Israel and the Jewish people are affected by global economic developments, which reflect the impact of the Covid-19 pandemic and the Ukraine war crisis. These developments include increased inflation, rising interest rates, and a shortage of various goods, both for use in technology (due to supply chain difficulties) and for civilian consumption (there are concerns about food and fuel shortages in the coming winter). Israel needs to invest in high-cost infrastructures for increased immigrant absorption and to drive down housing prices; it must also devise plans for reducing income disparities without harming the productive sectors, especially high-tech. Tax increases could provide Israel a certain budgetary margin to allow such investments. Jewish communities around the world need to cope with the pandemic’s consequences on communal structures and resources, as well as with the ongoing trend of decreasing population numbers (in the non-Orthodox world). We are moving the needle of the resources gauge in a slightly negative direction, mainly because of pessimistic economic forecasts for the coming year.

Trends and Recommendations

The Israeli government and Israeli social change organizations must formulate strategy and take urgent measures to reduce education and wage gaps

Explanation: Two economies are emerging in Israel, the high-tech economy and the economy of everything else. The high-tech engine is decoupling from the train. While Israel’s minimum wage has risen 30% over the past decade and the country’s average wage has increased by 34%, the average high-tech wage has climbed by over 50%. The average high-tech wage is about five times that of the minimum wage.³ These economic gaps are giving rise to social disparities. Israeli high-tech is a “relatively homogeneous and closed circle” based on the work of “non-Haredi Jewish men,” according to a report by the Israel Innovation Authority.⁴ High-tech is “widening gaps, mainly due to the products of the education system and of Israeli higher education,” according to a report by the Knesset Research and Information Center.⁵ This situation is problematic in two respects: First, it leads to social unrest among those who have been “left behind.” Second, it could potentially cause an “exodus” of tech entrepreneurship from Israel, due to the excessive workload borne by a small number of people expected to financially support the larger group.

The situation demands integrated action by the government aimed at the rapid and resolute advancement of Israel’s peripheral groups (geographic and social) so that they can take part in the country’s “high-tech economy.” At the same time, aid and social-change organizations should receive support from donors in the high-tech sector, in order to mitigate societal tensions and reduce disparities. Such measures cannot be effectively realized without a significantly improved education system, and without demonstrating systemwide determination to achieve these objectives in the face of political, ideological, bureaucratic, and budgetary obstacles.

Diaspora communities (with the assistance of Israel) should prioritize significant Jewish education projects – economically, socially, and institutionally

Explanation: Cumulative data from recent years indicate that: 1) Among young Diaspora Jews (except the Orthodox), the sense of connection to Jewish culture, the Jewish faith, the Jewish community, and the Jewish people is weakening. Commonly held claims that Jews are shifting from a “traditional” to a “cultural” identity model (i.e. “museums not synagogues”) are not backed up by robust scholarly research and should be treated with caution. 2) There is a significant positive correlation between Jewish education and Jewish action/attaching importance to Jewish life, both in this generation and in those to come.

The Jewish communities, which invest their resources in many different and important objectives, should draw the appropriate conclusions from the data and focus philanthropic and administrative efforts on extending non-Orthodox Jewish education to all those interested, ensuring that it will be geographically available, economically accessible, educationally excellent, and ideologically pluralistic. Investment in Jewish day schools and preschools, in weekly courses and enrichment activities, in summer camps – this appears to be the most worthwhile and urgent option for those who want to perpetuate the existence of active Jewish life in the Diaspora.

Philanthropy in Israel, by both individuals and institutions, should be encouraged, emphasizing the Jewish value of giving as customary in Diaspora communities worldwide

Explanation: The great success of Israeli high-tech has created an economic class of wealthy Israelis whose numbers have increased significantly. These are primarily young people who have no multigenerational family tradition of giving. Data on individual and corporate philanthropy in Israel point to low donation levels compared to other Western countries, and especially with Jews abroad, who are leaders in the philanthropic sphere.⁶ Although Israeli philanthropy is trending upward to a degree, it is still far from the desired destination. The flourishing of high-tech constitutes an opportunity for Israeli capitalists to step up their contribution to the development of Israeli society.

The strengthening of philanthropy as a value should be supported by governmental moves (tax incentives) and social measures (education, raising expectations, respect, and recognition), and will serve three important objectives. First: increased philanthropy will make it possible to reinforce efforts in the educational, cultural, and welfare spheres. Second: it will promote mutual responsibility on the part of different groups in Israeli society. Third: it will embody a unifying Jewish value for Israel and the Diaspora.