The Economic Impact of COVID: Survey Finds Decline in Financial Liquidity Among Israeli Workers

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A special IDI survey on the economic impact of the COVID crisis finds that worker's financial liquidity has declined sharply with 31% of respondents reporting that they had no liquid funds to support themselves.

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The surveyThe full survey, which presents the general economic situation of working Israelis (salaried workers and the self-employed) was developed and analyzed by Prof. Karnit Flug, Daphna Aviram-Nitzan, and Yarden Kedar. Gabriel Gordon was responsible for the statistical workup. The Viterbi Family Center for Public Opinion and Policy Research at the Israel Democracy Institute aided with producing the questionnaire and methodological advice. was conducted in December 2020The field work was conducted by IPANEL from December 6 to December 16, 2020. (before the third closure was imposed at the end of 2020, and before the next and more stringent lockdown in the second week of January 2021) among a representative sample of the working public (people who had been employed when the pandemic erupted).

Main Findings

The working public’s financial liquidity has declined sharply: In December 2020, 31% of the respondents (both salaried workers and the self-employed) reported that they had no liquid funds to support themselves—up from 27% in the July survey and 25% in the April survey.

Among those with liquid funds, 32% reported that those were sufficient to support them for up to six months. This figure seems to be increasing (it was 16% in March and 20% in July). That is, this figure seems to suggest that the public's liquidity is improving. However if you look at it alongside the previous data, it shows no improvement at all. It seems that those who had available funds that would last for a short time at the start of the pandemic or several months into it (April and July), had no liquid funds by the end of the year – and consequentially this figure does not show them anymore

Nevertheless, there is relative stability over time in the percentage of those reporting that their bank account is overdrawn: In December, 34% reported that their bank account is overdrawn, as against 37% in July and 34% in March (so there is no upward trend here).

While no major difference in the liquidity of salaried workers and the self-employed was found, a difference exists with regard to how long they believe their funds will last (among those with remaining funds): 33% of the salaried workers in this category reported having sufficient reserves to last for more than six months, as compared with only 24% of the self-employed.

Almost one-fifth of the self-employed (19%) reported that while they did not have an overdraft before the pandemic, the crisis had pushed their bank account into the red. This was true among only 10% of the self-employed.

Some 37% of those who are not currently employed as a result of the pandemicSalaried workers who had been laid off, put on unpaid leave, or sent on paid leave, and self-employed persons who were not working. have no liquid funds, as opposed to 30% of those who are working. Among the former, 44% are overdrawn, as compared with only 33% of the latter.

The financial situation of those aged 45–54 is particularly grave: Some 40% of them report that they have no liquid funds to live on (as compared to 29% of the rest of the public); as much as 50% report that their bank account is in the red (as compared to 31% of the rest of the public).

Throughout the pandemic, liquidity problems have been more prevalent among young adults. In the current survey, as in those that preceded it, 39% of those aged 18–24 report that they have no liquid funds (as compared with the national average of 31%). Nevertheless, this time only 19% of them reported that they are overdrawn (national average: 34%), down from 41% in July.

The liquidity situation in the Arab sector is consistently much worse than that among Jews. But among the latter, and especially among the ultra-Orthodox, the situation has deteriorated since July. Some 47% of Arabs report that they have no liquid funds (46% in July); only 15% of those who do, report it will last them for more than six months. By contrast, 27% of non-ultra-Orthodox Jews have no liquid reserves (up from 22% in July); 34% of those who do have reserves say they will last for more than six months. Among the ultra-Orthodox,Based on 49 Ultra-Orthodox respondents. 41% have no liquid funds (a sharp increase from 33% in July).

The percentage of Arabs with an overdraft is much higher than the percentage of non-ultra-Orthodox Jews: 50% of the Arab respondents were overdrawn, as against 30% of non-ultra-Orthodox Jews (and 48% of the ultra-Orthodox).

Higher education wards off liquidity problems and reduces the risk of an overdraft: In December, only 27% of those with a college or university degree (and a similar percentage of those with technological education) found themselves without liquid reserves, as against 38% of those with lower educational levels. Similarly, 29% of those with an academic education were overdrawn at the bank, as against 40% of those with a technological education or those with lower educational levels.