At Davos, Israeli Central Bank Chief Stresses Poor Haredim, Israeli Arabs

Karnit Flug notes how both the ultra-Orthodox and Arabs have large families and low workforce-participation rates.

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In her first appearance at the Davos World Economic Forum in her new job, Bank of Israel chief Karnit Flug stressed how Israel’s two fastest-growing communities, Arabs and ultra-Orthodox Jews, are also the poorest and are poorly integrated into the workforce.

Flug was speaking in a panel exploring faith and gender equality. She was especially talking about the low workforce participation of Israeli Arab women and ultra-Orthodox – or Haredi – men; many of the latter shun jobs for full-time religious study.

The situation poses a huge challenge for Israel both economically and socially, said Flug, who became governor after Stanley Fischer stepped down in June. He was recently nominated for the No. 2 spot at the U.S. Federal Reserve.

Flug said efforts are being made to better understand why the low workforce participation rates happen. She noted that both communities tend to have very large families and suffer high poverty rates, with nearly 60% falling below the poverty line compared with 12% for the general population.

Within 35 years, the ultra-Orthodox and Israeli Arab communities are expected to make up half the country's population, Flug said. Meanwhile, the proportion of Haredim of working age – between 25 and 64 years old – is predicted in 2020 to be nearly three times the percentage in 2010, rising to 17%.

Flug said Haredim needed to study core academic subjects to help them integrate into the workforce. She noted that Arab women have an even lower workplace participation rate than ultra-Orthodox men. While 70% of Israeli women in general are employed outside the home, the figure is 30% among Arab women.

Arab women who do work log fewer hours per week on average than their Jewish counterparts, Flug said, adding that the situation needed to be changed through education and jobs that meet the needs of the Haredi and Arab communities.

Karnit Flug. Credit: Tomer Appelbaum

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