Ultra-Orthodox Political Power Threatens Israel's Economy, Study Says

The ultra-Orthodox parties emerged from April’s election stronger than ever, which will enable them to demand more cabinet posts as well as bigger budgets for yeshivas, while empowering them to push back on plans to draft Haredi men and require more secular studies at Haredi schools.

But as Prof. Dan Ben-David, the Tel Aviv University economist and head of the Shoresh Institution, points out in a study released this week the latest ultra-Orthodox gains are part of a long-term trend with an important impact on Israeli society and the economy.

The study says that rising Haredi political power has translated into changes in Israeli government policy that have placed a burden on the economy and social welfare.

“The nearly unbroken inclusion of religious and Haredi parties in Israeli coalitions has intensified the changes in national priorities,” Ben-David said in the report. “Big spending in the West Bank, the Golan, Sinai and Gaza went hand in hand with a major transfer of money to Haredi interests, from increased welfare payments and more subsidies for Haredi schools.”

The impact goes beyond how the government spends it money. “The latter [Haredi schools] avoid teaching a core curriculum after eighth grade for what is the fastest growing segment of the population,” he said.

The Shoresh report points to a host of economic and social indicators that it says have been impacted by the growth of ultra-Orthodox political power in Israel. For example, on a per capita basis the number of psychiatric hospital beds is 45% less than it was in 1977 while the number of senior faculty at Israeli universities is down 60% from its 1973 level.

Other indicators have also deteriorated. The number of cars in Israel per kilometer of road was about the same as smaller European countries in 1970; today the number in Israel is three times the average for those same countries. Young Israelis are among the worst performers in the developed world in international exams of student achievement – and that low score doesn’t include Haredi students who don’t even get a general education.

Ben-David said the reason isn’t a lack of budgetary resources. Israeli government spending on non-military activities is about average, and sometimes even more, over the last four decades compared with other countries belonging to the Organization for Economic Cooperation and Development.

Rather, the problem was the change in government priorities as ultra-Orthodox political power grew over the decades.

In the 1973 election, ultra-Orthodox parties garnered just 3.7% of the vote. Before 1977, when Menachem Begin’s Likud party ended Labor Party rule and formed a right-of-center coalition for the first time, no Haredi party had ever agreed to join a government. Since then, they have been partners in ruling coalitions in 39 of the last 42 years.

In the April 9 election, the two Haredi parties – United Torah Judaism and Shas – increased their Knesset strength to 16 seats thanks to what Ben-David said was an 80% turnout of ultra-Orthodox voters and near wall-to-wall support by them for the two Haredi parties. Even many non-Haredi voters supported the parties.

In a demonstration of their increased power this week, UTJ signaled it would be seeking increased spending on yeshivas. Although party officials said it simply wanted to keep the yeshiva budget unchanged, it framed it in terms of spending per student, meaning that the overall budget would rise as the number of yeshiva students grows.

The 2009 coalition agreement in Prime Minister Benjamin Netanyahu’s second government set spending on yeshivas at 975 million shekels ($272 million at current exchange rates) and it stayed at that level in subsequent coalitions. But since 2013, Israel’s yeshiva population has ballooned 27% to 124,000, according to the Israel Democracy Institute’s Haredi statistical yearbook.

Sources estimated that if UTJ’s demands are met it could lead to an increase of about 200 million shekels in spending. UTJ officials, speaking on condition of anonymity, said Likud negotiators were taking a positive attitude toward the demand.

Those budgets enable Haredim to realize the community’s ideal of men studying in yeshiva well into adulthood rather than getting a broad education that would enable them to enter the workforce. Government allowances are another way the state subsidized the ultra-Orthodox Society of Learners.

“When welfare payments rose sharply in the 1980s and 1990s, the labor force participation rate for Haredi men ages 35-54 dropped from more than 80% at the end of the 1970s to under 40% at the start of the 2000s,” said Ben-David.

The trend changed when Israel slid into a recession in the early 2000s leading the government to reduce allowances and forcing Haredim and other Israelis with little formal education to seek work for the first time. However, when the allowances were partly restored in 2015, Haredi labor force participation began to decline again.

The ultra-Orthodox birthrate followed the same trajectory, increasing from 6.05 births per woman in 1980 to 7.42 in the early 2000s. It began to decline with cuts in allowances but when they were partially restored the rate began rising again to over 7 births per woman.

The high birthrate means that while Haredim over age 20 constitute just 7% of Israel’s population, those aged 0-14 account for close to one fifth. They will comprise a big part of Israel’s future workforce, but will lack the skills and education to make them productive workers.

“Of all the many ultimatums the Haredim are making as a condition for entering the coalition, the most problematic one for the future of Israel is the demand that their children – mainly boys – won’t have the right to study a core curriculum,” said Ben-David.