Failure to draft ultra-Orthodox cost economy NIS 8.5 billion - study

Failing to draft ultra-Orthodox men into the IDF cost the country NIS 8.5 billion in 2024, investment firm BDO estimated in a report commissioned by civil religious-freedom movement Israel Hofsheet.

BDO calculated that if 27,000 haredim (ultra-Orthodox) – which they say makes up only 40% of those whose service has been pushed off for yeshiva study – had been drafted, the state could have saved NIS 8.5 billion, the firm asserted.

The savings would have been made possible by replacing reservists with regular-service haredi soldiers.

The savings break down into NIS 2.9 billion of budgetary expenses saved, saving of NIS 3.5 billion in lost GDP from reservists missing work, saving NIS 0.9 billion lost through harm to a partner’s employment, and saving NIS 2.2 billion lost from loss of seniority.

These estimates were based on publicly available information and BDO estimates, the firm said, adding that its calculation was based on conservative assumptions, including leaving out possible additional harm to freelancers and businesses.

Additionally, the report only accounted for one hour of lost labor per day for reservists’ partners because this is what is allowed by law. This is likely a conservative estimate given the challenges posed to partners of reservists and the potential impacts on them.

Increases in amount of reserve duty and implications for the economy

The report also focused on the potential economic impact of an increase in the amount of reserve duty, discussed by the IDF and Israel’s political echelon, saying this would have a serious impact on Israel’s economy.

Not only would increased reserve duty come with a budgetary cost, but it would also harm economic activity, the employment and income of the partners of reservists, and lead to missed education and downtime for reservists, the report said.

The report highlighted that 50% of reservists are contracted employees, 31% are freelancers, 16% are students, and just 3% are unemployed.

Reservists are among the country’s most productive population and are in the prime of their employment, the report stressed, adding that this means that extending their reserve service has a significant impact on production.The report compared the cost of a regular service haredi soldier to that of a reservist, using this as part of the basis for calculating the costs of not drafting ultra-Orthodox soldiers.

While a reservist costs the economy around NIS 2,400 per day, a regular service ultra-Orthodox soldier would cost around NIS 700 per day, the report said.

This estimate was based on IDF salaries, including stipends for children, offset by the savings in the costs to the budget of yeshiva students through stipends and other expenses. 

"The outrageous Haredi draft exemption is not only an economic absurdity but also a threat to Israel's defense needs and social equality," said Uri Keidar, Israel Hofsheet's Executive Director. "A mandatory, universal draft is both a security imperative and an economic necessity—it is the just and fair course of action."