The next economic disaster?
The Los Angeles Times worries that Israel will be the next economic basket case. [O]ne Israeli economist is warning that beneath Israel's back-patting lurks a hidden peril — fueled by demographic trends and political choices — that could eventually mean an end to the country.At Hot Air, Shy Guy, who sent me this article, comments:
Armed with a Power Point presentation he's been showing to lawmakers, newspaper publishers and anyone else who will listen, Dan Ben-David, executive director of Jerusalem-based Taub Center for Social Policy Studies in Israel, says the problem is simple: Not enough Israelis are pulling their own weight.
According to Ben-David, nearly one in five Israeli men between the ages of 35 and 54 — a group that he believes has "no excuse" for not working — are not part of the labor force. That's about 60% higher than the average among nations in the Organization of Economic Cooperation and Development, an international forum fostering market-based economies that Israel joined Monday.
Officially, Israel's unemployment rate is about 8%. But that doesn't include Israeli citizens who are not trying to find work, either because they feel disenfranchised, such as many Arab Israelis, or because they've chosen a life of state-subsidized religious study, such as many ultra-Orthodox Jews.
Nearly 27% of Arab men and 65% of ultra-Orthodox Jews don't work, government figures show. The non-employment rate for ultra-Orthodox men has tripled since 1970, Ben-David said.
...
Today Arabs and the ultra-Orthodox together make up less than 30% of the population, but they account for nearly half of school-age children. If trends continue unchecked, Arab and ultra-Orthodox children could make up 78% of Israeli classrooms, recent studies have shown.
"Eventually it's going to break the bank," the economist said. "We're on trajectories that are not sustainable."
But not everyone agrees with Ben-David's dire predictions.
"He's been very successful at scaring everyone," said Beni Fefferman, director of the planning and research office in the Ministry of Industry, Trade and Labor. According to Fefferman, Ben-David's analysis "grossly overstates" the extent of the problem, because data over the past decade suggest employment rates among Arabs and ultra-Orthodox Jews are improving.
But Ben-David said the government has relied too heavily on a quick fix. With heavy lobbying from ultra-Orthodox parties that often prove crucial in forming government coalitions, Israel has increased welfare payments fivefold since 1970, while the standard of living has doubled, he said.
Nearly a decade ago, Prime Minister Benjamin Netanyahu, who was then finance minister, won praise for slashing welfare payments, including monthly per-child allowances. But last year Netanyahu, in a nod to his right-wing coalition partners, agreed to nearly double some child allowances.
While the majority of “ultra-Orthodox” (“Haredi”) Jews might be unofficially unemployed, a great proportion of these are full or part-time studying in religious institutions, known as “kolels”. There, they earn a stipend, mostly coming from donations, not the government.It's more than that. First, a lot of the men in Kollel (and not just their wives) are earning money off the books. Many of them have part-time or full-time jobs as teachers or in various types of manual labor. There's a huge cash economy here (and it's not just in the Haredi sector - when my eldest daughter went to university, she came home one day and told us that among all her friends, she was the only one whose parents reported all of their income. She didn't have many Haredi friends in university).
And in many of these kolel cases, the wife is bringing home the bacon flanken, either legally employed or via unreported income revenue.
This drag has always been here. If anything, it’s decreasing because years ago the government substantially cut back on special handouts to religious education institutions and many people in the Haredi sector had no alternative but to start looking for work. Of course, that’s not an easy thing to do if you’re 50+ years old, have 7 to 13 children and never received anything near a high school education.
Personally, to me the biggest financial burden on the economy is the highly bloated Israeli government bureaucracy. Most of our ridiculously high taxes feed these excess parasites more than anything else. It stifles both business and consumer economic growth.
And all of this has been true for a long time. Good morning to you, LAT!
Second, in the long run, I don't believe that a community where 100% of the men are not employed is sustainable. And indeed, more and more ultra-Orthodox men are openly leaving the Kollel. The bigger issue - and the reason why so many ultra-Orthodox men don't work - is the army. Most ultra-Orthodox men do not go to the army at the age of 18 (there are exceptions), and those who do not serve in the army cannot legally work, which is a major reason so much Haredi employment is 'off the books.' (What would you do if you were 35 years old with six kids and you could not legally get a job - any job - without first spending two years in the army?).
Third, many ultra-Orthodox live in astounding poverty and really have no gripes about doing so. While the State may wring its hands every December when the poverty statistics come out, I hear many stories about happy families where there aren't enough beds in the house for each child to have his or her own. They're living in another age where the rule of the day was that you ate bread with salt and drank water. And they are doing so willingly.
Fourth, the child support subsidies were cut drastically in the mid-'90's (we used to get around NIS 3,000 per month - yes everyone gets them regardless of income - today we get about NIS 700 with four kids still under the age of 16, which is now the cutoff). But the child support subsidies are now larger for the first and second kids (they used to increase for the fifth kid and beyond), which increases the tax burden, and everyone still gets them - even if you earn $100,000 per month. The Cohens who live in Ramat Aviv Gimmel (a wealthy northern Tel Aviv neighborhood) with one kid, a dog, two cars and a five-room penthouse apartment still get their child support subsidy every month.
Fifth, Shy Guy is right about the bureaucracy. Some of the highest paid people in this country are in 'government service' (sounds like the direction the US is going in, doesn't it?). Among notoriously high paying employers in this country are the Bank of Israel, The Electric Company, the ports authorities and the water company. It's no coincidence that we pay way more than we should for our utilities.
We are also among the most highly taxed people in the world (a few years ago, we were all the way at the bottom of that chart - into August). If you go here, you will note that the excuse that 'our Defense budget is so high' no longer holds water either.
So no, sorry, the country isn't going to go broke because of the Haredim anytime soon. There are probably a few professors at Tel Aviv University who will actually be disappointed to hear that.
posted by Carl in Jerusalem @ 3:44 PM
8 Comments:
I never gave much thought to Haredim. But I have had my eye on Israel's healthcare delivery system. Israel has a similar population to a U.S. state and my understanding is that healthcare is "included". I grew up with U.S. military healthcare, which seems similar to the clinic-based system I saw when we visited friends in Israel. So it will be interesting to see whether it holds up or goes the way of Massachusetts and Hawaii. Also, I've heard some grumbling about drugs not approved... can people get supplemental insurance or buy their own supplemental healthcare in Israel? The use of the internet to communicate with patients seems like an excellent improvement. It would be interesting to see some articles on how the system is organized and a cost analysis. It could help other govts in figuring out pathways.
Sunlight,
You're entitled to basic coverage from a health fund. You are taxed for it and pay a minimum tax if you don't work. You can buy supplemental coverage from the health fund (there are four health funds and I believe all of them have two levels of supplemental coverage) and you can also buy extra, private coverage.
In Jerusalem (but not officially in other cities), you can pay to see certain specialists privately.
There are issues with getting drugs that are not 'in the basket.' They can be quite expensive. You can buy insurance to cover them, but if you don't have insurance and you need a drug that's not in the basket (God forbid), you are stuck.
The current health law has been in effect since 1995. Health care is expensive but usually not catastrophically so. Until the law went into effect, two of the health funds were well off financially (because they charged more and took mostly healthy young subscribers). Since the law went into effect, all of the health funds have become basket cases financially, although the ones that were worse off then are worse off now.
"Israel the next economic disaster?"
Wishful thinking ...
Someone at Israpundit posted this video about the next economic disaster.
Heh :)
Young haredi men are joining the army in increasing number. Economics will force a change in how those Jews live - but it would probably happen more readily Israel if Israel's government cut regulations and high taxes and allowed Israelis to keep of what they make. Sure Israel has problems with the economy but the haredim are not a threat to it. They are an asset waiting to be tapped.
Gov't assistance should be limited to citizens, and exclude residents. This would end paying out money to the Arabs who should not be assisted in growing families anyway. - Saving money, fewer Arabs; win-win.
Im sorry but is this your opinion?
Most ultra-Orthodox men do not go to the army at the age of 18 (there are exceptions), and those who do not serve in the army cannot legally work.
Because its TOTALLY wrong, there is no law that prohibits you from working, and I know some people that didn't served because of drugs or stupidity in young age, and they work in normal jobs some in Hi-Tech hi paying jobs
GamesWorldWide (and others who have written me privately about this),
You are all wrong.
In order to work legally in Israel, you must either have served in the army or have been exempted (whether because of age, medical history, mental capacity or any other reason determined by the IDF) from service in the army.
People who claim that they are studying in yeshiva and are therefore entitled to a deferral from the army must sign and file with the army twice a year an affidavit (under the 'pains and penalties of perjury) that says that you are in yeshiva full time and that you are not working. It must be accompanied by a certification from Va'ad HaYeshivot that you are studying in a 'recognized institution.' If you do not file that affidavit, the army can - and does - come looking for you, and can and will draft you. I know of 35-year olds to whom that has happened, who got drafted for two years (!) of service.
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