Over the past four decades, Israel’s economy and society have digressed in a number of key areas, so the country must immediately change its priorities to guarantee its people a better future, says Prof. Dan Ben-David, the president and founder of the Shoresh Institution for Socioeconomic Research.
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Shoresh’s handbook on Israeli society and economy for 2015 was released Tuesday. Ben-David, a professor at Tel Aviv University’s Public Policy Department, was until recently the executive director of the Taub Center for Social Policy Studies.
According to the institution, the handbook is a “first-of-its-kind publication that begins with some of the main misconceptions and fundamental problems regarding Israel’s society and economy, continuing with an examination of key underlying factors and implications, outlining budgetary contexts and priorities that need to be recalibrated.”
Education: The situation is bad
The ultra-Orthodox, or Haredi, community is the fastest-growing population segment in Israel. As opposed to the conventional wisdom, the percentage of Haredi men with only eight years of schooling has grown over the years; over half of them have no formal education beyond the eighth grade, Ben-David says. (He does not include yeshiva study as formal education.)
Ben-David says this situation stems from the ultra-Orthodox community’s political power. He warns that Haredi children will have a hard time acquiring an academic education when they are older — if they want to.
As for Israeli children in general, Ben-David notes that their average achievement levels in math, reading and science are near the bottom of the OECD rankings, even though the data do not include students from ultra-Orthodox schools. The education level of Israeli Arab students also leads to lower scores for Israel.
The number of Haredi men in higher education has been rising even though more Haredi men lack a high-school education — this is simply a function of the Haredi community’s growth, Ben-David says.
But the findings about Haredi men over the past decade completely contradict the group’s needs, as well as the needs of Israeli society in general, he says. In 2013, only 2.4% of Haredi men between 20 and 34 had any college education. This compared with 10.6% of Haredi women in the same age group.
The share of Haredi Jews with academic degrees in the United States is twice that of Haredi Jews in Israel — an indication that the main problem is political, not religious, the report states.
In Israel, some 16.8% of Haredi men age 35 to 54 have a college education, compared with 15.2% in 2012. This compares with 39.1% of non-Haredi Jewish men. Meanwhile,18.3% of Haredi women in this age range have at least some college education, compared with 44.8% of non-Haredi women of the same age.
One factor that predicts higher wages in the future is the level of math studied. People who studied the highest level (known as five units in Israel) receive higher salaries throughout their lives compared to those who studied only three or four units. In 2012, only 9.2% of Israeli 12th-grade students took the five-units math matriculation exam, though the Education Ministry has recently proposed new plans to increase this number.
The hourly wage for those with only three math units on their matriculation exams was 19% higher than for those who did not pass any such math exam or who studied at a lower level. For four math units, the average hourly wage was 36% higher than for those who did not pass any math matriculation exam.
While of course math isn’t the only important part of the core curriculum, and the results are preliminary, the situation is not good. “Not only are achievements in math and science near the bottom of the developed world, the share of Israeli children with less than the minimal level of problem-solving abilities is by far the highest in the developed world,” the report says.
Higher education: Faculty cuts
For 40 years, Israel has gone backward in higher education, Ben-David says. The number of faculty positions at leading universities is 20% lower than four decades ago, even though the Israeli population has more than doubled — and the number of university students has grown by almost 3.5 times.
In addition, the number of research faculty has grown by only 14% over the past four decades. If we include the colleges, the number of students has grown by over five times, while the number of senior faculty has risen by only 40%.
This drop in faculty numbers, which is also linked to the brain drain, stems from mismanagement at universities and the erosion of higher-education budgets since the early 2000s. In recent years, the Council for Higher Education has tried to increase the number of senior faculty positions, but with only partial success.
The report stresses higher education’s large contribution to employment levels. For example, Arab women with college degrees have a workforce participation rate of 79%, compared with 11% for Arab women without 12 years of schooling. Meanwhile, non-Haredi Jewish men with college degrees have a 91% employment rate, compared with 71% for those without 12 years of schooling.
Health: Patients in the corridors
The health sector is no less disappointing. There are 34 countries in the OECD, the Organization for Economic Cooperation and Development, one of them Israel. In 31 of them there are more hospital beds per person than in Israel. This country may have some of the best doctors in the world — but with patients' beds in the corridors.
For years health economists have warned that the health system isn’t prepared for the growing and aging population. They say hundreds more hospital beds are necessary — and with all that entails including more doctors, nurses and other workers — or the situation will only worsen.
Except for a one-time addition of 1,000 hospital beds promised in 2011 as part of a deal to end a doctors’ strike, there has been no progress on the matter. (And that one-time addition didn’t even come close to solving the problem.)
The result is not only overcrowding in the wards, which can also lead to infections, but Israeli hospital stays are shorter than average in Western countries. Many patients are often released too early.
At least Israel is mediocre in the OECD regarding the number of active doctors per capita, but the country hasn’t adequately invested in training the next generations of doctors and medical staff. Thirty-five years ago, only 8.5% of Israeli doctors were 65 or older, compared with 25% today — the highest level in the OECD by a large amount. The situation for nurses is even worse.
This is partly the result of the aging of a certain cohort: the large immigration from the former Soviet Union in the 1990s, which brought with it a hefty number of doctors. The number of places in medical schools has risen in recent years, and a new medical school has even opened in the town of Safed in the north. But it will take years to make up for the gaps.
Transportation: Plenty of traffic
Israel’s transportation infrastructure is lagging and damages the country’s productivity and output; it also worsens inequality. In 1970, congestion on Israeli roads (measured in the number of vehicles per kilometer of road) was almost the same as in small European countries (Belgium, Denmark, the Netherlands and Switzerland). Over the past 40 years, this density has risen to almost three times that in those European countries.
The price of cars and the cost of using them are both very high in Israel; as a result, the number of vehicles per capita in Israel is lower than in 30 OECD countries. Still, congestion on Israel’s roads is higher than in 30 OECD countries.
Roads have not been paved over the past four decades in areas where most of the population lives. Over the past 10 years, there has been some improvement in paving new roads and expanding existing ones, but the number of vehicles per kilometer still rose 16% between 2005 and 2013.
“Part of the reason for this is a lack of significant transportation alternatives to cars. In fact, the number of train passenger-kilometers travelled relative to population size in Israel is but a small fraction of the level in Europe,” Ben-David says.
Productivity: Low and falling
The years after the 1973 Yom Kippur War have been characterized by low productivity, Ben-David says. Israeli labor productivity among the lowest among developed nations, and it has been getting worse.
“While much of Israel’s fast total factor productivity growth in the period preceding the 1973 Yom Kippur War could be ascribed to a catching-up phase with the rest of the developed world, the decades since then have been characterized by particularly low rates of productivity growth,” he writes.
“In fact, Israel’s labor productivity is not only low, it has been falling further and further behind the G7 countries who have been leading the developed world since the mid-1970s,” he adds.
“A part of Israel is cutting edge — the universities, hi-tech, medicine, and so on — but a large, and growing, share of the population is not receiving either the tools or conditions to work in a modern, competitive global economy. This part of Israel is like a huge weight on the shoulders of the rest, a weight that is becoming increasingly heavier over time.”
It’s no surprise that more skilled and educated young people are leaving Israel, Ben-David says. Preserving Israel’s strength over time requires changing the way it thinks about its national security. It must also think in terms other than planes, tanks and soldiers.
“Children receiving a Third World education will only be able to maintain a Third World economy, which cannot support the First World defense that Israel requires to physically remain alive in the extremely violent neighborhood that it lives in,” he says.
“Israel is facing existential issues that are primarily socioeconomic in nature. Israel is also a country that still has time to adopt policies reflecting a turnaround in budgetary priorities — if it begins to comprehend the scope and magnitude of the long-run issues not currently on its national radar.”