Amir Levy, Director of the Finance Ministry`s Budget Department, set off a storm during Tuesday`s meeting of the Knesset`s Finance Committee when he said that by 2050 half of the country`s population will consist of ultra-Orthodox Jews and Arabs and that this should concern decision-makers in light of the fact that significant segments of these sectors do not participate in the job market.
Committee chairman Moshe Gafni (United Torah Judaism) criticized Levi`s remarks and said the state ”does not really act to integrate haredim and Arabs into the workforce. Haredim who wish to work face difficulties, and then people complain that they do not work.”
The senior Treasury officials who attended the meeting also angered the Finance Committee members when they said the budget that was submitted to the Knesset does not provide a solution for the declining growth rate, the gaps and inequality within Israeli society, and additional issues.
To prove his point, Gafni mentioned a recent case he had handled in which a student in the Hebron Yeshiva, ”one of the best yeshivas,” who wanted to work and make a living as a tour guide, did not get the job because he had not completed the necessary years of education.
”He does not have the necessary amount of years? He studied in the yeshiva for many years which the state does not recognize,” the committee chairman said.
Gafni recalled that he had also handled a case in which a man who wished to become a driving instructor, ”not a rocket engineer”, could not do so because he did had not completed the required years of schooling. ”The state simply does not carry out the measures that are required to solve the employment problems of the haredi public. It wants the haredim to be secular, or panhandlers,” he stated.
Turning to the Treasury officials, Gafni said: ”If you come here with a presentation showing that haredim and Arabs are going to take over the country, then there is a problem with the manner in which you are fulfilling your role, which is to ensure growth and prosperity.”
Shai Babad, Director General of the Ministry of Finance, confirmed that growth has in fact slowed, saying that the projected growth rate is 2.6% in 2015 and 2.9% in 2016. The main causes of the decelerated growth rate, he said, are the decline in exports due to the global slowdown and the drop in investments. ”We are dealing with this through a series of measures within the budget framework, and beyond it,” Babad informed the committee.
Levi noted that ”the weakness in exporting and investments has slowed the growth rate.” He said exports dropped 12.5% in the second quarter of 2015, while investments declined 3.8% during that same period. ”The rate of participation in the work force among haredi men and Arab women remains very low,” he said, ”and the problem becomes clearer as we look forward, so in 2050 the demographic trends are such that these two sectors will constitute 50% of the total population – 27% haredim and 23% Arabs – and this will be a significant problem in the future.”
”Furthermore, the education system does not compensate for socio-economic backgrounds. A quality matriculation exam, which makes it possible to enroll in a university, can be attained mainly in strong local authorities. The Arrangements Law and the budget treat the market`s basic problems, including the cost of living and the housing shortage, and are also part of the attempt to create equal opportunities in Israeli society. We are working to increase growth for all inhabitants. Interest payments on debts have decreased significantly, by NIS 40 billion, between 2002 and 2014. The year 2016 will see a significant increase in public expenditures due to the drastic increase in the defense budget.”
Yoel Naveh, the Chief Economist in the Finance Ministry, said the main engines for growth over the past few years have been private and public consumption. ”This has advantages and disadvantages,” he said. ”We`ve gone from a 4.3% average growth rate over the past two decades to 3-3.5% in the past few years. In the labor market: the unemployment rate has dropped and the rate of participation in the work force has increased – a [favorable] phenomenon which affects poverty rates and income levels. Israeli exports are influenced by exchange rates and the scope of global trade. Since 2011 there has been a suspension in the trade of goods. The growth rate of global trade is relatively low due to the global crisis, and the exchange rate also affects the relatively low growth rates. However, the importance of private consumption must not be diminished. When you consume more, you produce more. The tax collection forecast: NIS 254.7 billion in 2014; NIS 270.2 billion in 2015 and NIS 280.7 billion in 2016.”
The opposition coordinator of the Finance Committee, MK Erel Margalit (Zionist Camp): ”The Israeli economy is beneath any reasonable standard. This is a time when the American economy is growing. The current budget has nothing new for the business sector or the periphery. Half of our population goes out and works but doesn`t make an honest living. The state needs to say something to the business sector; to encourage the employment of Arabs and ultra-Orthodox Jews”.
MK Orly Levi-Abekasis (Yisrael Beitenu): ”The state isn`t working to create true social equality. There is only talking. If we want equality we need to push for differential budgeting in the areas of education and welfare. We need to strengthen the education in poor municipalities and in the periphery; unfortunately what is actually happening is the exact opposite of that”.
MK Micky Rosenthal (Zionist Camp): ”The people of the Treasury are describing the situation but aren`t doing anything about it; for example, the deferential budgeting of education in favor of weak municipalities. If economic growth won`t stem from a rise in production then we`re in trouble. We cannot rely only on consumption. There is no connection between your assumptions as economists and the budget you are presenting to the Knesset. It is true that the unemployment rates are low but it comes with an extremely low pay. We need budgets to raise productivity and for professional retraining which add to the earning ability. However, the budget that’s intended to encourage employment and training in the Ministry of Economy (note: ministries in caps) was drastically cut. There is no real treatment of inequality. This budget lacks any vision.”
Amir Levi responded to the MKs on the subject of deferential budgeting for education by saying that ”the opposition comes from the coordinator of municipalities. Regardless, we are working for the growth to go on and reach all parts of the population”.