COVID-19 only the most recent example of path of self-destruction

Haredi sector is leading Israel toward bankruptcy

A recent Haaretz article underscores how the disregard of significant groups in Israel’s ultra-Orthodox community on the issue of restrictions imposed to limit the spread of COVID-19 marks a deadly low point on a path of self-destruction that has been underway for many years, and how Israeli society and government have allowed them to do so.

30/09/2020 23:49

Tags: OECD ·  Bank of Israel ·  Haredim ·  economy ·  COVID-19

Approximately 1/4 of COVID-19 tests among Haredim in Israel are positive, source: Corona Cabinet

It is clear that Prime Minister Netanyahu’s failure to harshly rebuke Israel’s ultra-Orthodox community for flouting the government’s virus rules entirely is based upon his personal need of them to form his coalition and remain in power. When it comes to the weekly nationwide protests against him, however, the PM doesn’t hesitate to accuse the participants of irresponsibly spreading the virus.

Haaretz notes that for decades the ultra-Orthodox political parties have held the balance of political power, and they’ve used it to support and perpetuate their unique lifestyle and values. That means no core curriculum of basic math, science and English skills, no army service and (for adult men) religious studies instead of working. Quite simply, Netanyahu continues to surrender to the demands of the ultra-Orthodox over and over. He is so dependent on them that even when it comes to literal life-and-death decisions, he cannot go against them.

Haredim today constitute 12% of Israel’s population, but because of their high birth rate they will be one-third of the population by 2060, according to Central Bureau of Statistics forecasts. In terms of birthrates, about 7 children are born per Haredi woman compared with about 2.7 among non-Haredi Jewish women. In other words, writes Haaretz, the campaign of self-destruction won’t be confined to the Haredi world but will envelop the entire state.

If the Haredim don’t change by 2060 Israel won’t be able to survive – at least not as a modern state with an advanced economy. Today only 50%-52% of ultra-Orthodox men work and those that do mainly work in low-skilled, low-wage jobs and have the lowest levels of labor productivity. Many among them work in part time jobs. The idea that an economy can function properly with that kind of labor force in illusory. Israel is destined to become a Third World country.

Two years ago, Amir Yaron, the Governor of the Bank of Israel, quantified the challenge. If Israel continues along the same path it is on now, per capita GDP [gross domestic product] will decline 60% by 2065. The critical variable is human capital, to ensure Israel has an educated population capable of high-productivity labor. The main obstacle to achieving that is the growing Haredi minority. The National Economic Council and the treasury’s chief economist have published similar forecasts. All of them warn that the goal of becoming one of the world’s 15 best countries doesn’t square with the socioeconomic trends in Israel.

The report concludes that concerning labor productivity, which is the report’s focus, the challenge is particularly in the low volume of schooling and the low quality of teaching.

According to the Bank of Israel report, the participation rate of primary working age ultra-Orthodox men, as of 2018, was 53.9 percent, compared to 88.1 percent among non-ultra-Orthodox Jews. The report concludes that concerning labor productivity, which is the report’s focus, the challenge is particularly in the low volume of schooling and the low quality of teaching. While the Haredi population spends many years in school, those years of schooling are largely ineffective in the labor market, particularly among men.

The report (titled: Raising the Standard of Living in Israel by Increasing Labor Productivity) highlights the fact that beginning in the mid-1970s, subjects relevant to the labor market (Mathematics, English, and Sciences15) have greatly declined as a share of the curricula for boys in the Haredi stream. Most Haredi teens will not learn these subjects at all starting in high school. The gap that has already developed during childhood is reflected in later stages in the negligible rates of people from the Haredi population applying for and receiving matriculation certificates.

The low amount of study in subjects relevant to the labor market at early stages, and application at adult stages to studies that have no connection with the labor market, are reflected in the low level of human capital (relevant to the labor market) among the Haredi population, and particularly among the men. The basic skills of young Haredi men (up to age 40) are lower in all parameters than those of the non-Haredi Jewish population at similar ages. This is reflected in labor productivity gaps between the Haredi and the non-Haredi Jewish population in Israel.

The report by the OECD [Organization for Economic Cooperation and Development] last week forecast that by 2060 Israel will be facing bankruptcy because of rising national debt. It pointed to three threats – lagging infrastructure development, regulations that discourage business and most of all the problem of human capital and that problem is first and foremost about the Haredim due to their growing share in the size of the population.

Source: OECD

Source: OECD

Senior economist Anthony De Lannoy, who monitors Israel on the executive board of the International Monetary Fund (IMF), puts it succinctly in an interview he gave last year: “… the haredim [have] a substantially lower rate of participation in the workforce than other groups, while on the other hand [they] receive most of the social [financial] support. At some point, as this group grows, then the rest, who finance the social benefits, will no longer be able to do so, or else they won't want to, and they'll emigrate.”

The problem has been well understood for years but the politicians have failed to stop the self-destruction, and Haaretz concludes: “we see it today under bright lights: The Haredim are ready to commit suicide from the coronavirus and the politicians are ready to let them do it.”