The market solution to the Haredi draft crisis

The Israel Democracy Institute has confirmed what conscript soldiers have always known: there is a fundamental inequality in the economic burden of national security in Israel.

The conscript soldiers earning NIS 2,500 ($815) per month — below the minimum wage, below what Palestinian workers earn, below the stipend of a Haredi yeshiva student — are being systematically exploited. Their high intrinsic motivation to serve is being used against them to accept poverty wages. Since October 7, they have fought the longest, costliest war in the country’s history at this poverty wage. No voice speaks for them. They deserve better.

In March 2026, IDF Chief of Staff Lt. Gen. Eyal Zamir told the security cabinet, “I am raising 10 red flags before the IDF collapses.” The IDF is currently short 12,000 soldiers — a gap projected to reach 17,000 by year-end. This is the IDF’s own leadership, on the record, about an institution heading toward collapse.

Dr. Gilad Malach, co-author of the Israel Democracy Institute’s landmark June 2026 research report on the true cost of national security, says there is a fundamental inequality in the economic burden of national security between Israeli citizens. By quantifying the hidden tax on conscript soldiers at NIS 18.4 billion ($6 billion) per year, his research implicitly acknowledges that those who serve are being systematically underpaid — that the gap between what they receive and what their service is worth is real, measurable and large.

Serious Israeli economists and military analysts agree the transition towards a professional army is inevitable but question when and how it should happen. Asher Tishler and Sasson Haddad’s modeling shows a professional army would increase military effectiveness. The INSS has acknowledged that the transition to a professional army is both desirable and inevitable, and documented a measurable decline in motivation for combat service. RAND’s 2024 report, co-written by Amos Harel, concluded that the current conscript model is “no longer a good fit for today’s reality.” A 2021 IDI survey found that 54 percent of Israelis aged 18–44 support abolishing mandatory conscription and replacing it with a professional army.

Milton Friedman, the Nobel Prize-winning economist, built his case for a professional US army on five arguments. He regarded the abolition of the US military draft as his greatest policy achievement. After the United States implemented the professional army in 1973, all five arguments were proven correct. Each applies directly to Israel today.

1. Conscription imposes a hidden tax

When the state compels young people to serve at below-market wages, it imposes an invisible tax equal to the gap between what soldiers are paid and what their labour is actually worth. In Israel, the IDI has now quantified this tax for the first time: NIS 18.4 billion per year ($6 billion) — NIS 9,073 ($2,962) per soldier per month. This tax is borne almost entirely by non-Haredi Jewish men and women aged 18–21, Israel’s most economically vulnerable citizens, at the very start of their working lives. Dr. Malach says he hopes the research will be a turning point in discussions about the true cost of national security and the Haredi security subsidy. But the IDI does not propose a remedy for the soldiers themselves. That gap is what this article addresses.

2. A professional army is actually cheaper

This seems paradoxical — surely paying soldiers more costs more? Not when the implicit tax is accounted for. The IDI estimates the net annual cost of paying conscripts a fair market wage at NIS 18.4 billion ($6 billion) — 1.06% of GDP and 15.7% of the defense budget. This is deliberately conservative: it takes no account of fiscal recoveries from Haredi benefit cancellations or the broader economic dividend from labor market integration. OECD research finds that countries which abolish conscription gain approximately 0.5% of GDP annually — and even a modest multiplier on the additional wages would add at least a further 0.5%.

3. Raise the wage and you will find the soldiers

The coercive approach has been tried and failed catastrophically. 79,836 draft orders were issued to eligible Haredi men. The result: 1,850 enlistments — a 2.7% compliance rate. Coercion will not work, and social unrest will plague any government that tries it. Friedman’s response is immediate: you are not paying enough.

The IDF’s projected year-end shortfall of 17,000 soldiers represents just 21% of the approximately 80,000 eligible Haredi men not currently serving. This is the breakeven rate: the minimum voluntary participation needed to close the gap entirely, without a single court order, demonstration or water cannon. The IDI’s own research shows Haredi male workforce participation responds immediately and measurably to economic incentives. Over 40% of young Haredim live in poverty. A professional army wage is the most powerful economic incentive ever offered to them. 21% is not an ambitious target. It is a conservative floor.

4. Taxation is a fairer way to share the burden

Conscription falls entirely on young people aged 18–21. A tax falls on everyone. Two options are available: a national security levy of NIS 548 per month per net income taxpayer, or a 2% VAT increase — from 18% to 20% — which raises NIS 20 billion per year and covers the entire cost. VAT is fairer: universal, unavoidable, and paid by every household, including large Haredi families. Israel set this precedent in January 2025 when it raised VAT by one point to fund defense costs. For the first time, the cost of national security would be truly and equally shared by all Israeli citizens.

5. The military has no institutional incentive to change

Friedman identified one final obstacle: the generals themselves. Military commanders will always oppose a professional army — not because they are wrong about military matters, but because more conscripts means more manpower, more budget, more institutional prestige and more political influence. Their opposition is not dishonest. It is institutionally inevitable. But it should carry no more weight in a democratic policy debate than the opinion of any other party with a direct financial interest in the outcome. When the Chief of Staff opposes a professional army, he is speaking as someone who stands to lose from it — not as a neutral witness.

Some argue that after October 7, Israel needs a larger army, not a smaller one — but coercion has failed and will continue to fail. Israel needs a national commission to plan the transition to a professional army, but this must not delay the urgent step that can be taken immediately: paying conscript soldiers a fair market wage now.

When Friedman made his case, the then US Chief of Staff said he did not want to command an army of mercenaries. Friedman replied: “General, would you rather command an army of slaves?” The exchange ended the argument in America. In Israel, we have not yet begun.

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This article was first published in Hebrew in Zman Yisrael on 26 July 2026.