Are Haredi parties standing in the way of their community’s prosperity?

All of a sudden, everyone is talking about Haredim.

The formation of the new government and the dramatic concessions offered by Prime Minister Benjamin Netanyahu to the Haredi parties in his coalition has brought the question of the Haredi, or ultra-Ortodox, economy to the forefront of public debate.

Front-page feature articles in Israeli media over the past two weeks have laid bare troubling economic indicators. Put simply, the Haredi community, which makes up just 12% of Israel’s population, is an epicenter of poverty.

Fifty-one percent of Haredim live below the poverty line, compared to 18% among non-Haredi Jews, according to 2019 government figures. Over 60% of Haredi households are classified as poor on the government’s socioeconomic index, as is every single Haredi municipality. In Jewish-majority municipalities where the majority isn’t Haredi, just 16% are poor. Haredim work less — just 51% of Haredi men are employed, compared to 86% among non-Haredi Jewish men — and earn less when they do work — Haredi men’s salaries are 47% lower than those of non-Haredi Jewish men; Haredi women earn 26% less than non-Haredi Jewish women.

And that poverty isn’t imposed from the outside; it’s due almost entirely to the community’s cultural and religious choices. Huge numbers of Haredi men prefer Torah study to work. And it’s hard to get high-paying jobs when the study of math, English and science stops in the early elementary years, as happens in large swaths of the Haredi education system.

The result is a huge disparity in income. The average gross income of a non-Haredi Jewish household is NIS 21,842 ($6,205) per month, 82% higher than the average Haredi household’s NIS 14,121 ($4,012), according to Central Bureau of Statistics figures for 2022.

And that leads to rampant poverty rates, which exceed 60% in the community before government entitlement spending is factored in. Haredim may be just 12% of the population, but they make up well over a quarter of the country’s poor, helping to drive Israel to the top of the poverty rankings of the developed world, according to the OECD.

But all of that was true a month ago as well. What propelled the issue to the top of the agenda in recent weeks? As the coalition agreements became public, Israelis discovered just how much of the problem was driven by the Haredi political leadership.

In the new agreements, the Haredi parties — Shas and United Torah Judaism — demanded and received an unprecedented increase to yeshiva student stipends and a rise in child stipends, subsidies for daycare without an income requirement (i.e., parents don’t need to work to have their daycare covered by public funding), a government-funded food stamp program, and a significant increase to funding for schools that don’t teach math, English and science, and more.

Huge budgets were also promised to ministries controlled by the Haredi parties, especially the interior and Jerusalem ministries, that will be funneled to cash-strapped Haredi municipalities to make up income shortfalls due in part to massive property tax discounts that can reach as high as 90%. The list goes on, up to and including straightforward government subsidies for goods and services in the Haredi community.

And that dizzying array of policies all has a clear bottom line: At the heart of Haredi politics is the demand that someone else pay for the Haredi community’s decision to live in poverty.

As a new government gets underway in which the Haredi parties are set to play a major part, many Israelis — and not just on the secular left — are worried that this poverty has grown too costly to ignore.

Unsustainable

There’s no gentle way to say it: Haredim draw much more from the public coffers than other Israelis and contribute much less.

A recent three-part feature series by the business journal Calcalist explained to Israelis that the average Haredi household pays just one-sixth the tax burden of an average non-Haredi Jewish household. When measured per capita rather than per household, the figure is just one-ninth (since Haredi households are larger on average).

Perhaps the most staggering figure: The Haredi community pays just 2% of the country’s total income tax revenues.

And while contributing little to the public coffers, they draw a lot. Fully 26% of the total income of the country’s 200,000 Haredi households comes from government payments, including welfare, study stipends and so on. That’s 2.4 times the 11% figure for non-Haredi Jews. And that’s just a measure of direct government payments; it doesn’t include the vast outlays for healthcare and other services.

In other words, to sustain its cultural choices of widespread non-work and avoidance of modern education, the Haredi community must impose a massive transfer of wealth from other communities to its own.

It doesn’t help when Haredi politicians like UTJ chief Yitzhak Goldknopf seemingly admit publicly that tax evasion is rampant in their community. Asked in a radio interview in late October why his party seemed to be flagging in the polls, Goldknopf explained, “Haredim have a tendency to not answer phone surveys. They say to themselves, ‘Maybe it’s the Tax Authority, maybe it’s National Insurance. Leave me alone.'”

Add that tax disparity to their growing numbers — with nearly three times the average birthrate and 60% of the community under the age of 20, they will constitute 16% of the population by decade’s end and nearly a quarter of the country by 2050 — and the situation becomes unsustainable.

’We’re not afraid of you’

On December 27, United Torah Judaism MK Moshe Gafni addressed the flood of news reports on the Haredi economy at the opening of a meeting of the Knesset Finance Committee. His tone was mocking — “Haredim have turned to me asking where they can get tax rebates, because apparently they’re supposed to pay just one-sixth the legal tax rate.”

It was a moment of bluster, but also of willful blindness. “There’s no such thing as a Haredi paying less or more, everyone pays [what is required],” Gafni told the committee. “These are simply lies.”

Another MK interjected, demanding to know which specific figure was incorrect. “Why are you interrupting me?” Gafni shot back, leaving the question unanswered.

He continued: “I’m saying to all these journalists and politicians, we’re not afraid of you. You think you’ll scare us. But you were quiet for a year and a half because you thought I might go with you [into the Bennett-Lapid government]. I didn’t go with you, and now comes the hour of revenge.”

Gafni’s response captures something important about the politics surrounding the Haredi economy: Maintaining the work and education disparity and funding the poverty it engenders is the primary task of Haredi politics — as is denying that it’s happening.

The result, say experts, including Haredi experts, is a continuation of the basic “cycle of poverty” that prevents the Haredi community from transforming from a massive drain on the national economy to an engine of growth.

And as the community grows, it’s becoming harder to ignore. Gafni’s denials of the problem notwithstanding, most Israelis are displeased by the concessions his party won at the negotiating table.

An IDI poll published Wednesday found that a majority of Israelis “give Netanyahu a negative rating for how he managed the negotiations” with his new coalition partners. Fully 62% of Israelis agreed that Likud “made too many concessions”; just 26% disagreed. More worryingly for Netanyahu and his Haredi partners, the critics included 38% of Likud voters.

In fact, the only group of respondents among whom supporters of the coalition agreements outnumbered detractors were Haredi voters.

Antagonism is growing among the broader population, as well as dissatisfaction in the community itself.

Two signals of this dissatisfaction were noted this week. Israel’s National Insurance Institute measures the “perception of poverty” among the population. The figures, published by business journals this week, show a Haredi community increasingly frustrated with its situation. Fully 41% report having given up leisure activities because of their household’s financial situation; 14% report giving up medical care for the same reason.

And the other signal: The simple fact that Haredim are increasingly joining the workforce.

That’s the good news: “In 2002, about a third of ultra-Orthodox men were employed, and only slightly more than half of the women. … Today over half of ultra-Orthodox men (51%) and over three-quarters of ultra-Orthodox women (80%) work,” noted Wednesday’s Israel Democracy Institute report.

This surge in Haredi workforce participation that began 21 years ago demonstrates that the problem can be addressed by better policies — that Haredim are just as susceptible to economic incentives as anyone else. When subsidies were cut dramatically in 2002 as part of an economic belt-tightening pushed by then-finance minister Benjamin Netanyahu to pull the economy out of recession, it sparked a dramatic influx of Haredim, especially women, into the workforce.

It also drove a new search for educational opportunities, at least among women. Between the 2008-9 and the 2019-20 school years, the rate of Haredi schoolgirls taking state matriculation exams rose from 31% to 59%, according to the IDI report.

Among men, the initial improvement after 2002 ground to a halt in 2015 and has plateaued since, in keeping with a rise in subsidies after Haredi parties returned to power after the 2015 election.

Or put another way: The choices and policies of the political leadership have a direct impact on levels of employment, education and poverty in the Haredi community.

Where are the leaders?

If Haredim show signs of tiring of this poverty, if the cost for the country is growing as the Haredi population grows, and if the wealth transfer required to sustain it is generating growing resentment among the rest of the population, why can’t the Haredi leadership tackle the problem? Why does Gafni, who as chairman of the Knesset Finance Committee could lead the charge, choose to deny that the problem even exists?

Haredi politicians have largely avoided interviewing on the subject in recent days. Haredi media have mostly taken a defensive posture, accusing the non-Haredi press of anti-Haredi prejudice.

But those who speak to Haredi politicians behind closed doors, such as IDI researcher Dr. Gilad Malach, director of the institute’s Ultra-Orthodox in Israel Program, report that “Haredi politicians understand as much as Netanyahu that there’s a long-term problem here… But there’s a gap between that long-term vision and the established views of the community that emphasize Torah learning.”

After he presented to the politicians the cost to the country’s GDP and general wellbeing of Haredi non-work, Malach told The Times of Israel, the politicians replied “that it sounds reasonable that in the long term two-thirds of Haredi men will go to work.”

Why, then, can’t they help drive that change?

The basic answer, say Haredi analysts like Eliyahu Levi, an editor at the Haredi journal Tzarich Iyun, is that Haredi political culture still operates by the assumptions of an earlier era, when the community was small, marginal and concerned only with itself.

“The religious parties, particularly the Haredi ones, have over several decades become accustomed to lobbyist politics at best…and to tribal maneuvering at worst,” Levi wrote in Tzarich Iyun’s October edition, just before the November 1 election.

“Among incoming Haredi Knesset members, some continue to perceive themselves in the traditional image of Jews seeking to procure all they can from unjust and unscrupulous non-Jewish authorities… But this attitude will backfire. The authorities are ‘us,’ not ‘them,’ and our goals must include ensuring the long-term prosperity of the state rather than spending down resources for short-term needs. If Haredi representatives fail to do so and continue to follow tribal strategies, they stand the risk of fueling already existing tensions to new levels of animosity. As representatives of religion, the backlash will not be limited to Haredim but will apply, Heaven forbid, to Judaism in general.”

A fundamental change was required in Haredi political culture, a willingness to take responsibility for the wellbeing of all Israelis, he argued.

“It is up to our representatives to rise to the challenge and take responsibility. It is also time for us, the general Haredi public, to do the same. We need to change our own mindset and demand accountability from our representatives. … We are the majority; both our representatives and we need to internalize the responsibilities this implies.

Failure, warns Levi, risks wasting a moment of political triumph on the altar of a narrow and obsolete political self-understanding.

“If we succeed, this moment could be the beginning of many years of essential service in Israel’s government. If we don’t, we are likely to lose the opportunity all too quickly.”