The economic debate is once again centered on lowering the cost of living and redistributing the national budget. The coalition agreements of the new government highlight handouts according to political priorities, while there has been almost no attention to creating new engines of growth that will lead to an increase in the budgetary pie.
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Israel’s major economic growth challenges lie in increasing productivity outside the high-tech sector, retraining for the existing workforce with a focus on education for the long term, and getting more Haredim and Arabs into jobs.
Israel’s high-tech sector employs 7 percent of the workforce, and another 7 percent are employed at support companies. The “Startup Nation” economy competes at the global level, but is concentrated in greater Tel Aviv.
Economically speaking, everyone else lives in Non-Startup Nation, and they work – those who do – in industries that cannot compete in the global market due to their relatively high wages. This is especially the case for people living in the periphery. Arab citizens represent just 2 percent of the high-tech workforce, despite being 20% of the population and 19% of Technion graduates.
For the Haredi community, living in poverty is not a decree of fate. A report from the Taub Center for Social Policy Studies in 2013 shows that when both husband and wife have academic degrees, family income is in the top four deciles of the population. Unfortunately, though, only 5 percent of Haredi families fit into this category.
Interior Minister Arye Dery and Finance Minister Moshe Kahlon have the opportunity to empower weaker sectors of society, not just provide them with handouts. Both grew up in Israel’s economic periphery and are uniquely placed to provide the political leadership required to bring about a sea change in economic participation rates.
The same cannot be said of the ministers responsible for economic policy in the last government. Both Yair Lapid and Naftali Bennett come from the well-to-do class that resides between Ramat Aviv and Ra’anana, happen to be Ashkenazi, and can often be patronizing.
In March 2014 Bennett visited Nazareth and visited PresenTense’s accelerator program for Arab startups. He was visibly shocked and amazed by the quality of the entrepreneurs and their companies – stating that he wasn’t expecting it and that he thought he would see a “few young guys developing some games.” To his credit, he walked away with a positive attitude, but it was a sad reality check of the walls we place between different groups in our society.
There are a lot of reasons to be hopeful – dozens of initiatives supported by private business, civil society, philanthropy and government, focused on employment and entrepreneurship in the Arab and Haredi community, have been successful at lifting families out of the cycle of poverty.
Vital support for study and going out to work is also appearing from within the community. Two graduates of PresenTense Israel programs demonstrate this. Machon Ilan, founded by a member of the Haredi community, is a school to help Haredi men get high school graduation certificates. In Hura, a Bedouin town in the Negev, female entrepreneurs are setting up daycare facilities to allow other women the opportunity to go out to work.
Dery and Kahlon need to seize on these types of initiatives, these home grown solutions, and provide them with the support and budgets to scale from the ground up.
The ocean of the Israeli economy, the places with the potential for the largest rates of economic growth, are between Baka al-Garbiyeh and Bnei Brak, Sanhedria and Sachnin – and if Dery and Kahlon choose to, they are perfectly placed to empower the “invisible class” and convert them into the “opportunity class” – primarily for their own benefit, but also for the benefit of the entire Israeli economy.