The Organisation for Economic Co-operation and Development has recommended that Israel remove government subsidies for yeshiva students in order to close what it said are wide socioeconomic gaps in society.
In an annual report issued Tuesday assessing every OECD member country, the global organization criticized Israel on a number of fronts, including its economic policy regarding the ultra-Orthodox community.
According to the OECD, “socioeconomic gaps remain wide” in Israel, as “certain groups, especially the Haredim (ultra-Orthodox Jews) and Arab-Israelis, are underrepresented in the thriving high-tech sector, and have low employment rates, working hours and wages.”
To address the disparity, the OECD called on Israel to “remove government subsidies for yeshiva students and condition childcare support on fathers’ employment.”
It also suggested that child-care options in Arab towns be boosted as well as budgets for schooling in Arab towns.
Coalition lawmaker Moshe Gafni from the ultra-Orthodox United Torah Judaism party flatly dismissed the OECD report, saying those behind it don’t understand that Torah study is what sustained the Jewish people through thousands of years of exile in order to return to the land of Israel.
“The goy does not understand this,” Gafni said, using the Hebrew term for gentile that is generally seen as derogatory. The UTJ lawmaker, who heads the Knesset Finance Committee, went on to claim that the report was written due to pressure from individuals within Israel. “We’ll deal with that matter too,” he warned.
MK Avigdor Liberman, the leader of the opposition Yisrael Beytenu party, who during his term as finance minister was thwarted in his efforts to cut some of the Haredi subsidies, responded on X that he was happy the OECD was “fully adopting my approach on the matter of ending subsidies for people who don’t get a profession and education, and evade joining the workforce.”
Separately, the OECD criticized Israel on climate change, saying that its “share of renewable energy in electricity generation is one of the lowest in the OECD” and advised it to address the issue in a number of steps including using some environmental tax revenue to boost renewable energy use and improving public transport. The OECD also called to increase the amount of public land available for solar installations.
The suggestions for ending Haredi subsidies came after earlier this year the government approved a state budget that included NIS 13.7 billion ($3.7 billion) worth of coalition funds mainly allocated in support of ultra-Orthodox institutions, including about NIS 3.7 billion ($960 million) to be spent on increasing the budget for stipends at religious yeshiva student institutions. Prime Minister Benjamin Netanyahu’s Likud party made generous promises of billions of shekels to secure the support of its ultra-Orthodox and far-right coalition partners, including ample funding for Haredi education and religious initiatives.
The Finance Ministry’s Budgets Department at the time warned that the allocation of funds to ultra-Orthodox institutions and initiatives creates negative incentives for Haredi men to seek employment and will harm the country’s labor market and the economy as a whole.
At the same time, Finance Minister Bezalel Smotrich halted the transfer of hundreds of millions of shekels to Arab municipalities, including millions for a program to integrate East Jerusalem Arab residents into Israeli academia. Smotrich eventually agreed to release the monies on the condition that an oversight program be introduced.
Last week, the Knesset Finance Committee okayed hundreds of millions of shekels for various ultra-Orthodox educational initiatives. The committee also approved the eventual transfer of NIS 200 million ($52 million) to Arab-majority towns and cities, though that was to wait for the implementation of the oversight mechanism, sparking charges of discrimination from Arab lawmakers.
In July 2021, under the previous Bennett-Lapid government, then-finance minister Liberman changed the criteria for the receipt of daycare subsidies for young children up to the age of three in a way that excluded 18,000 Haredi families in which the father was a full-time yeshiva student.
Liberman’s stated goal was to “eliminate disincentives to join the labor market” which he said was the upshot of the subsidy as it stood.
Three private Haredi attorneys petitioned the court, arguing that the subsidy cut would create severe economic difficulties for Haredi families. The High Court agreed in part, ruling that ending the subsidy with immediate effect would indeed do significant and immediate harm to the household budgets of those receiving the benefit without giving them time to prepare economically.