16.03.2011
 
The following is an excerpt from the Bank of Israel 2010 Annual Report, which will be published on March 30, 2011*
Education and Employment in the Ultra-Orthodox Population
 
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  The number of ultra-Orthodox students (men and women) studying in programs geared to the ultra-Orthodox sector, rose from around 2,000 in 2005 to around 6,000 in 2010. The number of ultra-Orthodox men pursuing an academic education rose from a few hundred in 2005 to around 2,500 in 2010.
  More than 90 percent of ultra-Orthodox students study subjects with strong vocational orientation.
  Despite the increase in the number of ultra-Orthodox men pursuing academic studies, the labor force surveys have not recorded significant changes in their employment rate. If such a change occurs, it will contribute to the future growth of the economy.
The ultra-Orthodox sector, particularly the male population, is characterized by very low rates of participation in the labor force and low rates of employment. In recent years, government labor policy has focused on increasing the integration in the labor market of populations characterized by low participation rates, among them the ultra-Orthodox. These steps are of critical importance in light of the ultra-Orthodox population growth rate, which greatly exceeds that of the non-ultra-Orthodox Jewish population. According to various estimates, the ultra-Orthodox currently constitute 8-10 percent of the population, and their proportion of 25–64 year-olds (the main working age group) will reach 17 percent in about twenty years. The growth in the proportion of the ultra-Orthodox, a consequence of the ageing of the population and the declining birth rates in other population groups, highlights the importance of their integration in the labor market.
Several policy measures have been adopted in recent years to encourage the employment of the ultra-Orthodox, including indirect measures such as the reduction in child allowances in 2003, and direct programs for encouraging employment. In 2003 the Large Families Law (the "Halpert Law") was revoked, and a further cut in allowances was instituted. This step was intended, among other things, to motivate ultra-Orthodox men to enter the circle of employment. In addition, various programs have been introduced in recent years to encourage the integration of the ultra-Orthodox in the labor market by means of professional training and placement, stipends for academic studies, and employment support. Government expenditure on these projects exceeded NIS 300 million in 2010 (of which NIS 150 million was allocated as a subsidy for day-care centers serving this population). Encouraging the ultra-Orthodox to acquire education appropriate to the labor market as well as professional training, is the key to their integration in the world of work.
The data from the labor force surveys points to a constant and significant increase in the rate of employment of ultra-Orthodox women over the past decade. Against this, the rate of employment of ultra-Orthodox men, as mentioned, showed no significant changes during this period. One of the major reasons for the non-participation of ultra-Orthodox men in the labor force is the economic disincentive for doing so, a result of their lack of education that could equip them for the labor market. The disposable income of an ultra-Orthodox family in which only the woman works, is liable to decrease when the man goes out to work (assuming that he earns the minimum wage), because of the decrease in the family's non-labor income (for example, stipends for married yeshiva students and economic assistance from charity organizations). A significant change in the employment patterns of ultra-Orthodox men is, therefore, largely dependent on a rise in their earning capacity relative to alternative sources of income outside the labor market. This change could occur through acquiring education or training geared to the labor market, which will raise the potential salary of ultra-Orthodox men.
Academic study in the ultra-Orthodox sector
In recent years a slow but steady process of pursuing academic study has been taking place in the ultra-Orthodox sector, particularly among the men. Ultra-Orthodox men and women are enrolling in academic and professional studies in programs designated for this population as well as in programs for the general population. According to data of the Council for Higher Education, the number of ultra-Orthodox students (men and women) in programs geared to the ultra-Orthodox sector rose from around 2 thousand in 2005 to around 5 thousand in 2010 (Table 1). The change was overwhelmingly due to the growth in the number of male students. This figure does not include ultra-Orthodox students studying in programs and institutions for the general public. The assessment is that the overall number of ultra-Orthodox students in 2010 was around 6 thousand, 42 percent of whom were men. Furthermore, as Table 2 shows, the trend of academic studies is concentrated around acquiring professions with a high potential for integrating in the labor market. More than 90 percent of ultra-Orthodox students acquire such professions.
   
   
   
 
 
Table 1: Ultra-Orthodox Students by Learning Institutions (Men and Women)


 
Government policy could assist in overcoming the barriers that prevent the ultra-Orthodox population from participating in academic and professional study. If the above trend continues, it will imply a significant change in the employment patterns of the ultra-Orthodox population, a change that could greatly affect the state of the Israeli economy, and prevent a situation in which low participation rates in the labor force hampers the economy's growth.
 
* In Hebrew. The English version will be published about one month after the Hebrew.