The continued existence of Israel’s ultra-Orthodox (Haredi) society is dependent on a strong national economy able to provide economic security and a strong army able to provide physical security. In light of the Haredi society’s exponential growth – doubling its share in Israel’s population every generation (Haredim are 6 percent of the country’s grandparents, but are already a quarter of today’s infants) – the continued existence of the State of Israel is dependent on the Haredim. This interdependence requires an immediate internalization of the current direction that Israel is headed and the consequences of that direction for the country in general, and for Haredi society in particular. This process – involving very rapid changes in the population distribution within towns, alongside a steep and rapid decline in those towns’s living standards – is already well underway in several Israeli municipalities, which allows a glimpse into the future that currently awaits the entire nation, unless dealt with while it’s still possible to do so.

A solution that can return Israel to a sustainable long-term trajectory needs to be founded upon complete overhauls of Israel’s education system and of the government's budgetary priorities. This proposed solution is not directed against the Haredim, but is based on a national goal of increasing equality in opportunities, rights and obligations among all citizens. The social, economic and political processes that Israel has undergone in recent decades – and since January 2023, in particular – have brought the country to its moment of truth. The importance of the need for a sharp and immediate policy pivot cannot be overstated. Haredi towns have Israel to ensure their existence – an insurance policy that the country as a whole will not have, if and when it will begin to look like the Haredi towns.

Even before Israel’s recent constitutional crisis, the main barrier to the development of the high-tech industry, Israel’s major growth engine, was a shortage of skilled, professional, and creative labor supply. The share of advanced-degree graduates in the sciences and engineering in Israel is lower than in many developed countries, and is trending downward. In recent years, the share of students admitted to undergraduate programs in these disciplines has risen, as has the share of those completing their degrees. Yet it is uncertain if this trend will continue without an enlargement of the physical and human infrastructures necessary to absorb additional students.

The decline in psychometric scores (serving a similar screening purpose as the SAT in the US) of those admitted to academic studies in sciences and engineering suggests that the supply bottleneck for sufficiently skilled high-tech workers in Israel may due primarily to the quality of the country’s education system, as evidenced by Israeli pupils’ low achievements on international exams.

Uncertainty created by Israel’s constitutional crisis in 2023 negatively affected high-tech investments. Both entrepreneurs and workers began to seek alternatives outside of Israel. It is still too early to accurately assess the impact of the Israel-Hamas war, but even if the situation in the sector will return to normal, the alternatives abroad for Israeli high-tech workers could nonetheless spark future worker shortages.