The part of the program earmarked for increasing the integration of Arab youth (aged 18-35) into the job market, budgeted at 1.4 billion shekels over the 5-year period, focuses on two groups:  young men and women with high school educations or less, and young women with academic or other post-high school educations. To date, the program has initiated quality professional guidance, professional training, Hebrew language skills improvement, encouragement to work in high-tech, and the provision of incentives to employers to hire Arabs.[4]

Preliminary figures indicate that the program is succeeding; therefore, it is crucial to continue it in order to realize the potential of young Arab men and women.

According to Sami Miaari and Arnon Barak,[5]  there has been an improvement in the employment rate of Arab women in Israel, which on the eve of the present war was 44.8%, among others, due to the 5-year plan. However, that rate is lower than the employment rate of non-Haredi Jewish women — 83.2% in 2022.[6] As for Arab men, in 2023, their employment rate rose beyond the goal set for 2026. However,  that rate is expected to grow more slowly in the future, to 79% by 2030. As such, it is not expected to achieve the goal set by the government  (prediction by Miaari and Barak). [7] Thus, without continued financing of the program, the achievement will be even lower.

Employment Rates of Arab Men and Women, 2019 and 2023, and 2020 Goals of the 5-year Plan[8]

Budget cuts in the Employment Program for Arab women and men will result in perpetuating the gaps between Jews and Arabs; they also augur damage to the Israeli economy, especially in light of the reduction in the employment of Arabs since the outbreak of the war.[9]

Employment gaps between Arabs and Jews in Israel are significant. In 2021, the average wage of Arab men was 64% of the average wage of Jewish men, while the average wage of Arab women was 67% that of Jewish women.[10] This can be partially explained by the fact that Arabs’ representation in high-paying branches of the economy is very low. A prime example is the hi-tech industry, in which no more than 2% of employed Arab men were to be found in 2019, compared with 64% of employed non-Haredi Jewish men.[11]

The integration of Arabs into the employment market will improve the Israeli economy, as two-thirds of the growth potential of the GDP has been attributed to an increase in employment.[12]  Thus,  a rise in the total employment of Arab citizens and the quality of that employment will contribute both to the growth of the Israeli economy and to the narrowing of gaps in employment rates between Israel and other OECD countries.

הפוסט Arab Society in Israel and the Israeli Economy Will Be Weakened by the Proposed Budget Cuts in Employment Programs for Arab Citizens הופיע לראשונה ב-Adva Center.

Rising defense costs

Still, this is not the main problem with the latest budget proposals. The main problem is what appears to be a limitless increase in the total budget for defense. The 2024 defense budget is slated to increase over that of 2023 by NIS 55b. Thus, together with the monies provided by US assistance, this allocation is slated to amount to the considerable sum of NIS 125b.

But that is not all: after the war has been paid for, the talk is of a permanent annual increase to the defense budget of NIS 20b. Indeed, the Finance Ministry mentioned the figure of NIS 20b., while the Defense Ministry demanded an annual increase of NIS 60b.

In light of these amounts, what needs to be said to those who are up in arms – and justly so – against the coalition payments, “It’s the defense budget, stupid.”

The increase to Israel’s defense budget is based on the assumption that the main response to the Israeli-Palestinian confrontation in general and to hostilities originating in Gaza specifically needs to be military. This is the background of the apparent readiness to give the IDF whatever it asks for.

The future of the war in Gaza

However, there are questions that need to be considered, such as does Israel really intend to continue fighting for the next four years? Does Israel really intend to deal with the Palestinians by military means only? Are there really no other options?

These questions are important because they present the size of the defense budget as one horn of a dilemma: Israel does not have the means to provide both a greatly enlarged defense budget and better social services. If the defense budget increases, the budget for social services decreases, and vice versa.

A good example of this dilemma can be seen in the following. According to Finance Ministry figures, in the decade between 2012 and 2022, the budget for social services – health, education, higher education, social security, and social welfare – increased more than the budget for defense.

The relatively slow growth of the defense budget enabled Israel to devote larger sums to its social services. The latter grew from NIS 120.7b. to NIS 210.9b. – an increase of some 70%. In contrast, the defense budget grew by 10% – from NIS 68.2b. to NIS 75b.

In retrospect, it appears that those years represented a period of grace, which began with the 2011 social protest slogan, “The people want social justice,” and ended with the government’s successful handling of the coronavirus pandemic.

The need to invest in Israeli social services

The need for a massive investment in Israel’s social services is well-known. On most socio-economic indicators, Israel is located at the bottom of the OECD scale. The situation is such that even if there are no budget cuts, the services suffer from a lack of man – and mostly woman – power, as relatively few professionals are willing to work for the low salaries offered.

And now the revised budget for fiscal 2024 posits a large increase for the defense budget, thus decreasing the budget for social services. And this is happening during a time when the war itself has been creating new needs every day – assisting hundreds of thousands of displaced persons, hundreds of thousands of unemployed persons, and thousands of small businesses with no way of making a living.

The situation may arise in which when demobilized soldiers ask for assistance and rehabilitation, they are informed that “the money was depleted by the war.” What may happen is that next to all the placards declaring, “Together to Victory,” there will be others lamenting, “No more Together. Everyone for themselves.”

// The article was originally published in English in the Jerusalem Post

הפוסט It’s the Defense Budget, Stupid הופיע לראשונה ב-Adva Center.

The inactivity of young Arabs has repercussions beyond those for the individuals themselves. Inactivity leads to a decrease in feelings of capability, faulty interpersonal skills, social isolation, depression and economic burdens on households. Inactivity perpetuates socio-economic gaps, increases poverty levels and burdens community social services.[1] Finally, there is a correlation between the high percentage of inactive Arab youth and the high crime rate among members of this group.

According to the State Comptroller’s Report,  there is a disturbing gap between Arab and Jewish youth:  25% of young male Arabs and 34% of young female Arabs are to be found in the catetory of inactive young people, compared with 14% of young male Jews and 17% of young female Jews. Moreover, according to the report, Arab Youth in Israel (2023), some 40.5% of Arabs between the ages of 18 and 24 are below the poverty line, compared with 14.8% of Jews in the same age group.[2] Since the outbreak of the “Iron Swords” war, there has been a significant decrease in employment among Arabs; thus the poverty rate among Arab youth is expected to rise even higher.

The economic distress experienced by inactive young Arabs often leads to involvement in criminal activity; 48.6% of the criminal cases filed against persons aged 18-24 involve Arabs,[3] which is much higher than their percentage of the population in this age group (30%).[4]  In serious cases, criminal activity is liable to deteriorate into organized crime or terrorist actions.

For the very purpose of preventing such eventualities, the Israeli government earmarked 1.4 billion shekels for initiatives to provide employment opportunities for young Arabs, focusing on the development of professional skills, increasing Hebrew language proficiency and obtaining employment.  This program is central for dealing with the problem of inactive Arab youth, and it is expected to reduce the threat of falling into crime and violence.

This is a decisive moment in Israel’s responsibility for Arab society as well as for Israel as a whole. A budget cut in the 5-year plan – especially the planned cut of 15% — according to the revised budget for 2024 – is liable to negate the progress made to date and to increase the level of violence in Arab society.

// The English version of this article was originally published in The Times of Israel, on 21 February 2024.

הפוסט Proposed budget cuts will have an adverse effect on Arab youth הופיע לראשונה ב-Adva Center.

The revised 2024 budget is characterized mainly by a huge increase in the defense budget, an increase far larger than anything we have seen in the past. And this is to be voted upon without any presentation to the general public or to the Knesset itself of a specific plan, or alternative plans, vis-à-vis what is to happen when the fighting ends. Does the present government anticipate years and years of war against the Hamas? Has it lost all belief in the possibility of a political solution? And worse yet – has the incumbent government abandoned the very possibility of a political solution, preferring instead ongoing hostilities with Palestinians? In the absence of political goals it is difficult, nay impossible, to calculate costs and construct a budget based on what it is that Israel is aiming for. The option of continued fighting until the Hamas is disbanded requires an immense investment,  in order to maintain a large armed force for many years to come, while the option of fighting only until the Americans say “Stop!” – as was the case in previous rounds of fighting – requires a smaller sum.

In the absence of clear goals and in light of the fact that Israel’s generals are asking for more and more time to achieve their military ends, what we have is a budget predicated on a prolonged war and by military actions guided by the notion that what has failed to be achieved by force will be achieved with greater force.

The absence of a program for “the day after” will have an adverse effect on Israel’s social services, including education, health, welfare and higher education. This, due to the fact that, among others, a greatly enlarged defense budget will come at the expense of reduced social services, for which there is no credible plan either. Will the state provide full financing for the formidable project of returning displaced persons to homes in located in the Gaza envelope or adjacent to the Lebanon border? Will the state provide full financing to repair the vast infrastructure damage? Or will it supply some sort of basic compensation and then leave the rest to the “free market.” The latter may result in reducing thousands of households to a level of income below the poverty line. These questions are especially significant in light of the fact that for years now, Israel’s social services have been suffering from a lack of personnel, including teachers, nurses and social workers, due to the low salaries paid in the public sector.

Moreover, the social services budget is completely devoid of vision or soul. The budget and accompanying documents contain  no statement about the social services whatsoever – nothing about reviving public education, nothing about broadening higher education or reinforcing the public health system, nothing about increasing investments in localities in which Arab citizens of Israel reside, rather than decreasing them, the latter of which is one of the salient features of the new budget. Soldiers fighting in the various arenas of the present war will be demobilized into a society much less caring than what is implied by the popular war slogan, “We are all together in this.”

There remains a crucial issue: where will the financing come from for a much larger defense allotment as well as for the tasks ahead: rebuilding the settlements in the Gaza envelope as well as those near the Lebanese border, and reinforcing the social services?

Now, the main source of state revenue is taxation. Taxes are of two kinds: direct taxes (the major one of which is income tax) and indirect taxes (the major one of which is VAT). Together, the two examples constitute half of state revenues from taxation. As is well-known, income tax is more equitable, as low-income persons are either exempt or pay a lower percentage of their earnings, while higher income persons pay a larger percent of their earnings, while VAT is less equitable, as all individuals pay the same tax on purchases, and as such, low-income individuals pay a higher percentage of their income. In recent years, state revenues from VAT have been greater than revenues from income tax. The present government’s budgetary decision to raise VAT rather than income tax levels is evidence of the continuation of a less equitable approach to financing the war.

Israel’s national budget for 2024 indicates a “day after” with more warfare, less welfare and less equity.

// This op-ed was published in Hebrew in the newspaper Maariv

הפוסט Israel’s New 2024 Budget: More Warfare, Less Welfare הופיע לראשונה ב-Adva Center.