Economy and Governance

We examine the increased burden of reserve service that the defense establishment is seeking to impose on the population groups that already perform regular and reserve service, and the economic-budgetary implications of this step for the period through to 2050.

IDI's Prof. Karnit Flug, VP of Research and the William Davidson Senior Fellow for Economic Policy joined Jeff Schoenfeld, Chair of the Jewish Federation's Israel and Overseas Committee and Bloomberg's Galit Altstein to discuss the implications of the ongoing war in Gaza on Israel's economy.

Israel's Commission of Inquiry into the Mount Meron disaster released a report that criticizes shortcomings in the culture of accountability in Israel. The Committee distinguished between personal responsibility and ministerial responsibility and offered important recommendations, including for police operations during mass events.

What is the connection between the expiration of the conscription law and the budgets for yeshivas? What exactly was discussed in the Supreme Court and is the state in violation of the law? Bottom line, will the ultra-Orthodox be recruited, or not?

Over the weekend, Moody’s Investors Service announced that it had downgraded Israel’s credit rating from A1 to A2 and assigned it a “negative” credit outlook. Our policymakers would be well advised to study the risk analysis and assessment in Moody’s report closely and to take all possible steps to mitigate the risks. 

Israeli reserve soldiers are making unimaginable sacrifices to protect their country. To rise to the challenge of meeting the IDF's expanded personnel needs, Israel's policy solutions must be as diverse as are the reservists serving this nation. A "one-size-fits-all" compensation approach will not cut it. 

A decision to allow Palestinian workers back into Israel is not at all a simple matter. Despite recommendations by Israel's security agencies to allow entry to Palestinian workers, the Ministers of Construction and of the Economy oppose it for security reasons. As alternative solutions to the severe shortage of workers are unsatisfactory, we must ask ourselves whether we, as a country, are prepared to withstand another socioeconomic crisis.

This survey was conducted in order to assess public opinion regarding the preferred economic policy in light of the war in Gaza, to identify the main areas of concern to the public, and to examine the public’s views on various social issues.

Coalition funds have been part of the budget-making progress for years. This study examines the trends in the use of these funds under the last three governments. One can see that the volume of coalition funds has grown up to fourfold within two Governments and that their breakdown has been less professional and more directed to interest groups.

Even in these dark times, Israelis must hold on to the imagination, ingenuity, and entrepreneurial spirit to face the global challenges that lie ahead.

The ongoing war poses unprecedented challenges—military, civilian, geopolitical, and economic. Our focus is on providing necessary responses to the needs of the military, the needs of those directly affected in combat areas, mitigating the financial damage to businesses and employees, and rebuilding the communities destroyed on October 7.

The government of Israel must recognize the strategic importance of agriculture, the food sector, and other industries producing goods that are vital for the country’s security and for the continued functioning of the business sector during times of emergency and war

As the brutal attack from Gaza continues, the possibility of a change in the composition in the government is being bandied about. What kind of government is possible and what has been done in the past?

Earlier this year, we published an article warning against the dangers of the judicial reforms, to our regret, many of the negative developments about which we warned at the beginning of the year have already come to pass.

Ditching the 5-year plan for the Arab sector will have adverse long-term effects on the Arab's sector ability to integrate into Israel's shared society.

Less than 24 hours after the Knesset passed the “Reasonableness Law” the attorney general filed her professional opinion to the Supreme Court on an entirely different matter: the “Incapacitation Law.” What do the two amendments share in common?

When Israeli liberals depend solely on the Supreme Court for checks and balances, they are taking a big risk. It is essential to add veto points as human rights in Israel should not depend on the Supreme Court alone - decentralization of government is key. 

This paper seeks to elucidate the economic consequences of the judicial overhaul. It approaches the topic through the lens of the new institutional literature in economics, which has extensively addressed the link between democratic institutions and the economy in recent decades.

The Authority for the Advancement of Women's Status and agencies like it are being gutted along with protections for women

“I want to maintain a strong, independent system of higher education” Yoav Kish, Minister of Education

High cost of living in Israel is addressed at the Eli Hurvitz Conference on Economy and Society.

Bank of Israel Governor: “the Israeli economy has experienced a significant shock in recent months following the proposed changes to the judicial system... continued uncertainty has significant economic costs.”

40% of Israelis aged 25–44 cited the high cost of living as the issue that concerns them most. 80% of them have had to give up one or more item of expenditure, particularly leisure activities and vacation in Israel and abroad, and about 30% have refrained from buying basic items, food, or cars.

New survey of Israeli workers reveals changes in levels of satisfaction post COVID pandemic: Most workers in Israel are satisfied with their work-life balance, despite the fact that half of them work more than their official number of hours; around a third report difficulty with functioning in family life

Even though the tax seems to have reduced the use of disposable utensils, its repeal demonstrates that a sustainable change in behavior requires additional measures, including running information campaigns tailored to the ultra-orthodox, making alternatives available, and encouraging their use.

The impact of the proposed changes to the judicial system on the financial balance of Israeli households: analysis of the M.O.F risk scenarios by income deciles

Over the past decade average real wage of Israeli workers increased by 25% - nevertheless their purchasing power is relatively lower than the OECD average

Behind the record number of job openings, in an age of full employment and an economy with rapid growth, what steps can the government take to promote the inclusion of workers currently outside the job market and to help businesses?

“The issue I want to talk about is extremists versus moderates. Those who want to destroy and tear apart, versus those who want to build. And that’s what these elections are about. This is the struggle we have to win.” Alternate Prime Minister and Foreign Minister Yair Lapid 

A new study by IDI experts Prof. Yotam Margalit, Gabriel Gordon and Zak Hirsch finds that the Israeli Economy is transitioning towards occupations in which the main tasks require high analytical abilities and to a lesser extent interpersonal abilities. Occupations which mainly require routine-physical abilities are diminishing rapidly

The rapid rate of technological development requires an examination of the changes in demand for workers, specifically in terms of the tasks that make up different occupations. This study offers such an examination along with recommendations for action

Tamar Zandberg Minister of Environmental Protection: “On Sunday, together with Minister Karine Elharrar and Minister Orit Farkash-Hacohen, we will bring a precedent-setting NIS 3 billion government decision to promote innovation & climate change. This decision includes many of the removal of barriers proposed by the Israel Democracy Institute”

Despite the health and economic crisis that has affected Israel since March 2020, the share of those who say they are satisfied with their economic situation (“somewhat satisfied” or “very satisfied”) has risen from 28% in the summer of 2019 to around 33% in May 2022.

This report presents the results of the work led jointly by the Israel Democracy Institute and the Israel Innovation Institute - a proposal for government policy to promote climate innovation

New IDI study finds that only 14% of Israeli children in the bottom income quartile will reach the top quartile

Israel hi-tech sectors is one of the largest and most innovative in the world, accounting for around 10% of jobs in the country - but innovation to be limited to what is still a minority of the workforce. 

This study examines patterns of intergenerational mobility and found considerable differences between different population groups

How will Israelis react to a new tax on sugary drinks? A special IDI survey found that only a quarter of the public said that they would reduce their consumption of such drinks if they are taxed up to half a shekel, but a significant majority said they would limit their consumption if the tax exceeds two shekels.

The "great resignation" that has swept the US and UK in recent months is one of the symbols of the recovery from the pandemic. Is this trend taking place in Israel too?

Meirav Cohen, Minister of Social Equality: “Employers should be given incentives to choose older workers”

Minister of Environmental Protection Tamar Zandberg, Minister of Energy Karin Elharar, Minister of Transportation Merav Michaeli and Minister of Economy Orna Barbibai in a joint declaration at IDI's Conference: "We will cooperate on Israel's climate policy, to lead to an 85% reduction in Israel's greenhouse gas emissions by 2050."

Avigdor Liberman, Minister of Finance, opened the first day of the 2021 Eli Hurvitz Conference on Economy and Society, saying: “We are after more than three years of political crisis without a budget, reforms or legislation. The economy ran on a kind of autopilot. We will now pursue a responsible policy, without deep cuts.

“Two challenges hover above the rest – a stock market bubble and inflation”

Outgoing OECD Secretary General Ángel Gurría is a close friend of Israel whose name has become synonymous with the organization itself. Gurría's long tenure saw Israel implement a number of important OECD reforms, will this continue after his departure?

As Covid-19 continues to take Israeli lives and ravage its economy, seemingly immune to Israel’s impressive vaccination campaign, IDI President Yohanan Plesner and Professor Karnit Flug, Vice President, Research and William Davidson Senior Fellow for Economic Policy joined IDI's VP of Strategy Dr. Jesse Ferris on a JFN webinar to discuss the stakes and possible outcomes of Israel’s fourth election in less than two years.

A special IDI survey on the economic impact of the COVID crisis finds that worker's financial liquidity has declined sharply with 31% of respondents reporting that they had no liquid funds to support themselves.

Politicians and healthcare practitioners alike must learn from their experience and formulate strategy before it is too late.

Prof. Karnit Flug unpacks the effects of the COVID pandemic on the Israeli economy: Does the fact that Israel is a small and centralized economy work in its benefit and how quickly will it bounce back?

Defense Minister Benny Gantz: "Elections should be avoided, there should be a budget and a functioning government; I have no intention of replacing Avi Nissenkorn – he is doing a good job and we are committed to preserving democracy and judicial institutions."

Dr. Aliza Block, mayor of Bet Shemesh:"The idea that a senior official sits in Jerusalem and knows how to decide for me which streets or stations to close is fundamentally wrong."

The 2020 Eli Hurvitz Conference on Economy and Society concluded today following special addresses from the Alternate Prime Minister Benny Gantz and Chair of the Opposition MK Yair Lapid as well as discussions and deliberations with Minister of Health Yuli Edelstein, senior WHO and local health officials and mayors from throughout Israel.

The second day of the 2020 Eli Hurvitz Conference on Economy and Society concluded following discussions and deliberations with IDI experts, leading academics, key regulators and senior officials from the public and private sectors.

As part of the Israel Democracy Institute’s Eli Hurvitz Conference on Economy and Society, a panel took place with the participation of Minister of Education Yoav Galant and a number of education experts, focusing on preparing the education system for the post-COVID reality. Eli Hurvitz, executive director of the Trump Foundation, served as chair of the panel.

The labor market panel at the Israel Democracy Institute’s Eli Hurvitz Conference on Economics and Society dealt with the challenges and opportunities of the employment market in the post-Covid era.

A new survey conducted by the Israel Democracy Institute (IDI) examined Israeli's attitudes toward climate change and the possible steps to stem the tide.

The first day of the 2020 Eli Hurvitz Conference on Economy and Society included discussions and deliberations with the Finance Minister Israel Katz, Prof. Amir Yaron the Governor of the Bank of Israel, Prof. Avi Simhon, the Chair of the National Economic Council, and senior private sector leaders from Israel and abroad. 

As part of the Israel Democracy Institute’s Eli Hurvitz Conference on Economy and Society, a panel was held (Dec. 14th) on the implications of the global crisis on Israel, including the labor market and the question of the budget, US–Europe–Israel relations in the Biden era, changes in times of crisis and routine, and preparedness for future challenges.

"If you look at the S & P, close to 86% of companies today report on Environmental, Social, and Governance (ESG) compared to a decade ago" said Anat Levin, CEO, BlackRock Israel, on the topic of how the global financial market adapts itself to ESG

Chen Lichtenstein, Chief Financial Officer, Syngenta Ventures: “Tthe challenges and complications a small country like Israel faces, is a drop in the ocean by comparison. Israel should be able to easily make decisions of the same explicit impact – the word zero is critical.”

For the past two years, the Israel Democracy Institute, in collaboration with the Ministry of Environmental Protection, the Ministry of Transport, the Ministry of Energy, the Ministry of Economy, the Ministry of Finance, and the OECD, has been leading a multi-sectoral and cross-ministerial process.

The Israel Democracy Institute’s Eli Hurvitz's Conference on Economics and Society opened today with a session titled "From Recession to Growth: Macroeconomic Policy" focusing on ways to accelerate Post-COVID economic growth in Israel.

One of the very few pieces of good news resulting from the corona crisis is the increase in people working from home (WFH). Unfortunately, workers from lower socioeconomic groups are not benefiting from this change.

“Meridor's resignation raises serious concerns that management of the worst economic crisis Israel has encountered in recent decades is characterized by a lack of systematic policies or priorities" 

Do Israelis want their government to improve the economy's readiness for the climate crisis? IDI's special survey on public attitudes to the climate crisis says that an overwhelming majority (89%) says "yes."

A growing number of countries around the world have realized that vocational training and subsidies for the training period can increase the demand for workers. Israel's government should follow this lead, while at the same time accelerating the pace of development of infrastructure projects, to increase the demand for skilled workers.

The coronavirus has made working from home much more prevalent, and has many advantages, including improving efficiency and providing workers with more flexibility. But how do we ensure that it does not increase wage disparities and provide even more advantages to those who are already the higher earners? IDI experts weigh in with recommendations to ensure that all sides benefit

The current crisis threatens the heart of the labor market with 400,000 workers between the ages of 35-54 designated as "temporarily absent from work" due to the coronavirus

Daphna Aviram Nitzan presents an analysis of unemployment in Israel in the wake of the coronavirus pandemic.

Prof. Karnit Flug's press briefing today focued on the Coronavirus’ effect on the Israeli economy and policies that could mitigate the damage inflicted by the pandemic.

What will be the economic ramifications of the coronavirus outbreak on the Israeli economy? Prof. Karnit Flug explains.

The Israel Democracy Institute Names Former Bank of Israel Governor Karnit Flug William Davidson Fellow - new partnership will focus on ensuring Israel’s continued economic vitality.

Prof. Karnit Flug, former Governor of the Bank of Israel and currently Vice President for Research at the Israel Democracy Institute, analyzes the strengths and weaknesses of the Israeli economy.

Developing human capital in Israel is the key to narrowing the labor productivity gap as a key to reducing income disparities

Eli Hurvitz Conference on Economy and Society – First Day, Second Session

Prof. Karnit Flug, Vice President of IDI and Former Governor of the Bank of Israel spoke at the 2019 Eli Hurvitz Conference on Economy and Society: “With no government in place, the ability to make economy-related decisions is impaired. In the current situation, what is done depends entirely on what the Knesset Finance Committee is prepared to do."

Benny Gantz, Chair of the Blue and White party and former IDF Chief of Staff spoke at the 2019 Eli Hurvitz Conference: "Government ministers bicker daily with the professional echelon - a situation that harms Israelis"

Yohanan Plesner, President of the Israel Democracy Institute and Prof. Eugene Kandel, CEO Start-Up Nation Central, open the two day conference, welcoming senior executives from the public and private sectors. 

Reducing the regulatory burden is a key objective for many government ministries -but how can this be achieved while maintaining honest and ethical behaviour

Profit remains the ultimate objective, but the focus should be on profit for all those with a stake in a company, and not just its shareholders

In response to the Ease of Doing Business 2020 index that was published this morning, Daphna Aviram-Nitzan, director of the Center for Governance and Economics at the Israel Democracy Institute, who leads the regulation reduction project at the Institute, commented on Israel moving up 14 slots to the 35th place after 5 points improvement last year.

Excerpts from the presentation of Prof. Karnit Flug, IDI’s newly appointed Vice President, at the ‘Globes’ Governors Conference”

Two and a half weeks ahead of the elections, a special IDI survey reveals that the Israeli public gives government economic policies a failing grade and supports increasing the budgets allocated to health, education, welfare, and public transportation services

Reframing the eco-system to prepare for Israel’s job market of the future.

Israel improved by five spots over last year in the index of 190 countries. In first place is New Zealand, followed by Singapore, Denmark, Hong Kong, and South Korea. The Ease of Doing Business Index is an international indicator of how easy it is to do business in various countries.

Guaranteeing an independent Supreme Court. Integrating the Ultra-Orthodox into the IDF. Boosting participation of Arab women in the workforce. Improving the ease of doing business in Israel. These are some of the challenges facing IDI’s new cadre of program and center directors.

The “Regulatory Roadmap for Investors” was initiated against the backdrop of the heavy bureaucratic and regulatory burden with which the business sector must contend when establishing new manufacturing plants and doing business in Israel.

Israel’s ranking on international indices of regulatory and bureaucratic burdens has been far from flattering - a closer look reveals the difficulty in complying with the demands of the complexity and inefficiency of Israel’s bureaucracy and regulatory system.

Israel suffers from a shortage of skilled workers in manufacturing industries and hi-tech and an overflow of the service sector; priorities in the allocation of public resources for the training of human capital must be changed to better fit the needs of the economy.

The number of vacation days in Israel is among the lowest in the world. Research by Prof. Yotam Margalit presents a new model which will ensure a minimum of 18 vacation days for each worker.

Dr. Peter Jarrett, the head of the Country Studies Division at the OECD, says the government must do more to integrate all Israelis into the economy if it is to continue to prosper and grow. "Boasting that Arabs and Ultra-Orthodox Aside, Israel's Situation is Excellent - is Simply shortsighted and Foolish."

An ambitious plan aims at slashing the 4-6 years it currently takes to pass all the regulatory hurdles in Israel

Our Democracy Index shows that while Israel’s citizens love their country and are optimistic about its future, they feel a lack of confidence about their personal futures.

Survey to serve as backdrop for discussion at Eli Hurvitz Conference on Economy and Society – June 19 and 20

In a dynamic labor market, challenged by technological disruption and increasing longevity, flexibility is key.

The Knesset’s top priority for 2017 should be to restore the Israeli public’s belief in its political institutions.

Is Israeli democracy weak, fragile and on the brink of collapse, or is it robust, stable and resilient? 

srael's GDP is 40 percent lower than that of the U.S. and its level of productivity is 33% less than most OECD countries, according to a presentation by Dr. Karnit Flug, governor of the Bank of Israel.

The integration of talented Arab employees into Israel’s hi-tech sector could relieve the human-resources shortage for employers. Encouraging Arabs to enter the hi-tech industry could improve their economic situation significantly, which would reduce inequality and contribute to a reduction of social tensions in the Arab community.

Dr. Benny Porat discusses the precept of debt cancellation during the sabbatical year (Shemita) and proposes ways in which to update this practice to suit the economics of contemporary Israel and create a model society. 

On December 8, 2014, just before the Knesset dissolved itself to prepare for early elections, it enacted the Law for Prevention of Infiltration and Ensuring the Departure of Infiltrators from Israel. IDI's Dr. Reuven (Ruvi) Ziegler reviews this development.

IDI Research Fellow Yair Sheleg outlines four steps that can allay fears, contribute to dialogue, combat hatred, and improve relations between Jews and Arabs in Israel

A summary of a legal opinion opposing the "Law for the Advancement and Protection of Print Journalism in Israel," which would prohibit the distribution of a full-sized daily newspaper in Israel free of charge.

Dr. Tehilla Shwartz Altshuler discusses the challenges to transparency in the budgets of Israel's local authorities, including the need to make budgets accessible, to enable searches within budgets, and to facilitate comparisons between the budgets of different authorities.

Dr. Amir Fuchs discusses the Israeli High Court of Justice's decision to uphold the "Admissions Committees Law," which allows small communities to reject applicants due to a lack of social suitability. 

An exploration of the existential, social, and economic dimensions of the Shmita year, that calls for bringing together social, moral, cultural, religious and national forces to implement the idea of Shmita in non-agricultural and national contexts in Israel.

As Israel prepares to celebrate its independence, Rabbi Dr. Benjamin Lau and Ms. Shira Ruderman remind us of the need to bring people with disabilities into the circle of those who celebrate independence, drawing on the legacy of the late Prof. Reuven Feuerstein in this call for integration. 

In an op-ed in <em>Haaretz</em>, Prof. Mordechai Kremnitzer discusses government corruption in Israel and the implications of the Holyland verdict for deterring such corruption in the future.

Prof. Mordechai Kremnitzer explains the importance of the fifth meeting of IDI's Police and Society Forum, which was dedicated to the question of partnership and transparency in the relationship between the Israel Police and Arab society.

IDI Vice President of Research Prof. Mordechai Kremnitzer responds to the possibility that the police will use administrative detention to combat organized crime, much in the manner as it is used to combat terrorism. 

A study conducted by IDI Senior Fellow Prof. Momi Dahan that reveals that there has been a continuous narrowing of income gaps between Israelis of European-American origins and of Asian-African origins since the 1990s.

Dr. Reuven (Ruvi) Ziegler shares observations on the decision of the Israeli Supreme Court that an amendment of the Prevention of Infiltration Law that mandated lengthy detention of asylum seekers is unconstitutional.

IDI researcher Dr. Benjamin Brown discusses the sense of attack experienced by the Haredi community in the 2013 election campaign and calls for a process of gradual change in integrating the ultra-Orthodox in the Israeli army and workforce.

Research conducted by IDI's Arab-Jewish Relations project reveals a disparity between student achievement in the Jewish and Arab sectors. This abstract points to the variables that explain these disparities.

In an op-ed, originally published on the Ynet website, IDI Senior Fellow Dr. Momi Dahan reflects on the wave of social protest of the summer of 2011 and stresses that the response to the protest must be a new social-economic agenda.

In this article, originally published in Haaretz on April 1, 2010, IDI Senior Researcher Prof. Avraham Ben-Bassat warns that Israel's policy of reducing taxes should be frozen since it may precipitate an economic crisis, and advocates giving preference to increasing public spending while preserving the economy's stability.

Prof. Yedidia Z. Stern examines the reality of the ongoing financial crisis, and tries to explain how such a rational industry gets carried away with reckless decision-making procedures.

In an article originally published in Hebrew in IDI's online journal Parliament, Naomi Himeyn Raisch surveys the unique characteristics of women's organizations and how they affect productivity in Israel.

Despite last summer's war in Lebanon, Hamas's rise to leadership, Hizbullah rockets being aimed at Israeli cities, and international boycotts, Israeli economy is thriving, the national debt and unemployment have significantly dropped, and investors continue to look to Israel as fertile ground for investment.

In an article originally published in the Forward, Prof. Momi Dahan argues that it is possible to fight and reduce poverty without increasing taxes. 

As of the beginning of December 2020, 75% self-employed workers were working, though 45% were working only part-time. Only 29% were working the same number of hours as before the crisis.

"In order to change this trend, we must increase the use of technological tools and behavioral economics."

Monthly survey also finds that 84.5% of Israeli public defines mood as good or very good while 43% expresses trust in Prime Minister Netanyahu.

With 50% of young Haredi men expected to enter the labor market actually those with poorer skills and abilities, there is an urgent need for an in-depth rethinking about Haredi education. 

The state and its Arab leadership, not only the political leadership, must work together to bring as many Arab citizens as possible into the decision-making echelons.

For Israel's economy to grow, significant investment in building a strong and effective infrastructure for occupational training and reemployment is critical.

The north presents real opportunities for Israel’s society and economy. Turns out that the solutions have been in plain sight all along.

Ministry of Finance’s Hizkiyahu: ‘Israel has an anti-business environment’

Day 2 of the Eli Hurvitz Conference on Economy and Society highlights challenges and solutions for Israel’s excess regulation and bureaucracy

‘In skills and problem solving, we are at the bottom [of international indices] and it is quite embarrassing for a country that is referred to as the Startup Nation,’ Flug said

Avi Simhon, PMO’s Office: Those without special skills will find themselves competing with China, the Philippines and Thailand

Reem Younis of Alpha Omega: Arab engineers are being trained in Israel but leaving the country

Minister Bennett, Startup Nation Central's Kandel and Leumi Group’s Russak-Aminoach headline 2017 Eli Hurvitz Conference on Economy and Society

With the featured participation of: Bank of Israel Governor, Education Minister, Economy Minister, Director-General of the Finance Ministry, Director-General of the Prime Minister Office, Chairman of the Histadrut Labor Federation, Director-General of Bank Leumi, Director General of Microsoft Israel and other VIPs

Top Israeli economist, Professor Eytan Sheshinski, has joined IDI as a senior researcher in the Center for Governance and the Economy, under the leadership of Dafna Aviram-Nitzan.