Treasury: Every 1,000 haredi soldiers saves NIS 1.3b annually

During discussions of the Knesset Foreign Affairs and Defense Committee, the Finance Ministry presented its estimates of the increased defense costs in the wake of the war and the potential benefits of recruiting Haredi soldiers.

Among other things, the Finance Ministry says that extending compulsory military service and reserve service would cost more than NIS 10 billion a year. However, every 1,000 religious soldiers drafted for combat service could save the country NIS 1.3 billion a year, and the IDF’s current approach of only drafting active religious soldiers is a mistake and would harm economic growth.

At the beginning of the discussion, the Finance Ministry stressed that the employment rate of non-haredi Jews in Israel is particularly high, and this has led to major growth in the past decade. But now there is a significant gap between Arab women and haredi men who are being integrated into the labor market, which represents Israel’s main growth potential in the coming years. The quality of jobs is also a problem in itself, with working Arab women earning only 56% of what non-haredi Jewish women earn, while haredi men earn only 49% of what non-haredi men earn. So even when they do work, these population groups earn only half of what their counterparts earn.

Since the Haredi community is expected to constitute nearly a third of Israel’s population in 2065, this is a critical problem that must be resolved in order to secure the future of the Israeli economy. According to the Finance Ministry, the exclusion of Haredim from the labor market is expected to cause an annual loss of 13% to the GDP and require a 16% increase in direct taxes.

But more pressing are the security implications. The demands of war are putting pressure on the IDF’s manpower, which has led it to demand an extension of compulsory service. According to the Finance Ministry, extending compulsory service by six months costs NIS 6.35 billion a year, including the costs borne by the soldiers themselves, who must postpone the start of their careers. Moreover, extending reserve service is liable to cause additional economic damage, including financial damage to the partners of reservists, estimated at NIS 10 billion a year.

The Finance Ministry also stressed that the cost of reserve soldiers to the economy is much higher than the cost of conscripted soldiers, due to the need to compensate them at the same wage level and due to the loss of production despite their not working. The Finance Ministry estimates that the cost of five reserve soldiers is equivalent to the cost of nine conscripted soldiers, so expanding the conscription to include Haredim would significantly ease the financial burden.

According to the Finance Ministry, every 1,000 religious soldiers drafted for combat service will generate 833,000 combat reserve days per year, which will reduce the burden on combat reserve soldiers by 10-14 reserve days per year. This means a total economic savings of NIS 1.3 billion per year, for every 1,000 religious soldiers drafted for combat service.

This article was published in Globes, Israeli Business News – en.globes.co.il – on July 16, 2024.

© Copyright Globes Publisher Itonut (1983) Ltd., 2024.