An economic avalanche threat
The real demographic danger for Israel is economic. It is clear and it is present and it cannot be ignored. Without some encouragement for the minority to move to the majority - an avenue that is now blocked - an eventual economic avalanche cannot be avoided.
A number of the political and security issues raised at the recent Herzilya Conference won extensive coverage. But the conference also hosted economists - Dr. Yaakov Sheinin and Yossi Hollander, for example - whose data and analyses are no less significant than the questions of politics and defense.
Dr. Sheinin's study did not look at relevant data from a more usual perspective of "demographic dangers," but from an economic viewpoint. He divided the Israeli population into two parts - the majority and the minorities. The minorities are the Arabs, most of them Muslims, and the ultra-Orthodox Jews. The majority is anyone else.
Sheinin explained Israel's low growth rate in the usual way - low membership of the labor force, high natural increase, and a large number of children under 15. These factors were responsible for Israel's per capita growth rate of 1.6 percent from 1975-1999, compared to 2.2 percent in the United States.
High natural increase and low employment rates among the Arabs and ultra-Orthodox damage the economy. Among the majority, the average number of children per woman 2.3. Among the ultra-Orthodox it is 5.8 and among the Arabs 4.4. The data show that from 1975 to 1999, 58 percent of the majority was working, as opposed to 45 percent of ultra-Orthodox and 39 percent of Arabs. Thus the per capita GDP of the minorities is about one-third that of the majority.
This places a huge burden of transfer payments on the shoulders of the majority's bread winners - a trend that if it continues, may cause them to rebel or leave the country.
The conclusion is that the natural increase and low employment among the two minorities is a threat to the economy. The natural increase among the Arabs and the ultra-Orthodox is 3 percent a year, against 1 percent in the majority. If the present trend continues, the majority will decrease from 75 percent of the total population to 63 percent by 2030, and its participation in the work force will decrease from the already relatively low 54 percent at present to 52.6 percent.
These factors will decrease the annual per capita growth rate by half a percent. If the participation in the work force and the natural increase among the minorities were similar to that of the majority, the per capita GDP would increase by one-fifth.
The study makes optimistic some assumptions. It envisions a 1.3 percent increase in productivity and a 6 percent decrease in unemployment by 2010. But even in these circumstances, the burden of transfer payments made by the majority will reach 17 percent of its income on average, and the gap between the per capita GDP in Israel and Europe will increase by 23 percent by 2030.
The analysis provided an additional explanation for low membership of the work force that goes beyond religious and social factors. The unemployment rate among Arab males increases after age 45 - because most of them work at physically debilitating jobs. The employment rate among young Arab women remains low because of their high birth rate and lack of day care.
This is a very troubling picture. If Israel wants to move closer to the European standard, rather than further away, it must take immediate measures. It must move to a long school day, reinforce the curriculum in areas where demand is high in the labor market, and massively develop day-care facilities so that mothers can take full-time jobs.
If these steps are taken, the study suggests, general membership in the work force will rise to 58 percent, the heavy burden of transfer payments on the majority will decrease, per capita GDP will rise to 2.2 percent, and the gap between Israel and Europe will narrow sharply.
However if the natural population increase does not drop in the two minority groups - and it must be assumed that for cultural and religious reasons it will not go down significantly - the concomitant improvement would be only partial.
In other words, the real demographic danger for Israel is economic. It is clear and it is present and it cannot be ignored. Without some encouragement for the minority to move to the majority - an avenue that is now blocked - an eventual economic avalanche cannot be avoided.
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