Bank of Israel chief warns ultra-Orthodox & Arab sectors could drag economy backward


Dr. Karnit Flug, the Bank of Israel Governor, believes a tax increase may be required to meet needs created by growing demographic trends in Arab and haredi sectors.

United Torah Judaism MK calls Flug’s comments “incitement.”

By Hezi Sternlicht, Zeev Klein, Yehuda Shlezinger


Current demographic trends could cause Israel’s economy to regress in terms of employment rates, Bank of Israel Governor Dr. Karnit Flug warned Monday.

Bank of Israel Governor Dr. Karnit Flug – Photo: Lior Mizrahi

Flug, speaking at a Central Bureau of Statistics seminar, said that “the makeup of the population is expected to change, with greater weight comprised by the Arab and especially the haredi sectors.”

“If we make the major assumption that the rate of employment in these sectors will remain the same, we can see that the projected demographic trends can be expected to reduce the employment by some 7 percent in the long term,” Flug said.

Flug said that in her assessment, these challenges would need to be addressed by a tax increase.

Responding to Flug’s remarks, MK Moshe Gafni (United Torah Judaism) suggested that “[Flug] check with the haredi population to see how many would like to work but are prevented [from doing so] by the government and private employers.”

United Torah Judaism MK Meir Porush called it “terrible” that a “campaign of divisiveness and anti-haredi incitement [had] reached echelons thought of as professional.”

Israeli Arabs make up about 20% of the country’s 8 million citizens. The ultra-Orthodox are less than 10%.

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