Haaretz The Israeli economy cannot thrive without ultra-Orthodox Jews and
Israel's Arabs being more fully integrated into the workforce, the
National Economic Council warned the cabinet at a meeting last week.[...]
The most serious problem here, however, is related to working-age
populations that are not employed - meaning, the low
workforce-participation rate of the country's Arabs and the
ultra-Orthodox population. The problem is the product of a lack of
desire to be employed, when it comes to the Haredim, as well as low
skill levels. (A large proportion of Haredi men choose to engage in
Torah study full-time rather than work. )
The council presented
the cabinet with a slide, showing that between 1997 and 2012, the
poverty rate of the non-Haredi, non-Arab population remained unchanged
at 12%, while the rate among Arabs and Haredim skyrocketed from 38% to
58%. As a result, Israel's population consists of three separate
countries: Arab Israelis, ultra-Orthodox Jews, and everyone else. And
that last segment is actually contracting while the two weaker segments
are growing.
In 2009, 71% of those aged 25 to 29 entering the
labor force belonged to the third, more highly skilled, group (i.e., the
non-Haredi and non-Arab sector ). The council said, though, that this
group will decline to just 59% of the newly employed by 2019, and 53% by
2029. Israel is, therefore, moving in the direction whereby if things
are not changed, the non-Arab, non-Haredi working population with
relatively high productivity will become just over half of the new
members of the workforce - a situation that is not sustainable. [...]
The council says that as a result of the situation,
as early as next year the country will have a 3% structural deficit -
an excess of government expenditures, including items such as social
welfare payments to the poor - over government income from taxes and
economic growth.
The structural deficit is a reference to a
situation in which the government spends more than it is taking in, not
as a result of transient factors but rather the entrenched structural
characteristics of the economy. Even more alarming, the council says, is
the fact that the structural deficit will be 10.5% by 2050, if the
current situation is not addressed.
Israel needs to decide, the
council says: It can continue down its current path of greater
government outlays for the poor at the expense of increased taxes, and
reduced government spending in other areas. This will perpetuate poverty
among Haredim and Arabs and impose an impossible burden on the
remaining working population.
Alternatively, Israel can better
integrate the Arabs and ultra-Orthodox into the general workforce,
increasing their participation and substantially enhancing their skill
levels through education.
The council's assessment is that if
the three population groups are indeed integrated into one productive
workforce, by 2030 Israel will once more be competitive in the world
economy.