In 2003, in response to the emerging threat to its economic stability, the government decided to slash the National Insurance, welfare, and education budgets. The ultra-Orthodox sector dubbed these decisions “the Netanyahu Edicts.” This constituted a milestone in the growing institutional recognition of the sociological effects of the ultra-Orthodox community on Israel’s economy, welfare policy, and labor market. The transformation of the issue of the ultra-Orthodox employment rate from an annoying question of equality to a macroeconomic subject is encapsulated in the title of the article by Berman and Klinov (1997), “Jewish Father Stops Going to Work.” For the first time, the ultra-Orthodox’s lack of participation in the workforce was presented in this article in macroeconomic terms, with widespread effects on the labor market and GDP. The modest booklet had a great influence on the economic media, the Ministry of Finance, and the policy makers.
In the ultra-Orthodox household – under the increasing pressure of a high birthrate, a decline in financial support of the younger generation by the older generation, increasing poverty, and the beginnings of new consumption patterns – the participation of the men in the labor force has been a central issue for some time now. The solution of a single, female breadwinner (in the framework of employment for ultra-Orthodox women) in the education system and in other areas of the labor market is no longer sufficient. Religious leaders are increasingly permitting ultra-Orthodox men to enter the workforce on a selective basis. The State of Israel and the Ministry of Finance have designated the employment of the ultra-Orthodox as one of the main targets of its labor policy.
In this document, we begin by using up-to-date data to present the macroeconomic problem that derives from the patterns of employment in the ultra-Orthodox sector. Policy-makers realized over a decade ago that this problem threatens the welfare of the ultra-Orthodox population, as well as the strength and prosperity of the Israeli economy in the future. We then briefly analyze the obstacles to employment in the ultra-Orthodox sector and outline the attempts undertaken in recent years to encourage employment in this sector. Finally, we point out the main dilemmas confronting policy planners today as in the past, and propose initial measures for action, with a preference for the following three recommendations.