It's the Haredi Contribution to the Economy, Stupid
There's too much focus on Haredi IDF enlistment and not enough on the massive financial gaps between Haredim and the rest of Israeli society
Amidst the ongoing ceasefire/hostage release, and Trump’s comments about the “voluntary migration” of Gazans (which I hope to address next week), important developments regarding Haredi army enlistment have received less attention than they would have otherwise. Earlier in January, Israel Katz, the new Defense Minister, announced his proposal for addressing the problem. “Because the Haredim will be a third of Israel’s population,” he said, “it is important in my opinion to promote legislation that is based on dialogue and agreement, including by Haredi public leaders. The goals must be realistic and reflect the correct relationship between the desired and the possible.”
Earlier this week, Cabinet Secretary Yossi Fuchs built on this, saying:
The Haredi public sees Torah study as a supreme value. Naturally, not everyone studies day and night. The two biggest challenges facing the Haredi public are a worldview that prioritizes Torah study and fear of a process of secularization. The success of the draft can only take place under conditions that meet these challenges…If you arrest those who learn day and night in yeshiva and turn them into criminals, you’ll turn the entire Haredi community into the Jerusalem Faction.
While one can argue with the specifics of Katz’s plan, I think he’s telling the truth about the problem. Throughout the country’s history, Israel has never forcibly conscripted the Haredim. Suddenly switching direction on this issue without the community’s consent, even considering the new conception that has prevailed since October 7, would be extremely difficult, and there’s no point pretending otherwise.
Less difficult, though, should be addressing the arguably more serious problem of Haredi integration into the country’s economy. According to a recent Israel Democracy Institute study, employment growth has stalled, while the income gap with the rest of the country has grown. As Dr. Gilad Malach, research fellow for the IDI’s Ultra-Orthodox in Israel program, explains:
In order to maintain the same quality of security and economic standards and development, the non-Haredi population will have to carry more of the burden. And this was apparent in public discourse surrounding military service, but the same is true in the economic field. If you have one population that is less integrated, the other population will have to give more.
Around 54% of Haredi men are currently employed, compared to around 85% in the non-Haredi population (for women the figure is 80% vs. 83%). Exacerbating the problem, in January 2024 there was a sudden 8.5% rise in the number of unmarried yeshiva students aged 18-23 compared to the same month in 2023, double the Haredi population growth for the same period and the single largest one-year rise in yeshiva students since 2015. This followed the return of Haredi parties to the coalition and the subsequent 55% increase in state financial support to Haredi yeshivas.
Haredi families pay a third of the income tax, national insurance and health insurance payments than non-Haredi households do, even though the average Haredi household is 1.5 times larger. The average non-Haredi household spends a monthly NIS4,496 ($1,200) on taxes and payments to the state; three times the NIS1,469 the average Haredi household spends. The average Haredi household has a monthly income of NIS14,816, 67% of the average non-Haredi household. This has resulted in a net deficit of NIS400 per month, which was funded by an outstanding loan or overdraft (and possibly some undeclared income). The average Haredi man earns a gross income of NIS9,929 per month, less than half of his non-Haredi counterpart, while the average Haredi woman earns NIS8,617 per month, 67% of the average wage for non-Haredi women.
Just like military service, over the past decade there has been no major progress towards integrating Haredi men into the mainstream economy. Haredim earn just 49% of the wages of non-Haredim, primarily because most of them don’t learn sufficient math, science and English at school. In 2023-24, Haredim represented only five percent of the total number of students in higher education. Just 3.5% of Haredim work in tech, compared to 20% of non-Haredi men.
The problem is very simple: the Haredi community’s contribution to the economy falls far behind their non-Haredi Jewish counterpart, while receiving significantly more funding than it pays in taxes. The Haredi population is growing at a faster rate than any other group in Israeli society. It currently stands at 1.39 million, 13% of the population, but this is expected to rise to 16% of the population by 2030, with their fertility rates still more than double that of non-Haredim, even after a recent decline.
The Bennett-Lapid government wisely conditioned education funds on Haredi schools teaching the core curriculum. This became known as the “Belz arrangement,” because the Belz Hasidim wisely agreed to it. Netanyahu, however, abandoned the arrangement, saying “a Haredi child should not receive less than a secular child.” Over twenty years ago, however, he was proud of the fact that his decision to cut child benefits led to an increase in the Haredi workforce. Now, though, the Haredim hold the key to his political survival, so he is happy to do their bidding, irrespective of the obvious harm it does to the state.
The IDF may be able to survive without mandatory Haredi enlistment; the country cannot survive if the figures above don’t improve dramatically in the coming decades. While there are various programs and initiatives to address the problem, they will all be for nought if the government does not change course. The current policy is quite literally unsustainable. Economies rise and fall. Following the Korean War, South Korea rapidly transformed itself from one of the least developed countries into a developed country; Argentina was one of the world’s richest countries at the beginning of the twentieth century while today it is a middle-income country. There is no country in the world that indulges a section of the population in the way Israel does the Haredim. The problem brings to mind Sarojini Naidu’s reputed quip to Gandhi in Inia: “Do you know how much it costs to keep you in poverty?” The Haredim should be free to live whatever lifestyle they choose, if they don’t impose it on others and are able to pay for it themselves. It is sheer madness to not address this problem robustly, and it is even more galling that the government perpetuating the insanity claims the mantle of patriotism for itself. This must not be allowed to continue.
Not that this will ever happen, but it would seem sensible for the Haredim to borrow a page from Hinduism's "Four Ashrams" and sequester religious study to portions of the lifespan that won't interfere with economic productivity.
Rav David Brofsky, Yeshivat Har Etzion:
“For those who actually experience the consequences - for those whose cities or towns have very little money to invest in parks, schools, and infrastructure because a significant percentage of their population, in principle, lives below the tax bracket, for those whose taxes are higher because other communities choose not to participate in the tax burden, for those whose children spend years in the army defending a community which in principle doesn’t bear the burden of participating in the country’s defense - these are actually real issues. All societies are made up of those who are wealthy, those who are in the middle-class range, and those below. And by definition, societies are meant to provide for all, and individuals certainly can choose to enter high or low paying fields. I am referring to the ideology of an entire community - which denies its children the education necessary to enter the workforce in a significant manner… I believe, as a community, there should be an evaluation of whether those decisions are considerate of the broader population.”