8.38.48.58.7

10.111.311.511.712.2

13.213.914.2

15.315.615.815.915.9

16.716.716.7

17.818.4

19.419.8

21.521.9

23.439.6

4.04.7

6.17.37.47.57.57.7

8.38.48.58.7

10.111.311.511.712.2

13.213.914.2

15.315.615.815.915.9

16.716.716.7

17.818.4

19.419.8

21.521.9

23.439.6

State Comptroller’s Report (2013):

For comparison purposes:

4,000-6,000 Israelis die each year from infectious

and parasitic diseases

250-350 persons killed each year in traffic accidents

* Mortality rates from infectious and parasitic diseases adjusted by the ratio of standardized population to actual population.


Data: OECD

Figure 7

Deaths from infectious and parasitic diseases per 100,000 population*, average for 2014-2016




Although Israel was caught unprepared in March, its quick nation-wide lockdown

thwarted the kind of major surges in deaths experienced by other countries. With the epidemic

continuing to be as contagious and as deadly as before, with no vaccine on the horizon in the

foreseeable future – at least until the end of 2020 – and with increasing economic damage

limiting further options of the kind implemented during the first wave, it was clear that Israel

needed to utilize the time that it had bought with the lockdown to prepare for the future.

In April, at the height of the first wave, the Shoresh Institution published a study (Ben-

David, 2020) on Israel’s unique innate conditions, not available in most countries, which would

enable the country to open up all places of employment, all schools, all entertainment venues, all

of the elderly and retirement homes, and to do this without masks or special restrictions on social

distancing. The study detailed how Israel could utilize its unique characteristics to completely

rid the country of the virus for as long as necessary, even in the event of catastrophic future

Covid-19 waves abroad. Among Israel’s comparative advantages:

Israel is a very small country the size of New Jersey with a population smaller than

metropolitan Chicago;

furthermore, it is one of the most isolated countries in the world, with extraordinary

control of its borders and those who cross them;

and finally, Israel has exceptional capabilities and experience in dealing with unexpected

security crises. The current problem is not security-related in the conventional sense, but

for all practical purposes, Israel is in a war and Israelis are dying.

From the domestic Israeli level, all that’s needed to significantly limit damage from the

coronavirus war is

a sufficient number of labs, with all of the ingredients, technicians and test kits;

and the ability to quickly find, trace and identify all infected persons in the country.

This would then enable treatment of all those who are sick and full isolation of the remainder for

the requisite days, with full oversight and immediate testing of all persons entering Israel.




What’s needed to implement a project on this scale is money – a lot of money. But when

put in the perspective of the huge and rising economic, social and psychological costs at the

national level, this is an almost negligible amount.

According to recent finance ministry forecasts, Israel’s GDP is expected to fall by 80-100

billion shekels this year. In other words, Israel’s economy is hemorrhaging at a rate of 400-500

million shekels per work day from April through the end of this year. This daily economic cost

from Covid-19 dwarfs any expenditure necessary to rid the country of the virus – even before a

vaccination becomes available in the next year or two. Thus, any amount needed to do so is

feasible from an economic standpoint, and certainly from social and health perspectives.

Success of such an effort requires a serious professional at its helm, an individual granted

the authority provided to the army’s chief of staff during a war. The government needs to set the

goals while the Knesset must provide oversight on the activities of the coronavirus chief of staff

and the operation that he/she heads. But in a war, like in a war, they should not intervene or

interfere with the professional activities.

Nothing approaching such a plan of action was even considered after infection rates fell

in May. In fact, just the opposite occurred. To make room for the largest Israeli government

ever, with 36 cabinet ministers and 16 deputy ministers (comprising nearly half of the country’s

legislative branch, the Knesset), existing cabinet ministries were divided into additional silos that

further reduced much needed coordination and planning.

As if the lack of planning and strategic perspective were not enough, Israel’s prime

minister appeared on primetime national TV on May 26, a week after forming his new

government, to announce: “We received great news today. The government is allowing

restaurants, pubs and bars, the large parks, swimming pools. You can return as closely as

possible to your daily routines. Drink a cup of coffee, drink some beer – and enjoy life!”

That is exactly what Israelis did – and the outcome of that behavior is clearly visible in

Figure 8. After the number of new Covid-19 cases nearly bottomed out by the date of the prime




minister’s May 26th

announcement, the number of new cases began to soar almost immediately

thereafter.

Since Israel began to administer

more tests during the summer months –

though not nearly enough, and with very

limited efficiency in terms of very long

lag times for results alongside high

numbers of lost tests and test results – it

stands to reason that many infected

persons who would have otherwise gone

undetected now appear as new cases.

An alternative approach is to

focus not on the total number of

infected persons but rather on the daily

percentage of positive results from the

Covid-19 tests (Figure 9). While more

accurate than simply looking at the total

number of cases, this is also not a fool-

proof measure of the virus spread. It is

more than likely that the less available

tests during the early weeks of the

epidemic were given only to persons

with the highest likelihood of being

infected while the increasingly available

tests over the summer have been

administered to many more individuals

who are less likely to be infected. To

26

May

Percentage of daily positive test results

0%

1%

2%

3%

4%

5%

6%

7%

8%

Percentage of daily positive test results

0%

1%

2%

3%

4%

5%

6%

7%

8%

0%

1%

2%

3%

4%

5%

6%

7%

8%

1-Mar

9-Mar

17-Mar

25-Mar

2-Apr

10-Apr

18-Apr

26-Apr

4-May

12-May

20-May

26-May

1-Mar

9-Mar

17-Mar

25-Mar

2-Apr

10-Apr

18-Apr

26-Apr

4-May

12-May

20-May

26-May

5-Jun

13-Jun

21-Jun

29-Jun

7-Jul

15-Jul

23-Jul

31-Jul

8-Aug

16-Aug

24-Aug

1-Sep

5-Jun

13-Jun

21-Jun

29-Jun

7-Jul

15-Jul

23-Jul

31-Jul

8-Aug

16-Aug

24-Aug

1-Sep

daily deaths from Covid-19

0

2

4

6

8

10

12

14

daily deaths from Covid-19

0

2

4

6

8

10

12

14

0

2

4

6

8

10

12

14

0

2

4

6

8

10

12

14

daily deaths

percentage of daily

positive results

Figure 9

Daily deaths from Covid 19 and percentage of daily positive results from Covid-19 tests in Israel*

* 7 day moving averages.

Source: Dan Ben-David and Ayal Kimhi, Shoresh Institution for Socioeconomic Research


Ma

y 2

6

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1-Mar

9-Mar

17-Mar

25-Mar

2-Apr

10-Apr

18-Apr

26-Apr

4-May

12-May

20-May

26-May

5-Jun

13-Jun

21-Jun

29-Jun

7-Jul

15-Jul

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31-Jul

8-Aug

16-Aug

24-Aug

1-Sep

1-Mar

9-Mar

17-Mar

25-Mar

2-Apr

10-Apr

18-Apr

26-Apr

4-May

12-May

20-May

26-May

5-Jun

13-Jun

21-Jun

29-Jun

7-Jul

15-Jul

23-Jul

31-Jul

8-Aug

16-Aug

24-Aug

1-Sep

Figure 8

Daily new Covid-19 cases in Israel*

* 7 day moving average.






the extent that this is indeed the case, this measure provides an overestimate of infection rates

during the first wave.

And yet, even if these drawbacks did indeed exist, the behavior of infection rates during

the first wave (the blue curve in Figure 9) mirrors the behavior of the curve in Figure 8 showing

the total number of infections. The share of positive test results shot up to about 7.5% by the

first half of April, and then fell close to zero by May 26th

. Following the prime minister’s public

green light for the population to return to its daily routines, the share of infected person shot up

once again, reaching 8% in August.1

Possibly the most accurate way to gauge fluctuations in the epidemic’s severity is to

focus on the daily number of deaths from Covid-19. Since deaths occur – if at all – several days

after infection, this lag is depicted vividly by the red curve in Figure 9. It is a fairly similar

facsimile of the blue curve showing infection rates, but shifted to the right by a few days. The

fact that the daily peak of deaths in the first wave was lower than the daily peak in the current

wave is a testament to the much greater severity of the second wave in Israel.

Add to this the fact that the peak is not only higher, but the area under the curve during

the second wave is considerably greater than in the first wave, denoting just how much more

serious the situation has become in late summer than during the April peak.

This is borne out in Figure 10a. While 198 Israelis died from Covid-19 in April, the July

total very nearly reached that first wave peak while over twice as many Israelis died in August

than in April. Figure 10b, highlights the rapid increase in mortality rates over the past month,

with the inflection point just a few days after the prime minister’s address to the nation on May

26.

The small decline in infection rates in late August (in Figure 9) – and what appears to be

the beginning of a subsequent decline in mortality rates a few days later – may signal that the

second wave’s peak has passed. But the very high number of new daily cases in early September

1 In light of the large daily fluctuations in the reported numbers, the graphs depict seven-day moving averages to

smooth out the curves and provide a better visual indication of the changes over time.




(surpassing 3,000 for the first time ever, and doing so twice within the first three days of the

month), with infection rates at the time of this writing exceeding 9% for the first time ever, it is

entirely possible that any such conclusions regarding a change in direction may be premature and

misleading. This is especially true in light of the fact that schools reopened on September 1 and

the education ministry’s lack of preparedness for the new school year may yet heighten infection

and mortality rates even further.

Even with the currently spiking mortality rates from Covid-19, Israel is still below half of

the other OECD countries in this regard (Figure 1). A comparison with the United States, a

country that has fared far worse thus far, can provide some perspective.

Since the onset of the pandemic, the number of infections per capita in the United States

has been 35% higher than in Israel (Figure 11) – though, as noted earlier, this is highly related to

the number of tests administered. More indicative of the gap between the two countries is the

percent of positive results, with the American average equaling 2.4 times the Israeli infection

rate. The tremendous disparity between US states in dealing with the epidemic has led to the

situation spiraling out of control in different states at different times. Overall, the number of

1717

198198

6969

3535

184184

416416

March April May June July August

Figure 10a

Monthly Covid 19 deaths in Israel

0

100

200

300

400

500

600

700

800

900

1,000

0

100

200

300

400

500

600

700

800

900

1,000

1-Mar

9-Mar

17-Mar

25-Mar

2-Apr

10-Apr

18-Apr

26-Apr

4-May

12-May

20-May

26-May

5-Jun

13-Jun

21-Jun

29-Jun

7-Jul

15-Jul

23-Jul

31-Jul

8-Aug

16-Aug

24-Aug

1-Sep

1-Mar

9-Mar

17-Mar

25-Mar

2-Apr

10-Apr

18-Apr

26-Apr

4-May

12-May

20-May

26-May

5-Jun

13-Jun

21-Jun

29-Jun

7-Jul

15-Jul

23-Jul

31-Jul

8-Aug

16-Aug

24-Aug

1-Sep

26

Ma

y

Figure 10b

Total Covid-19 deaths in Israel






Americans who have died from Covid-19

(relative to the population size) is over five

times the mortality rate in Israel since the

pandemic’s outbreak.

The red bars in Figure 11 provide a

more up-to-date comparison of the two

countries, with the number of total cases per

capita and infection rates in the US falling

below Israeli levels during the last week of

August. The gap in mortality rates has

declined substantially as well – though it’s

still a huge gap – with 80% more Americans

per capita dying in the last week of August

than Israelis. But as Figure 12 indicates,

there is more here than meets the eye.

In fact, the recently falling gap in

mortality rates between the US and Israel is

not due to a declining number of persons

dying, per capita, in the States. This

number has actually been increasing since

June – albeit in considerably lower numbers

than during the initial Spring peak period.

The gap in mortality rates between the two

countries has been falling because these

rates are rising even more quickly in Israel

than in the States in recent months (Figure

12).

22

2323

8844

2121

4848

1010

175175

129129

6868

7878

9494

March April May June July AugustIsrael US Israel US Israel US Israel US Israel US Israel US

Figure 12

Monthly Covid 19 deaths in Israel and US average monthly number of deaths per million persons



Israel = 100

total casesper capita

deathsper capita

percent positive test results

63most recent

7 day period*

63most recent

7 day period*

93

most recent 7 day

period**

93

most recent 7 day

period**

180

most recent 7 day

period*

180

most recent 7 day

period*

240

since beginning of Covid19

240


511


511


135


135


Figure 11

Covid-19 comparison of US and Israel in US relative to Israel (Israel=100)

* August 26 – Sept 1. ** August 18 - 24.






Some insight on the differences between the first and second waves of Covid-19 in Israel

can be gained by examining socioeconomic attributes related to infection rates across different

municipalities. While public perception during the first wave was that predominantly ultra-

Orthodox (Haredi) municipalities had the highest infection rates per capita, Kimhi (2020) found

two socioeconomic attributes in particular that explain most of the difference in infection rates

between Israeli municipalities at the top and bottom of the infection rate distribution. These

were population density and the fraction of residents living in religious boarding schools (not

necessarily Haredi boarding schools). Predominantly Haredi municipalities are ranked high

according to both attributes, but some non-Haredi municipalities with large religious boarding

schools also had relatively high infection rates. Most Arab-Israeli municipalities, on the other

hand, had much lower infection rates during the first wave, despite relatively high population

density.

The situation has changed in the second wave. While predominantly Haredi

municipalities are still among the most infected municipalities, they have been joined at the top

of the distribution by many Arab-Israeli municipalities with very high infection rates. In fact,

among the 32 municipalities declared as “red zones” (as of September 3rd

), 24 are Arab-Israeli

(including more than a third of the population in predominantly Arab-Israeli municipalities) and

five are predominantly Haredi (including roughly 80% of the population in predominantly

Haredi municipalities).2

The difference between the first and second waves may be rooted in behavioral changes.

The complete lockdown during the first wave yielded a sense of emergency resulting in higher

compliance with government orders almost everywhere – except the religious boarding schools –

including in the Arab-Israeli sector. The evidently-too-rapid exit from the lockdown alongside

the very inconsistent and contradictory government policies and statements has since led to

considerably less compliance during the second wave. This was particularly true in the Arab-

Israeli sector, with mayors of several large Arab-Israeli towns publicly testifying to this effect.

2 Twelve Arab neighborhoods in East Jerusalem have also been declared red zones.




Compliance in the Haredi sector was far from perfect during the first wave, and it became

even worse during the second wave, with Haredi leaders exacerbating the situation even further.

For example, one of Israel’s most influential Rabbis commanded his followers to avoid

coronavirus testing altogether while Haredi cabinet ministers and other leading Haredi politicians

publicly attacked their own government’s policy measures aimed at protecting the Haredi

population. The public statements by government ministers against government policies were

not condemned or rebutted by the prime minister.

The economic impact of Covid-19

The economic toll that both Israel and the US have begun to pay is huge, though it’s far

from being among the worst in the OECD (Figure 13). Projections made on the basis of the first

half of 2020 – these may yet change dramatically in light of the huge unknown awaiting in the

second half of 2020 – indicate drops in GDP ranging from -4.6% (in annual terms) in Korea to

nearly a quarter of GDP lost in Spain, with the UK not far behind at -22.1%. Current projections

for a 10.6% fall in American GDP place

the country at around the middle of the

OECD in percentage terms – though the

immense size of the US economy makes

the loss in dollar terms (as opposed to

percent) far higher.

While the currently expected

9.7% decline in Israeli GDP may be

relatively small in comparison with most

other OECD countries, it is nonetheless

the greatest fall in GDP in Israeli history

– and that includes periods of major

wars.

-4.6%

-5.0%

-5.4%

-6.7%

-8.4%

-8.5%

-9.2%

-9.3%

-9.7%

-9.9%

-10.2%

-10.6%

-10.6%

-11.5%

-11.5%

-12.9%

-13.0%

-13.9%

-14.8%

-15.3%

-17.1%

-17.3%

-18.3%

-18.9%

-22.1%

-22.7%

-4.6%

-5.0%

-5.4%

-6.7%

-8.4%

-8.5%

-9.2%

-9.3%

-9.7%

-9.9%

-10.2%

-10.6%

-10.6%

-11.5%

-11.5%

-12.9%

-13.0%

-13.9%

-14.8%

-15.3%

-17.1%

-17.3%

-18.3%

-18.9%

-22.1%

-22.7%

-4.6%

-5.0%

-5.4%

-6.7%

-8.4%

-8.5%

-9.2%

-9.3%

-9.7%

-9.9%

-10.2%

-10.6%

-10.6%

-11.5%

-11.5%

-12.9%

-13.0%

-13.9%

-14.8%

-15.3%

-17.1%

-17.3%

-18.3%

-18.9%

-22.1%

-22.7%

KoreaFinlandLithuaniaNorwayJapanSwedenDenmarkPolandIsraelNetherlandsLatviaChileUnited StatesCzech RepublicGermanyAustriaSlovak RepublicCanadaHungaryBelgiumItalyPortugalMexicoFranceUnited KingdomSpain



Figure 13

GDP decline in OECD countries over first half of 2020 (in annual terms, seasonally adjusted)


Data: OECD




According to the Central Bureau of

Statistics (2020a), nearly half of Israel’s

private businesses reported a drop of at

least 50% in their revenues during the

Spring lockdown period (Figure 14). The

share of such firms declined to about one-

sixth of the total in June and the beginning

of July (the most recent numbers currently

available).

During the initial outbreak of the

virus, the share of persons out of work

skyrocketed, though not formally under the

conventional method of measuring

unemployment (the share of individuals

seeking work but unable to find it).

Instead, the relatively minor – in the past –

classification of persons absent temporarily

from work expanded significantly (Figure

15). While not formally classified as

unemployed since they are still formally

employed, such persons are nonetheless

unemployed from a practical perspective

since they are not working and do not

receive compensation. Using this broader

definition of unemployment, including

persons formally listed as temporarily

absent from work, over a third of Israel’s

18%12% 15%

29%24% 20%18%

12% 15%

29%24% 20%

14%20%

30%

30%

30%29%

14%20%

30%

30%

30%29%

26% 23%

26%

23%

23%28%

26% 23%

26%

23%

23%28%

20%17%

17%

7%10% 9%

20%17%

17%

7%10% 9%

23%26%

9% 7% 8% 7%23%26%

9% 7% 8% 7%

2%5% 5% 5% 7%

2%5% 5% 5% 7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mar 31 Apr 22 May 7 Jun 3 Jun 17 Jul 8

unknownunknown

51%-75%51%-75%

26%-50%26%-50%

up to 25%up to 25%

nonenone

76%-100%76%-100%

Figure 14

Percent drop in business revenues in Israel


Data: Israel's Central Bureau of Statistics

Jul 16-31

Jul 1-15

Jun 16-30

Jun 1-15

May 16-31

May 1-15

Apr 16-30

Apr 1-15

Mar 16-31

Mar 1-15

Feb 16-29

Feb 1-15

Jan 16-31

Jan 1-15

Jul 16-31

Jul 1-15

Jun 16-30

Jun 1-15

May 16-31

May 1-15

Apr 16-30

Apr 1-15

Mar 16-31

Mar 1-15

Feb 16-29

Feb 1-15

Jan 16-31

Jan 1-15

0% 5%0% 5% 10% 15% 20% 25% 30% 35% 40%10% 15% 20% 25% 30% 35% 40%

percent unemployedpercent unemployed

percent absent temporarily from workpercent absent temporarily from work

Figure 15

Percent unemployed and absent from work in Israel






working age adults were unemployed

during the first half of April (Central

Bureau of Statistics 2020b). That

share fell to approximately one-tenth

by June and current projections are

that this will be the unemployment

rate at the end of 2020 as well.

Aside from persons employed

in education, who tend to have a

substantially high number of persons

formally on leave each summer (the

share of persons on leave in the sector

during July 2020 was actually 9% below the share in July 2019), the two sectors taking the

hardest hit are also sectors that typically employ lesser skilled and more poorly paid workers

(Figure 16). These are primarily sectors affected by tourism and leisure activities, which were

particularly hard hit.

The impact on these two sectors was the largest in May – with over three and a half times

more people on leave in 2020 than in

2019 in the accommodation and food

services sector and 2.2 times as many

on leave in the arts, entertainment and

recreation sector (Figure 17). The gap

between the two years declined in

June, a month with relatively low

infection and mortality rates, only to

rise again in July to gaps similar to

those in April.

3.3

5.9

6.9

8.0

8.7

12.2

13.6

14.7

15.3

15.8

16.1

16.2

17.0

25.9

26.2

26.7

31.7

41.5

42.9

3.3

5.9

6.9

8.0

8.7

12.2

13.6

14.7

15.3

15.8

16.1

16.2

17.0

25.9

26.2

26.7

31.7

41.5

42.9

3.3

5.9

6.9

8.0

8.7

12.2

13.6

14.7

15.3

15.8

16.1

16.2

17.0

25.9

26.2

26.7

31.7

41.5

42.9

Agriculture, forestry and fishing

Local, public and defence administration and social security

Water supply, sewerage and waste management

Households as employers

Electricity supply

Information and communications

Manufacturing; Mining and quarrying

Wholesale and retail trade and repair of motor vehicles

Financial and insurance activities

Construction

Real estate activities

Professional, scientific and technical activities

Human health and social work activities

Other service activities

Transportation, storage, postal and courier activities

Administrative and support service activities

Accommodation and food service activities

Arts, entertainment and recreation

Education

Agriculture, forestry and fishing

Local, public and defence administration and social security

Water supply, sewerage and waste management

Households as employers

Electricity supply

Information and communications

Manufacturing; Mining and quarrying

Wholesale and retail trade and repair of motor vehicles

Financial and insurance activities

Construction

Real estate activities

Professional, scientific and technical activities

Human health and social work activities

Other service activities

Transportation, storage, postal and courier activities

Administrative and support service activities

Accommodation and food service activities

Arts, entertainment and recreation

Education



Figure 16

Percent of persons on temporary leave of absence in Israel by economic sectors, July 2020

Arts, entertainment

and recreation

Arts, entertainment

and recreation

Accommodation and

food service activities

Accommodation and

food service activities

April 157%April 157%

114%April 114%April

May 258%May 258%

122%May 122%May

June 35%June 35%

66%June 66%June

157%July 157%July

109%July 109%July

Figure 17

Increase in number of persons on temporary leaves of absence in economic sectors with highest rates of leave (except education),

2020 compared to same month in 2019






Israel’s policy disarray

Just as the government was unable to determine a coherent policy to deal with the health

aspects of the epidemic going forward, the government’s response to the economic downturn

was haphazard at best. Seemingly entering election mode (which would make this Israel’s fourth

in a year and a half), the government began to massively increase its expenditures without

articulating any long-term strategy for dealing with an extremely serious crisis that is clearly not

going to dissipate anytime soon.

As of August, corona-specific allocations comprised 28.3% of the 2019 budget (Figure

18).3 That alone is more than the combined amount that Israel spends on its two largest budget

items (until this year), education and defense. Despite this, the prime minister pushed the nation

towards the brink of elections in

late August by reneging on a

coalition agreement to pass a

budget for 2021 and the remainder

of 2020. As of this writing in early

September, Israel still has no

budget even on the planning table

for the current year that is about to

end, nor a budget for next year.

The situation has become so politicized and so disconnected from reality that the

country’s most senior civil servant in charge of the budget division resigned on August 30th

(this

on the heels of an earlier resignation by the civil servant heading the government’s accounting

division) stating that “policy is characterized by narrow, irrelevant and short-term decision-

3 The 2019 budget was the most recent one approved by Israel’s government and is used here to provide a common

benchmark for the other budgetary expenditures.

Figure 18

Government expenditures as percent of total budget

28.3%28.3%total corona-specific budget

allocations as of 8-2020

12.4%education

12.4%educationeducation and defense

ministry budgets in 2019 11.5%defense11.5%

defense23.9%


Data: Israel's Finance Ministry




making while professional staff are silenced, blatant disregard is shown toward staff work,

policies are rash and normal budgetary tools and norms are ignored.”4

The magnitude of the economic

problem facing Israel is highlighted in

Figure 19. While the corona-specific budget

is currently slated to cost nearly 10% of

GDP, the ability to pay for this will decline

as well – with a nearly identical decline in

GDP expected at this time. If the current

absence of policy continues, these could

both be under-estimates for an economic

disaster with enormous future social consequences.

In late July, nearly five months after the Covid-19 outbreak in Israel, the government

finally decided to appoint Prof. Roni Gamzu to lead the country’s efforts in combatting the virus.

However, the government is still unwilling to define what powers and what authority Gamzu has

to actually deal with the epidemic. As a result, there is an incessant flow of contradictory

directives by leading cabinet ministers – not to mention persistent calls for his resignation from

top politicians from the ruling party – that undermine his ability to manage the government’s

efforts.

This is the current state of affairs as Israel head into its new year and High Holidays. The

degree of governmental dysfunction is unparalleled at a time when Israel faces one of the worst

crises in its history. Cabinet meetings, held weekly even during periods of wars, are being

habitually cancelled week after week. No budget for the country is in the offing while the

country’s top civil servants from across the spectrum, from the economic through the health to

4 Haaretz, Avi Waksman (August 30, 2020). https://www.haaretz.com/israel-news/business/.premium-israel-s-

treasury-budget-chief-resigns-accusing-minister-of-crossing-red-lines-1.9114296

Figure 19

Cost of Covid-19 as percent of GDP

seasonally adjusted loss in

Israeli GDP in first half of 2020

(in annual terms)

total corona-specific budget

allocations as of 8-2020

-9.7%-9.7%

9.6%9.6%



https://www.haaretz.com/israel-news/business/.premium-israel-s-treasury-budget-chief-resigns-accusing-minister-of-crossing-red-lines-1.9114296

https://www.haaretz.com/israel-news/business/.premium-israel-s-treasury-budget-chief-resigns-accusing-minister-of-crossing-red-lines-1.9114296




the law enforcement and judicial systems are coming under increasing personal attacks by the

very politicians who appointed them.

This is a period unlike any other that Israel has undergone. The Covid-19 pandemic has

severely strained matters across the world. In the case of Israel, it has only exacerbated problems

that have been escalating for years. As this powder keg heads toward an explosion, one can only

hope that in its aftermath – if such an explosion does indeed materialize – a viable new

framework will emerge that can finally return Israel to socioeconomic trajectories that are

sustainable in the long run.

References

Ben-David, Dan (2020), “Ensuring an almost fully operational economy in Israel during additional waves

of the pandemic in the coming year,” Shoresh Institution for Socioeconomic Research, Policy Brief.

Ben-David, Dan and Ayal Kimhi (2017), “Israel’s primary socioeconomic challenges and policy areas

requiring core treatment,” Shoresh Institution for Socioeconomic Research, Policy Brief.

Central Bureau of Statistics (2020a), “Survey of Businesses in Israel during the Coronavirus Crisis (7th

Wave),” Press Release.

Central Bureau of Statistics (2020b), “Labour Force Survey Data, Second Half of July and July 2020”,

Press Release.

Kimhi, Ayal (2020), “Socioeconomic aspects of Coronavirus infection rates across Israeli municipalities,”

Shoresh Institution for Socioeconomic Research, Policy Brief.

Our World in Data (2020), Coronavirus (COVID-19) Testing, Research and data by Hannah Ritchie,

Esteban Ortiz-Ospina, Diana Beltekian, Edouard Mathieu, Joe Hasell, Bobbie Macdonald, Charlie

Giattino, and Max Roser. https://ourworldindata.org/coronavirus-testing#tests-per-confirmed-case

The Shoresh Institution is an independent, non-partisan policy research center. The institution conducts

impartial, evidence-based analyses of Israel’s economy and civil society. Its objective is to assist in moving the

country towards a sustainable long-term trajectory that raises Israel’s living standards while reducing disparity

among its citizens. To further this goal, the Shoresh Institution informs Israel’s leading policymakers and the

general public, both inside and outside the country, through briefings and accessible publications on the source,

nature and scope of core issues facing the country, providing policy options that ensure and improve the well-

being of all segments of Israeli society and create more equitable opportunities for its citizens.

Findings and points of view expressed in Shoresh publications are the authors’ alone.

https://ourworldindata.org/coronavirus-testing#tests-per-confirmed-case

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