Bloomberg analyzes the haredi effect on the Israeli economy

Bloomberg.com has just run an article in which they paint Israel's financial picture as bleak, and the reason is that the large amounts of non-working haredim who are being supported mostly from the public coffers are holding Israel's prosperity back.

Linker is one of the almost 60 percent of Israel’s ultra- Orthodox men who don’t have jobs. The second fastest-growing population group in the country after the Bedouin, they have prompted Bank of Israel Governor Stanley Fischer and Finance Minister Yuval Steinitz to assert that the haredim, as they are called in Hebrew, may impede Israel’s prosperity.

The ultra-Orthodox community benefits from hundreds of millions of shekels in public aid. The low rate of employment is putting pressure on the economy in a way that is “not sustainable,” Fischer told reporters in Jerusalem last month.

About 50,000 ultra-Orthodox men who study full-time are also exempted from service in the military, which means they don’t participate in an institution that has driven Israel’s technology boom and helped transform its economy.

Linker, 39, says he makes an essential, if non-financial, contribution.

“We live in a Jewish nation and provide it with the spiritual energy to keep it going,” he said in a phone interview. “That’s at least as important as the economy.”
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The haredim’s current low participation directly cost the economy an estimated 4 billion shekels ($1 billion) in 2009, according to a June 30 Finance Ministry report. Gross domestic product rose 3.4 percent in the first quarter, the most recent period available.

Because employment is low among the ultra-Orthodox and they have a large number of children, their contribution to the public coffers is relatively low compared with benefits they receive, said Omer Moav, a professor of economics at Royal Holloway, University of London and at the Hebrew University of Jerusalem.

“Every citizen gives some and gets back some,” said Moav, a former adviser to Steinitz. “An average haredi family gives a small amount and gets a lot. And it’s not static. The burden on the working population will grow and grow.”

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More like him are ready to consider entering the labor force if workplaces “appropriate to the ultra-Orthodox culture and rules of conduct” can be created, said Benjamin Fefferman, director of the planning, research and economics administration at the Ministry of Industry, Trade and Labor.

This might require, for example, creation of gender- segregated workplaces, in line with community modesty rules, he said.

Parliamentary Finance Committee Chairman Moshe Gafni, a member of the ultra-Orthodox party United Torah Judaism in the Knesset, agreed.

“The haredi population is growing,” he said. “We want to work. We have the ability and we are not parasites. The haredim want to work, but we don’t want to change the way we live.”