Haredi Demographics and the democratic point of no return

A senior economist and executive Board Member at the International Monetary Fund (IMF), Anthony De Lannoy, this week diplomatically accused the Israeli government of ignoring the Haredi demographic problem which he implied threatens Israel’s long term economic prosperity.  He alluded to the fact that this rapidly growing poor population is one of the main recipients of Health, Education and Welfare resources yet they contribute very little to the tax base that sustains the Social Welfare system. The burden of financing Haredi welfare is being borne disproportionately and unfairly by other Israelis who work, pay tax and serve in the Army.

Ultra-Orthodox Jews (“Haredim”) currently make up 12% of the population in Israel (1.1 Mio 2018). With a birthrate of 7.1, the Israeli Central Bureau of Statistics forecasts the population to more than double to 2.3 Mio in 2037, and the Bank of Israel forecasts that by 2065, ultra-Orthodox Jews will make up 25% of the Israeli population.

The IMF articulated what Dan Ben David (Professor of Economics & Public Policy from Tel Aviv University, and the head of the Shoresh Institute for Socio Economic Research) has been saying for a while.  If nothing changes and their population continues to rise there is a “democratic point of no return” which, he says, some believe, we may have already crossed.  He is more optimistic and argues convincingly that it is not too late if the government starts to address the challenges of integrating Haredim more fully into Israeli society now. It must begin in the education system. Haredim must study a full core curriculum through the end of secondary school that in turn allows them to go on to university and specialized professions. They must be encouraged to work and earn higher salaries in order to pay their fare share of income tax. Strategically this is as or more important than Army service. The rights and benefits they are entitled to must be conditional on the responsibilities and duties of citizenship. They cannot arbitrage the system. Political power implies social responsibility to the greater good of society as a whole.

The Haredim are amongst the poorest groups in Israeli society.  The plight of hundreds of thousands of children being born into a vicious cycle of self-inflicted poverty is a moral stain on the Jewish and democratic values upon which the State was established. The early founders’ vision of an exemplary Jewish and democratic State caring for the weakest elements of the society has been forsaken for short term political expediency.

Ben David believes the best case scenario for the upcoming election is a unity government between Kahol Lavan and Likud that excludes the Haredim. The current coalition between the right and Haredim is unsustainable economically.  We can’t afford it. Well before the Haredim are 25% of the population in 2065 the economy and democracy will be unsustainable and our military strength and superiority will decline.  If modern Israel is to survive for a thousand years it must maintain its economic and military superiority. That requires addressing the Haredi issue now.

According to Prime Minister Netanyahu, former defense minister Avigdor Liberman is to blame for the second election. He refused to sit with the Haredim unless they agreed to serve in the Army.  The second election of 2019 has turned into a referendum not only on Netanyahu but on the Haredim and their position in Israeli society.  The Haredi issue is much more complex than the inherent unfairness of their refusal to serve in the Army or undertaken National Service.

Professor Ben David explains that partly because of the Haredim Israel has the largest percentage of people living below the poverty line, the biggest educational inequality and one of the lowest Labour Force Participation Rates of any country in the OECD (Developed World).

Haredi males in particular are poor and are encouraged by their communities to study in Yeshivot rather than work.  Primary school children study a very limited core curriculum of secular studies and high school children (14-17) virtually nothing at all. Israel is the only country in the developed world in which a core curriculum is not mandatory for all children. Only 1% of Haredi men get a National Matriculation compared to 77% in the general population. Haredi men have a significantly lower participation in the labour force (51 %) than other groups. A majority of those that do work tend to earn close to the minimum wage of NIS 4,500 and therefore pay very little Income Tax.

The rapidly growing Haredi population puts an even greater tax burden on increasingly fewer tax payers. Israel already has one of the smallest number of tax payers paying 90% of all Income Tax. Anyone earning more than around NIS 18,000 ($5,000) per month is part of the top 20% of income earners paying  92% of all income taxes collected by the Government.  This is highly unfair and the demographics suggest it will get worse. The current system is economically unsustainable.

The real victims here are what Eitan Regev, a Research Fellow from the Israel Democracy Institute, calls the “lost generations of Haredi children” who are being deprived of their right to an education that will enable them to work or earn higher wages, and extract themselves from a vicious cycle of poverty.  Over the last 20 years approximately 120,000 Haredi boys have been deprived of a secular education and over the next two decades if nothing changes approximately 274,000 young men and their offspring will be condemned to poverty. There are currently 308,000 children in Haredi schools between 1-12 grades and a further 124,450 student in Yeshivot. Haredi children are currently 19% of all 1st graders and this is expected to increase to 50% in two generations. Approximately 8,000 Haredi male students graduate 12^th grade each year. Liberman’s plan for integrating them into the Army ramps up to 6,500 a year over 8 years.

There is no other country in the developed world with a poverty problem of this nature and magnitude. Ben David says that it is the responsibility of the State to educate all children equally and provide them with the means to become economically self-sufficient. Professor Ben David argues compellingly that you cannot maintain a 1^st World Army with a 3^rd World Education System.  Fixing this problem now before the numbers become too large is doable. In the future it may be impossible. The survival of the State economically and militarily is at stake. The real victims however are the children who are being deprived of their right to an education that will enable them to work and extract themselves from poverty. If we were talking about a Health issue related to children everyone would understand that the State has the duty and right to protect all children but here it’s as if the children don’t exist. Israel desperately needs to start listening to the IMF, the Bank of Israel and Dan Ben David if it wants to survive.

In New York, Haredi parents and their children who have been similarly deprived of secular educations have bought a Class Action lawsuit against the Government accusing it of failing to provide an equal level of secular studies for all children.  It may not be long before similar claims are being made in Israel.