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Billions in losses (Illustration) Photo: Gil Yohanan
Billions in losses (Illustration) Photo: Gil Yohanan
 
 

Haredi unemployment costs billions annually

Treasury report reveals staggering loss of State revenues due to faltering haredi participation in workforce

Jonathan Golan
Published: 07.22.10, 14:32 / Israel Business

The Israeli economy stands to lose more than NIS 6 billion ($1.55 billion) annually as result of low haredi participation in the workforce, a new report found.

 

The report was commissioned by the Treasury at the request of the Knesset's Foreign Affairs and Defense sub-committee, headed by Knesset Member Yohanan Plesner (Kadima).

 

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According to the data, published by Yedioth Ahronoth last week, damage the Israeli economy stands to suffer in 2010 is 300% higher than what it suffered in 2000.

 

The impact on the national product excludes indirect State costs, like the funding of yeshiva seminaries, social security benefits, and child benefits, which amount to billions of shekels every year.

 

The loss stems from the increasing number of haredim who postpone their entry into the workforce under the Torah studies exemption. The Tal Law exempts yeshiva students from mandatory military service if they do nothing but study the Torah until their 30s – which means the loss of some 10 year in the workforce.

 

'Loss a conservative guess'

Dr. Eldad Shidlovsky, head of Economics and Research Department at the Treasury and the report's author, said its estimates were "conservative."

 

So what are the NIS 6 billion comprised of? The lion's share is the direct loss of NIS 4 billion ($1.03 billion) in potential working years, which, as 75%-80% of haredim 22 years and older apply the exemption, comes to 21,000 work years.

 

An additional NIS 2 billion ($520 million) is lost to the State's inability to cut mandatory military service short, which is due to lack of manpower, caused by the haredi exemption.

 

Also, the State stands to lose NIS 900 million ($232.7 million) in direct tax revenue in 2010 – threefold its loss in 2000.

 

A young haredi man of military service age has two options: He can apply for the Tal Law exemption, or – the less popular choice – he can serve in one of the IDF's religious units.

 

The Treasury and the Defense Ministry have agreed to form a committee to review several Tal Law articles regarding the age in which the exemption is applied.

 

Commenting on the findings, MK Plesner said that the current policy is unsustainable, predominately because it fosters a social problem.

 

"Exempting the haredi sector from military service is nothing short of moral bankruptcy, and will lead to a drop in motivation among the rest of the public. Both the IDF and the National Service should prioritize the mission of incorporating haredi youths." 

 

 

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