Israel is a relatively young country and economy. In its short life of 60 years, its economy has matured through continuing crises and has become strong and well diversified. Almost all years of the country’s existence it has enjoyed healthy economic growth. Apart from these achievements, the country and the economy are facing serious problems.
The conflict with the Palestinians, which has been dragging on for decades, in the new millennium has intensified and became more and more violent. Besides the obvious humanitarian and political consequences, this conflict also has many economic implications – all but positive, both for Israel and the Palestinians. Both parties are paying a high economic price for the continuation of this conflict – with falling GDP’s, loss of jobs, sanctions on one another and most importantly – the huge unfulfilled potential that lies in economic cooperation between the two.
Israel is also facing an internal economic and social problem – the Ultra-orthodox Jews population group. Due to their unique lifestyle of abiding vigorously to religion, they almost do not participate in the Israeli labour market, rely heavily on government help and also do dot join the army like all other Israeli Jews. This group contributes to the poverty rate in an unproportional manner, being much poorer than other Israelis. Due to very high fertility rate, the Ultra-orthodox, who used to be just a small minority, are on the way to become almost a quarter of the population in two decades. This situation demands some urgent changes.
Table of Contents
1. Scope of the topic
2. Israel - an insight into the young country
2.1. Contemporary history and conflict
2.2. Economy
2.3. Demographics
2.4. Poverty
2.5. Unemployment and low participation in the labour market
3. The Ultra – orthodox population in Israel and its effects on the economy
3.1. The Ultra-orthodox society
3.2. Religious education
3.3. Draft exemption
3.4. Subsidies, other income sources and unemployment
3.5. Social problems
3.6. Population growth and poverty
4. Economic consequences of the Israeli – Palestinian conflict
4.1. Current situation
4.2. Conflict consequences on the Israeli economy
4.3. Conflict consequences on the Palestinian economy
5. Policy Suggestions for the Ultra-orthodox question
5.1. Revaluation and renewal of the “Tal Law” and setting up of a civil service framework
5.2. Establishment of outsourcing centers and training programs
5.3. Supportive measures
5.4. Negative income tax
5.5. Implementation of the EITC system in Israel
6. Suggestions for the Israeli – Palestinian economic relations
6.1. Future economic agreement
6.2. Israeli – Palestinian trade throughout the conflict
6.3. Benefits of economic cooperation
6.4. Price of economic separation
7. Conclusion
Objective and Thematic Focus
This thesis examines the economic challenges facing Israel, specifically focusing on the internal socio-economic burden posed by the rapidly growing Ultra-orthodox population and the external economic impacts resulting from the ongoing Israeli-Palestinian conflict. It explores how these two distinct but equally critical issues hinder economic potential and suggests potential policy remedies to foster integration and cooperation.
- The economic impact of the Ultra-orthodox community and their low labour market participation.
- The consequences of government dependency and subsidies on the Ultra-orthodox society.
- Economic analysis of the Israeli-Palestinian conflict and its impact on both parties.
- Potential policy reforms including the EITC system and civil service frameworks.
- The economic benefits and necessity of Israeli-Palestinian economic cooperation.
Excerpt from the Book
3.1. The Ultra-orthodox society
The Ultra-orthodox Judaism is a very ritualistic form of observance that is two centuries old. It has originated in the late 18th century, when the European Jews have assimilated into the secular society. Today the Ultra-orthodox practice a tradition that is preserving quite remarkably there past lifestyle in the villages of eastern and central Europe of the 19th century. All men have beards, wear long black overcoats of a formal look, accompanied with black wide brimmed hats. Women are dressed in a very modest way, leaving only hands and faces visible and the hair of those who are married is cut very short and covered with wigs.
The traditional Jewish prohibitions are observed, like restrictions on diet, observance of Saturday (Sabbath) and sexual propriety, but in a stricter manner. Thus the customs of the Jews of Eastern Europe are being preserved in a quite precise way in Israel. Despite appearing conservative, the Ultra-orthodoxy is radically more demanding and less tolerant of any deviation than the traditional European Jewry.
The Ultra-orthodox community contains some sub communities with an array of beliefs and practices. Most of them are hierarchical communities that wish for the advise of their leader, who might be a Rabbi or a head of the yeshiva, on any possible decision or topic, regardless secular or religious. As other existing sects like the Amish or radical Islamists, the Ultra-orthodox reject all modern culture like literature, sports, film, television and music, because they see it as corrupt.
Summary of Chapters
1. Scope of the topic: Introduces the geopolitical context of the Middle East and outlines the two main economic challenges facing Israel: the Ultra-orthodox community and the Israeli-Palestinian conflict.
2. Israel - an insight into the young country: Provides a historical overview of Israel, its economic development, demographic structure, poverty levels, and labour market issues.
3. The Ultra – orthodox population in Israel and its effects on the economy: Analyzes the Ultra-orthodox society, their religious education, exemption from military service, reliance on subsidies, and social challenges.
4. Economic consequences of the Israeli – Palestinian conflict: Investigates the economic impact of the conflict on both Israel and the Palestinian territories, including the burden of defense and the effects of boycotts.
5. Policy Suggestions for the Ultra-orthodox question: Proposes reforms for the Ultra-orthodox population, such as the “Tal Law” renewal, establishment of outsourcing centers, and the implementation of a negative income tax (EITC).
6. Suggestions for the Israeli – Palestinian economic relations: Discusses the necessity of future economic agreements, the benefits of cooperation, and the negative consequences of economic separation.
7. Conclusion: Synthesizes the main findings, emphasizing that both the internal Ultra-orthodox issue and the external conflict are critical hurdles that require urgent, sustainable policy solutions.
Keywords
Israel, Economy, Ultra-orthodox, Palestinian conflict, Labour market, Poverty, Subsidies, Yeshiva, Economic cooperation, GDP, Defence expenditure, EITC, Negative income tax, Integration, Disengagement.
Frequently Asked Questions
What is the core focus of this bachelor thesis?
The work focuses on two major economic challenges in Israel: the socio-economic impact of the rapidly growing Ultra-orthodox population and the economic consequences of the ongoing conflict with the Palestinians.
What are the primary thematic areas explored?
Key areas include labor market participation, government dependency, economic repercussions of the Israeli-Palestinian conflict, and policy suggestions for structural economic reform.
What is the primary objective of this research?
The goal is to analyze these two major obstacles and propose viable long-term policy solutions that could improve economic integration and foster stability.
Which scientific methodology is applied here?
The thesis utilizes an analytical approach, reviewing existing economic literature, government reports, demographic data, and case studies to identify the root causes of current economic vulnerabilities.
What is covered in the main body of the text?
The main body details the historical and cultural context of the Ultra-orthodox community, the direct and indirect economic costs of the conflict with the Palestinians, and potential reforms like the EITC system.
How would you describe the work’s key characterization?
The work is characterized as a socio-economic critique that balances analysis of domestic policy issues (Ultra-orthodox dependency) with international economic relations (Israeli-Palestinian conflict).
How does the Ultra-orthodox educational system affect the Israeli economy?
The system prioritizes lifelong religious studies at the expense of professional training, leading to very low labor market participation and a heavy reliance on state-funded subsidies.
What is the main finding regarding the Israeli-Palestinian economic relationship?
The research concludes that both parties are economically interdependent and that cooperation is essential; separation, by contrast, is shown to be costly and detrimental to both economies.
Why are Ultra-orthodox men historically exempt from military service?
This practice stems from early agreements aimed at preserving their traditional lifestyle and religious studies, which they perceive as being at risk if exposed to secular military culture.
What is the proposed role of the Earned Income Tax Credit (EITC) in Israel?
The EITC is proposed as a mechanism to incentivize low-wage workers, particularly within the Ultra-orthodox community, to enter the labor market by bridging the gap between social benefits and market wages.
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- Gregory Ler (Autor), 2008, Israel's Rising Economy and its Drawbacks - Causes, Consequences and Remedies, Múnich, GRIN Verlag, https://www.grin.com/document/116191
