Israel's Next Economic Miracle?

Haredim and Arabs must be integrated into society and economy to take the start-up nation to the next level

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Technological innovation and material prosperity are the hallmarks of the start-up nation. However, certain sectors of Israeli society are not experiencing the benefits of our hi-tech economy. With Arabs and haredim on the periphery, Israel is like a five-cylinder engine running on only three cylinders.

In order to propel Israel’s economy forward, we must look inward and take advantage of these two readily available but hitherto untapped resources. It is time to stop treating Arabs and haredim as liabilities who produce a drag on economic performance and start treating them as resources that could vault Israel’s economy into the top 10 of the OECD.

And the pathways to their success may be quite similar.

Both the haredi and Arab populations, which amount to a combined 30 percent of Israel’s population, are effectively cut off from the rest of Israeli society. The haredim, who totaled approximately 1,000,000 people at the end of 2016 (11% of the population), for generations have chosen to erect “walls of holiness” to separate themselves from the rest of society and ensure the continuity of their cherished religious traditions.

Similarly, the Arab citizens of Israel, who totaled 1,800,000 at the end of 2016 (21% of the population), live in separate, homogeneous towns and study in separate school systems from their Jewish neighbors. In addition, most Jews in Israel do not speak Arabic, and the level of Hebrew among many Arabs is relatively low, increasing the challenge of living shared lives.


It is time to stop treating Arabs and haredim as liabilities who produce a drag on economic performance

Today, the majority of haredi students study in educational networks partially exempt from Education Ministry requirements.

Only 10% of haredi students earn matriculation certificates, versus 70% of their non-haredi peers. Similarly, only around 50% of Arabs earn matriculation certificates. The matriculation exam is taken by high school seniors to determine for which universities and university majors they can apply.

When it comes to employment, haredi men and Arab women find themselves in a similar position. In 2016, the employment rate stood at 52% for haredi males and 77% for Arab males, as compared to 87% among non-haredi males. Among women, corresponding figures were 73% for haredi women, 32.3% for Arab women, and 82% among non-haredi Jewish women.

The proportion of haredim and Arabs living beneath the poverty line is much greater than that of non-haredi Jews: roughly 54% of haredim and 53% of Arabs live in poverty, as opposed to 10% of the rest of the Jewish population in Israel.

However, the walls are beginning to crack.

The public, politicians, academicians and the media are waking up to the need to ensure haredim and Arab citizens of Israel integrate into the economy and society, and have equal opportunities for success.

This is both the moral and practical thing to do, for the benefit of haredim, Arabs, and for Israeli society as a whole.

FOR STARTERS, both populations need to increase their schools’ focus on core subjects, such as science and math; mathematical ability is proven to be a major predictor of students’ future success in the labor market— especially the knowledge economy.

Likewise, there need to be shifts in the curriculum to better prepare students for employment. In the Arab school system, this might mean changing the Hebrew-language curriculum from one that celebrates literature to one that ensures a high level of practical Hebrew. In both school systems, this would mean improving the English-language offerings to prepare students for jobs in the increasingly global marketplace.


Integrating Arab and haredi citizens into society and the economy will foster greater solidarity among all Israelis

Further, much of the job market and opportunities for social mobilization revolve around the army. The IDF has a department dedicated to assisting released soldiers. It also offers courses to help soldiers complete their matriculation exams while serving, employment opportunities specifically aimed at decommissioned soldiers, and tax benefits for companies that hire recently released military personnel.

However, most Arab citizens are exempt from army service because of the enduring conflict. And due to cultural and religious challenges, the majority of haredim request an exemption from service.

Therefore, just as the state managed in previous years to successfully increase the number of haredim who serve in the IDF, the state and its Arab leaders need to come to an agreement about alternative volunteer opportunities for the Arab community's young men and women.

Israel must simultaneously invest in geographically convenient and culturally sensitive career training programs for young Arabs and haredim.

ALTHOUGH MUCH of the responsibility for change rests with the non-Arab, non-haredi Jewish majority, the leadership of these two sectors could do more to advance the cause.

In fact, with the Arabs and haredim together constituting almost one-third of Israel’s population, their political representatives (the haredim as part of the governing coalition, and the Arabs as part of the opposition) should be able to form an effective lobby to accomplish these changes. Cooperation between Arabs and haredim would help their respective populations and also advance Israeli society toward a future of greater solidarity and social cohesion.

Admittedly, working together poses complex challenges. Our recent Israeli Democracy Index found that while most haredim believe in democracy, they want to limit the right of freedom of expression and full equality of Israel’s Arab minority.

However, there have been times in the past where the two communities collaborated politically on issues relating to religious rights and child allotments. They can use those past wins as stepping-stones for the future.

And even if collaboration proves difficult, Arab politicians could take a lesson from haredi leaders about how to advocate for their constituencies. Moreover, the time has come for Arab political leaders to be considered for participation in the governing coalition and be able to sit around the table when the most important decisions are made for the State of Israel.

Of course, while haredi politicians are making demands of the government, they should also consider supplanting the traditional focus on matters of personal status with forward-looking concern for the practical aspirations of their constituency, which according to all surveys wants to escape poverty.

Ultimately, integrating Arab and haredi citizens into society and the economy will foster greater solidarity among all Israelis and could set the stage for Israel’s next economic miracle.

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