Bank of Israel slams Orthodox conscription bill, warns of economic consequences
The central bank calculated that integrating an additional 20,000 Orthodox conscripts into the regular army could gradually lower the annual economic cost by roughly 9 billion shekels.
In a sharply critical report released on Thursday, the Bank of Israel condemned the proposed bill on the conscription of Orthodox Jews, calling it “flawed” and warning that it could harm the labor market.
The central bank expressed skepticism that the legislation, in its current form, will lead to a meaningful increase in enlistments.
The report argues that the bill “will not allow for the enlistment of the Orthodox in a way that meets security needs while reducing economic costs.” It cautions that continuing to rely heavily on reservists imposes a significant burden on both the state and the broader economy.
The Bank of Israel urged a substantial rewrite of the legislation to create “truly effective positive and negative incentives” to meet military requirements. It also noted that the economic penalties outlined in the current bill are unlikely to serve as sufficient deterrents.
The central bank calculated that integrating an additional 20,000 Orthodox conscripts into the regular army could gradually lower the annual economic cost by at least 0.4% of GDP, roughly 9 billion shekels.
The savings would primarily come from reduced reliance on reservists, whose extended mobilization negatively impacts economic activity. The report advocates for ambitious reforms that balance Israel’s security needs with economic efficiency.