Taub report: Economy faces existential problems

Israel lagging behind Western countries in non-employment rates and education reform.

By RON FRIEDMAN
April 13, 2010 02:38
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haredim working 311. (photo credit: Ariel Jerozolimski)

A 350-page report released Tuesday by the Taub Center for Social Policy Studies paints a grim picture of Israel’s prospects for economic sustainability and warns of increasing gaps between Israel and the developed countries of the world.

In an interview with The Jerusalem Post, the report’s editor, Prof. Dan Ben-David, highlighted what he felt were the report’s main points.

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“In some respects, what’s taking place in Israel is like the boiling frog syndrome,” said Ben-David. “If you put a frog into boiling water, it will immediately jump out of the pot, but if you put it in the pot with cool water and light a fire under it, the frog won’t notice it’s being cooked until it’s too late to resist. We are to a large extent witnessing some long-run trajectory in Israel that is very similar. It’s happening beneath the radar. We know that we have problems in several spheres, like poverty, education and inequality. That’s not news. The big news is the extent of the problem and the rate that it is progressing.”

Ben-David said that even though he had been studying the issues for 20 years, he’d had no idea how fast things were progressing and how “severe and existential” the problems were until he began working on the report.

One of the most telling statistics in the report is the country’s rate of non-employment. Not to be confused with unemployment, which is roughly on par with OECD countries, non-employment refers to people who are not looking for work. Here, said Ben-David, we are in a league of our own.

“When you look at rates of people who are not working, primarily men aged 30-54, you see that at nearly 19 percent, Israel is way above any of the other Western country, with the OECD average standing at just under 12%,” he pointed out.

According to the statistics compiled by the Central Bureau of Statistics and OECD figures, the closest country to Israel in non-employment is Spain, with 14.5%. The lowest non-employment rates are enjoyed by Switzerland, Iceland and Japan, at slightly over 6%.

Breaking down the non-employment numbers according to sector shows that non-employment is above OECD average in all but one sector: Jewish, non-haredi women. Arab men are above average with 27%, haredi men are well above average with 65%, and even secular Jewish men, at 15%, show a higher average than other developed countries.

This information is worrisome to Ben-David, especially looking to the future and observing that the two sectors of society with the lowest rates of participation in the work force are the sectors that are growing most rapidly.

“In 1960, only 15% of the kids were either in Arab [or] haredi schools. Today we are talking about an even split between haredi and Arab on one hand and state schools on the other,” he pointed out.

“To the extent that today’s kids will have their parents’ work habits, who will pay for this? Who will be able to? If you fast-forward 30 years, extrapolating from the rates of change we’ve seen in our educational system in the last decade alone, it means that three-quarters of the kids will be Arab or haredi and just 14% will be in the state schools. But that won’t happen. It can’t happen, because it’s unsustainable.”

Ben-David explained the rise in non-employment among Israeli Arabs as the result of the massive import of foreign workers in the 1990s, but said that what he found mind-boggling was that the rate of non-employment among haredim has been steadily rising for the last 30 years, from 20% in 1979 to nearly 70% in 2009.

“Not only is that group of the population growing very quickly, but their work habits are declining just as fast,” said Ben-David.

The solution, according to Ben-David, is education.

“If we wait until we can no longer afford [to provide] non-working lifestyles, it will be too late,” he said. “We won’t be able to cut them off because they will not have the proper education to enable them to integrate into the modern workforce.”

However, the solution is also in dire straits. Comparative studies show that Israeli students are consistently ranked lowest among developed countries in core curriculum subjects.

“The kids they are competing with educationally today are the grownups they will be competing with professionally in another decade or two. The starting-off point we are giving them is too low,” said Ben-David.

On the bright side, he said, Israel is in a better position than most other developing countries, because it already has all the necessary tools in place to improve the situation.

“It is not beyond our capabilities. We are the anomaly of the Western world. On the one hand, we look as bad as I just showed you, but on the other hand, we have all the institutions that a country needs that are basically at the envelope of human knowledge. We have universities that are on the leading edge. We have a hi-tech sector. Our medicine is at the leading edge. Everything is here. All we have to do is pull out the stopgaps and let the knowledge flow down,” said Ben David. “If we do, just imagine where we can go.”

The solution, according to Ben David, is nothing short of a comprehensive systemic change.

“It’s not just employment reform or educational reform. It’s got to be systemic,” he said.

Ben-David proposes change in three policy spheres, the first being the individual and the firm.

“As far as the individual is concerned, we have to move from non-work incentives to work incentives, but even if you force people to work, they will go hungry if they don’t have the tools to succeed in the modern economy. We must give them the tools to upgrade their education,” he said.

It is also important to deal with the firms, Ben-David continued.

“Employers must realize that the society we live in is what we have,” he explained. “The firms have to deal with it and work with the Israelis that they have and find the comparative advantages that they can.”

The second policy sphere is the conditions that enable productivity. Things like extending the school day to enable parents to work full-time jobs and improving public transportation so it will be fast and cheap are examples of ways to create a good environment for growth.

The third sphere is major educational reform, to which the report dedicates a whole chapter and which includes things like higher wages and requirements for teachers, establishing a mandatory core curriculum, merit-based bonuses for good schools, and additional involvement in education at the local level.

“Just think of where we are with all the negative things I’ve mentioned, and imagine where we could be if everything was done right. It’s within our grasp,” insisted Ben-David. “The key is electoral reform, because in the current political climate, nothing can change. Sectoral and personal interests dominate, while national interests fall by the sidelines.”


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