Not Iran, Education is the Weapon Destroying Israel from Within

Israel is facing rapid economic and demographic shifts. On one hand, Israel has successfully transformed from an agriculture-based economy into one of the world’s leading technology hubs. On the other hand, low productivity among a large portion of the workforce and demographic changes are making the education system one of Israel’s greatest challenges for the future.

One year after its independence in 1949, the agricultural sector accounted for 64% of Israeli exports. Today, its share is just 0.6%, while the high-tech sector has become the primary engine of growth, contributing approximately half of total exports. This transformation was supported by the development of research universities since Israel’s inception. In the first 25 years, the number of university lecturers relative to the population increased more than ninefold.

Currently, Tel Aviv University and the Technion rank among the top 10 globally for producing startup founders, according to PitchBook. Investment has also flowed heavily into the sector. In recent years, Israeli venture capital investment as a percentage of Gross Domestic Product (GDP) has reached more as than double that of the United States and more than 15 times the average of Organisation for Economic Co-operation and Development (OECD) member countries. Foreign-funded research and development (R&D) also reaches 13 times the OECD average.

Advanced Economy, but Lagging Productivity

Despite these advantages, a major problem persists. Overall Israeli labour productivity remains in the lower half of OECD countries. In 2022, GDP per hour worked in the high-tech sector was recorded at 22% above the OECD average. However, in other economic sectors, where approximately 90% of Israeli citizens work, productivity is 24% below the OECD average.

The high-tech workforce is also relatively small. Out of a population of approximately 10 million, only about 300,000 people work in high-tech, as doctors, or as senior lecturers in research universities. This inequality is also reflected in tax revenue. In 2024, about 20% of the Israeli workforce contributed 93% of income tax revenue, up from 83% in 2000. Meanwhile, half of the rest of the workforce earns too little to reach the income tax threshold.

One of the root causes is education. Israel ranks at the bottom of the OECD in mathematics, science, and reading in the Programme for International Student Assessment (PISA). About half of Israeli children receive a core education below the standards found in many developing nations. This issue is becoming more serious because the group with lower education levels is the one growing the fastest.

Haredi Population Explosion Alters Israel’s Face

The most prominent group in this change is the Haredim, the ultra-Orthodox Jewish community. Most of this group maintains a separate education system and, particularly for boys, allocates a very large portion to religious education. After the age of 13, Haredi boys are generally directed to focus on Torah studies, with very limited secular education.

Their demographic growth is also much faster. While most Israeli population groups have a fertility rate of about two children per woman, the Haredi group reaches nearly seven children per woman. As a result, the proportion of Haredim in the population doubles every 25 years. Data from the Israel Central Bureau of Statistics shows that in 2023, Haredim accounted for only 6% of the population aged 50-54, but have already reached 26% of children under the age of five.

This change is becoming clearly visible in several cities. Four municipalities that have experienced the largest decline in socio-economic conditions since 1995 have all undergone rapid demographic shifts. This condition is driven by the high birth rate of the low-education group and the migration of more educated and skilled residents.

In Jerusalem, for example, the proportion of secular Jewish students fell from about one-third of all students 35 years ago to just 9% today. The city of Arad provides an even sharper picture. In 2000, 75% of primary school students in the city were in the secular Jewish education system and 21% were in the Haredi system. By 2026, the situation will have reversed, with 75% of students being Haredi and secular students remaining at 20%.

This change is not merely a matter of population numbers. If more people enter the working age without the basic education required for a modern economy, while a small highly educated workforce supports productivity and tax revenue, the nation’s economic burden could become increasingly heavy.

Education and Budgeting are Key

Israel’s primary issue is not just increasing the education budget, but ensuring every child receives the core education needed to work and understand basic rights in a democracy. One proposed solution is to update the national curriculum and make it compulsory for all children. The required basic education should not be sidelined, even if additional curricula can still be adjusted to the preferences of parents and communities.

This change also concerns the national budget. The government is being urged to stop funding schools that do not fully implement the core curriculum, while also reviewing direct and indirect subsidies to the Haredi group. The scale of this support is under scrutiny, as total subsidies for the Haredim are said to be larger than the combined public funding for all Israeli hospitals and universities.

One impact is visible in the labour market. The employment rate of Haredi men in their primary productive age is now 25% lower than it was at the end of the 1970s.