“Haredim, not Arabs or Iran, are the biggest threat to Israel’, Dan Perry, 2021
Introduction: demography is destiny
The Haredim community represents the deeply religious, ultra-orthodox Jews in Israel. They currently (2023) represent 13.5 percent of the total population of Israel. In about 40 years, their relative size will rise to 31.3 percent (see Figure 1). To this, one can add about 20 percent who would be Arab Israelis.
What is even more striking is that by 2065, 49 percent of Israelis under the age of 15 will be ultra-orthodox Jews. In other words, by the time Israel as a nation is more than 100 years old, its essentially secular and Zionist character will be fundamentally altered, given that the typical ultra-orthodox Jew has views and values that are at odds with other Jews. Thus, members of the Haredim community overwhelmingly support the application of religious laws (Halakha) as a way of governing Israel, believe in gender segregation, prohibits membership of women in political parties, practices strict dress codes for men and men, abhors the notion of women singing in public and would like cessation of commercial activities during the Jewish Sabbath (which fall on Saturdays). There is, according to one survey, hardly any interaction between Haredi Jews and others. More importantly, ultra-orthodox Jews have historically opposed Zionism as ‘religious heresy’.
Figure 1: Demographic projections of different groups in Israel, 2023-2065
The socio-economic consequences of Israel’s demographic transformation
What are the socio-economic consequences of the demographic dynamics that are at work in Israel today? Professor Ben-David is leading the evidence-based and analytical work on this critical topic. As a macroeconomist, working on long-term socio-economic trends, Professor Ben-David worries a great deal about the ramifications that stem from the seemingly inexorable demographic transformation that is underway. This transformation is led by very high fertility rates among Haredi women (6.6 children per married women) whose primary roles are clearly defined: bear and rear children, look after the household and work to support the family, while men toil away for endless hours in learning and internalising iconic and religious texts in Jewish seminaries or Yeshivas.
The main concern of Professor Ben-David and his co-authors is that members of the Haredim community are poorly educated, have strikingly low employment rates for men relative to the national average, have the lowest living standards and highest poverty rates in Israel – see Figures 2 to 4 below. They are insufficiently integrated with mainstream society surviving primarily from social welfare support from the government. As one report notes; “in 2020, only 1,185 ultra-Orthodox men entered military service, and just 569 entered national civilian service.”
Figure 2: Employment rates, ages 25–66, by population group (%), 2009-2023
Figure 3: Per capita monthly income and expenditure (shekel) by groups, 2021
Figure 4: Family-level poverty rates by groups (%), 2015-2021
Exemptions from military service for Haredi men is as old as Israel itself, although this has now been overturned by a recent ruling of the Supreme Court. How this will evolve remains to be seen as there is a great deal of resistance among both rank-and-file and religious leaders of the ultra-orthodox Jewish community to the annulment of the cherished exemption.
The lack of integration with mainstream society is best exemplified by the fact that most children of the Haredim community largely bypass the core curriculum of English, Maths and Science by studying in specially designated community institutions. Hence, a whole generation of Israeli children will grow up as adults with insufficient skills to cope with the demands of a modern, globally oriented economy. This is an egregious example of a failing education system. As Professor Ben-David proclaims:
“Israel’s education system is one of the worst in the developed world. It is ill-prepared to provide many of the country’s children with opportunities to compete with the children of the other developed countries as future adults in the global marketplace.”
The Haredim and political representation
The burgeoning population size of the Haredim is reflected in the exercise of political power under Israel’s proportional representation system. This is most likely to grow significantly in the future.
Currently, the Haredim-supported parties are pivotal partners in the governing coalition led by Netanyahu. They account for more 15 percent of the total number of seats in Knesset. Together with other far-right partners of Netanyahu’s Likud Party, the Haredim-supported parties have been successful in having a significant share of so-called ‘coalition funds’ that can be dedicated to the pursuit of sectarian and communal agendas by interest groups. The overall size of coalition funds has increased, in real terms, from 19 percent to 53 per between 2015 and 2024. This crowds out other essential expenditure on health, education and infrastructure.
The ‘Haredisation’ of Israel against a background of sub-par economic performance
The ‘Haredisation’ of Israel is happening at a time when the economy has been battered by 11 months of war in Gaza. The recession that has ensued has been the steepest in the OECD. These adverse economic consequences will probably worsen as the war widens to Lebanon.
The war in Gaza (and now, Lebanon) can only worsen Israel’s poor economic performance relative to the G7 and the OECD. Judged from a long-run perspective, Israel has experienced sub-par per capita growth since 1973. Both capital and labour productivity are significantly lower than the G7 average and the gap has widened over time. Israeli workers are among the poorest in the OECD. Admittedly, Israel has a world-class high-tech sector, but this appears like an enclave employing six percent of the workforce.
Concluding remarks
Where will Israel go from here? It is not just Professor Ben-David who is behaving like a Cassandra. In May, more than 100 distinguished economists expressed their collective anguish on the path that Israel has followed. They have issued a clear warning to Israel’s political leaders.
“Without a change in the current trajectory, these processes endanger the country’s very existence. Many of those who bear the burden will prefer to emigrate from Israel. The first to leave will be those with opportunities abroad: physicians, engineers, high-tech workers, and scientists. Israel’s remaining population will be less educated and less productive…”
The “physicians, engineers, high-tech workers, and scientists’’ and other high-skilled professionals represents about 3 percent of the Israeli population. If they vote with their feet, the high-tech sector will decline as will Israel’s much-vaunted innovative and research capacities. This is not idle speculation. The ratio of leavers to returners has increased from 1.25 in 2011 to 1.78 in 2023.
Will the political leaders of Israel pay heed to such warning? A lot will depend on whether they will move away from their addiction to ‘forever wars’ in their quest to subvert aspirations of Palestinian statehood and to use such wars as a short-term fix to enhance national cohesion in a deeply divided society. This means long-term socio-economic challenges, most notably the ‘Haredisation’ of Israeli society, will suffer from benign neglect reinforced by the growing political power of ultra-Orthodox Jews. The concerns of the Cassandras of today might turn out to be the grim reality of tomorrow. Israel, in about 40 years from now, might turn out to be a poorer, less productive society struggling to sustain a formidable military machine as a bulwark against aspirations of Palestinian statehood while facing the opprobrium of the international community.
Yan Islam is Professor (Adjunct), Griffith Asia Institute and former Branch Chief, ILO, Geneva. The views expressed here are strictly personal.