IMF wraps up Israel visit with call to work

Ultra-Orthodox Jewish men are seen next to a cash withdrawal machine in Jerusalem, Monday, Feb. 13, 2012. The International Monetary Fund says Israel's long term economic stability depends on whether more Israeli Arabs and ultra-Orthodox Jews join the work force.

Israel's long-term prosperity depends on getting more ultra-Orthodox Jews and Israeli Arabs to join the work force, the International Monetary Fund said in a report Monday.

Wrapping up a two-week mission to Israel, the IMF also said the country's economy is strong and has weathered the global economic slowdown well. It cited growth of almost 5 percent in 2010 and 2011 and unemployment of 5.5 percent — an all-time low — while inflation has fallen back.

But it warned that the low work participation of Israeli minority populations poses a long-term threat to the nation's economic health. In particular, it said Arab-Israeli women have an employment rate of 20 percent and ultra-Orthodox men of 40 percent. The two groups are among the poorest and fastest growing in Israel.

The IMF study said the combined ultra-Orthodox and Israeli Arab populations could double over the next three decades, from a combined quarter of Israel's population to half. It said that if the two sectors reached the employment, wage and productivity rates as the rest of the country, Israel's output would rise by 15 percent.

The report underlines highlight a growing rift in Israel between the secular majority and a fervently devout minority whose numbers are skyrocketing and which lives in lifestyle distinct from the rest of the country. In ultra-Orthodox society, men focus heavily on religious study and often do not work, living instead on government welfare.

At current demographic trends — with the ultra-Orthodox typically having about six children per couple — the religious minority could become increasingly dominant.

Israel's Finance Minister Yuval Steinitz praised the mission and its feedback on the Israeli economy.

"We are acting and will continue to act toward the integration of Arabs and the ultra-Orthodox in the labor market," he said. "We are creating opportunities for ... education and vocational training and call upon those sectors of the population to participate in the labor market for their own good and the good of the whole economy."

Arab women have a low work force participation because of a combination of low education, distance from economic hubs and traditional social constraints.

The low work participation among the ultra-Orthodox, along with their refusal to perform compulsory military service, has fueled widespread resentment among secular Israelis. In some cities, ultra-Orthodox extremists have recently tried to impose their conservative mores on mainstream society, vandalizing billboards with images of women, for instance, further adding to the resentment.