Israel At Risk Of Collapse Due To Its Own Welfare State Crisis


It’s not just the U.S., Europe, and Japan who need to worry about bankrupting themselves with government spending programs.

Israel’s situation is in some ways far worse, since tons of people simply choose not to work because government support allows them to do so:

LA Times:

According to Ben-David, nearly one in five Israeli men between the ages of 35 and 54 — a group that he believes has “no excuse” for not working — are not part of the labour force. That’s about 60% higher than the average among nations in the organisation of Economic Cooperation and Development, an international forum fostering market-based economies that Israel joined Monday.

Not working is most popular amongst a certain sub-set of the population:

Nearly 27% of Arab men and 65% of ultra-Orthodox Jews don’t work, government figures show. The non-employment rate for ultra-Orthodox men has tripled since 1970, Ben-David said.

Too bad this sub-set is growing the fastest:

Today Arabs and the ultra-Orthodox together make up less than 30% of the population, but they account for nearly half of school-age children. If trends continue unchecked, Arab and ultra-Orthodox children could make up 78% of Israeli classrooms, recent studies have shown. “Eventually it’s going to break the bank,” the economist said. “We’re on trajectories that are not sustainable.”

The nation’s debt to GDP already stands at 78% according to the CIA World Factbook, which is pretty close to France’s already worrisome 80%.

Demographically, Israel’s problem seems far worse than the U.S., at least, and probably most European nations. How can there be a group of people where 65% of men don’t work? Government programs subsidise religious study, which might explain things. Attacking excess in these kinds of welfare programs is probably a bit tricky.

The saving grace so far is that the government’s budget deficit should only be 4% of GDP this year, and unemployment is lower than in the U.S. or the Eurozone. The economy is also set grow 4% this year. Ie. they’ve been saved so far by a competitive economy, which might have something to do with the fact that Israel has the highest level of research and development vs. GDP (R&D intensity) in the world.

Clearly a lot is going on in this dynamic economy and some societies might see no problem paying for others to study religion, but it still seems a bit dangerous to have such a large portion of people sitting idle from an economic perspective. Perhaps an originally good idea (helping people study religion) has gone too far.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.