Increasing haredi (ultra-Orthodox) enlistment in the IDF could save the economy billions of shekels, the Bank of Israel said in a report released on Thursday.
A month of reservist service costs the economy about NIS 38,000 ($11,700), while conscripting young haredim is far cheaper and may even encourage them to join the workforce. Expanding enlistment by 7,500 haredim annually – adding around 20,000 soldiers to the military overall – could cut the economic burden of reservists by NIS 9-14 billion ($2.8-$4.3 billion) a year, the central bank said.
Based on this report, the draft bill promoted by the coalition, currently under consideration by the Knesset, sets low recruitment targets and weak incentives, which may mean it will not meet the army’s needs or reduce costs.
The bank’s intervention comes at a sensitive political moment, as the government continues to advance a long-delayed framework to regulate haredi military service after decades of ad hoc arrangements.
For years, ultra-Orthodox men received sweeping deferrals under a doctrine suggesting that Torah study is one’s profession, and later, under the Tal Law, which granted blanket exemptions for full-time yeshiva students.
In 2017, however, the High Court of Justice struck down those arrangements as unconstitutional for violating the principle of equal burden-sharing.
IDF leaning on reservists
Yet, despite repeated deadlines to enact a new, more equitable system, no durable solution was passed into law. The statutory basis for haredi exemptions expired in June 2023, leaving thousands of draft-aged men without a legal framework and the state under judicial pressure to enforce conscription.
Ever since the Israel-Hamas War began, the IDF has been heavily leaning on its reserves, calling up tens of thousands of reservists for extended deployments. That reliance has created severe economic, familial, emotional, and psychological strains.
Government and independent economists have repeatedly warned that the current model is unsustainable without a broader standing force – a reality that places renewed focus on haredi enlistment rates, which remain far below national averages.
The central bank’s analysis emphasizes that drafting young haredi men carries little short-term economic cost because most are not yet engaged in full-time employment.
By contrast, reservist mobilization disrupts the labor market, depresses long-term productivity, and creates a budgetary drag. The central bank further noted that military service can increase haredi men’s long-term earning potential by enabling them to enter the workforce without the legal constraints imposed by ongoing deferments.
With that in mind, the draft bill received sharp criticism from the central bank. Because, it said, the proposal sets modest targets in its early years, allows up to 10% of those targets to be fulfilled through abbreviated civilian service rather than IDF duty, and delays the implementation of meaningful sanctions.
Placing restrictions on driver’s licenses, academic enrollment, and government benefits as punishments for draft evasion, the Bank of Israel noted, has limited relevance for many young haredi adults, making these weak levers for boosting enlistment.
Critics across the political spectrum have similarly warned that the bill merely formalizes the status quo while presenting an appearance of reform. Policymakers, including some within the security establishment, have said the IDF urgently needs thousands of additional soldiers for frontline and support roles – a need unlikely to be met under the current draft’s parameters.
Demographic projections intensify these concerns. Haredim constitute roughly 14% of Israel’s population and about 20% of schoolchildren. By 2030, the population’s share is expected to rise significantly. Without higher workforce participation and meaningful integration into national service structures, economists have warned that Israel’s long-term growth and fiscal stability could be threatened.
The central bank urged the government to revise the legislation before passage. It also called on it to strengthen recruitment targets and incentive structures so the law “will meaningfully contribute to the IDF’s workforce needs and the economy’s sustainability.”
Without such changes, it further noted, Israel risks entrenching vast military service inequalities and perpetuating a mounting economic burden on reservists and working taxpayers.