Thriving middle classes are the backbone of democratic and economically prosperous societies: they drive innovation, underpin economic resilience, and are essential for social cohesion. Yet in many OECD countries, middle‑class households continue to face mounting pressures from transforming labour markets, rising living costs, and economic uncertainty. As the OECD report Under Pressure: The Squeezed Middle Class documented in 2019, middle incomes grew much more slowly than high incomes for more than three decades in many OECD countries. At the same time, the costs of a middle‑class lifestyle have risen substantially. Across the OECD, prices for housing, health, and education have consistently outpaced general inflation, putting particular strain on household budgets in recent years. Labour market trajectories have also become more uncertain, as rapid technological change, shifting global supply chains, and demographic transitions reshape the world of work. Many middle‑skilled occupations face displacement through automation and digitalisation, while pathways into the middle class have narrowed, particularly for young people and those without tertiary education. In this context, Israel presents a distinct picture: thanks to robust income growth for middle‑income households, the country’s middle class has expanded since the global financial crisis, though it remains among the smallest across OECD countries. Middle‑income workers have experienced considerable occupational advancement into high-skilled roles, yet persistent inequalities by gender and ethno-religious background endure, particularly in access to managerial positions and wage levels. Rising expenditures on housing, food, and other core necessities have been putting pressure on household budgets, particularly for low-income households and ethno-religious minorities.
This country review builds upon Under Pressure and provides a comprehensive assessment of the labour market situation and living conditions of middle‑class households and workers in Israel. It provides evidence on changes in the size and composition of the Israeli middle class, presents trends in labour market outcomes for middle‑class workers, and analyses consumption expenditures and savings patterns of middle‑income households. The review puts Israel’s experience in an international context, comparing trends and outcomes with those in other OECD countries.
This review was prepared by Sebastian Königs (project lead, Chapter 1), Javier Terrero-Dávila (Chapters 2 and 3) and Vanda Almeida (Chapter 4), with statistical support from Giulia Klinges and Elad Passi, under the supervision of Stéphane Carcillo (Head of the Jobs and Income Division). Hanna Varkki provided editorial assistance.
The authors are grateful for the excellent collaboration with the Israeli authorities during the preparation of this review. In particular, the Secretariat would like to thank Shlomit Avni Ouaknine from the Ministry of Welfare and Social Affairs and Lior Barkan from the Israel Delegation to the OECD, who jointly co‑ordinated the work on the review, and Yafit Alfandari and Edna Shimoni from the Central Bureau for Statistics, who provided the Israeli consumption data and valuable feedback and advice at various stages of this work. The review benefited from comments provided by experts from the Ministry of Welfare and Social Affairs, the Ministry of Finance, the Central Bureau for Statistics, as well as Israeli researchers and NGO representatives.
Work on this review began prior to the terrorist attacks of 7 October 2023. The analysis presented covers data and developments before that date.