Discrimination against Arab Israelis comes at a high cost. According to economic studies, it “robs” the Israeli economy of NIS 30 to 40 billion annually.
This figure is so staggering that you don’t need to be a world-class economist to understand the significance of failing to fully integrate Arab Israelis into the Israeli economy.
While, over the past decade, Israeli governments have allocated resources to improve the economic standing of the state’s Arab citizens, in reality, those efforts have been small steps on a very long journey.
To bring about real change – and with it, a long-overdue shift in the Israeli economy – we must begin with the basic building blocks:
• Ensuring proficiency in the Hebrew language among Israeli Arabs, crucial for the Israeli job market
• Improving the Israeli Arab education system
• Guidance counseling for high-school students approaching graduation
• Expanded access to higher education, in-demand professions, and hi-tech.
How far are we from achieving these goals? Alfanar’s 2024 Arab Employment Index reveals the alarming employment and wage discrepancies between the Arab and Jewish populations – gaps which, unsurprisingly, begin with education.
For example, only 1.4% of Arab women and 5.4% of Arab men hold management positions, compared to 5.3% of Jewish women and 11.3% of Jewish men.
Ongoing discrimination in resource allocation, physical infrastructure, and teaching quality in the Israeli-Arab school system has led to disparities in achievement and skills that make it harder for Israeli Arabs to find quality employment.
Arab Israeli wage gap?
These gaps are also clearly reflected in wage data. These figures highlight the high concentration of Israeli Arab workers in low-wage occupations and industries – with approximately 25% of Arab men employed in construction.
The data for Israeli Arab women shows that 33% are employed in education and 25% in the health, welfare, and caregiving sectors.
Despite some gains over the past decade, the average salary for Arab men (NIS 11,486) is 70% lower than that earned by Jewish men. For women, the gap has actually increased from a previous 54% to the current 66%.
The situation is particularly dire among young people. Since the outbreak of the war, the percentage of young Israeli Arabs aged 18 to 24 who are not working, studying, or in professional training has surged from 22.3% to 34.5%.
That figure joins a decline in employment rates among young Israeli Arabs over the past decade: from 60.7% to 57% among 18 to 24-year-olds – and from 77.3% to 74.4% among 25 to 29-year-olds.
An entire generation is at risk of finding itself on the sidelines of the labor market, with no clear path to meaningful employment.
Israeli Arabs also face an array of structural barriers that make access to quality employment challenging. Many Arab communities are located far from major employment centers and lack the basic infrastructure, such as public transportation and childcare, to facilitate workforce participation and career progression – particularly among women.
Such barriers to adequate employment can be overcome by:
• Developing employment areas within or near Israeli Arab localities
• Expanding public transportation connecting Arab communities to major employment centers
• Increasing availability of daycare and family childcare
Consistency in enforcing anti-discrimination laws and in incentivizing employers to welcome workplace diversity is also essential in narrowing the gap.
On a positive note, data shows that when given appropriate opportunities, Israeli Arabs know how to leverage them: Only around 1% of young Israeli Arabs responded that it was important whether their employers were Arabs or Jews.
There has also been an encouraging rise in the employment rate of Israeli Arab women from 30.5% to 45.6% over the past decade, with a remarkable over 20% increase among those aged 44 to 54.
Substantial change, however, requires focused and large-scale investment in the Arab education system, from early childhood to higher education. Infrastructure that supports employment must also be expanded, including the development of industrial and employment areas in and near Arab communities.
Maintaining the status quo is detrimental to the state’s Arab citizens and to its economy. The annual loss of tens of billions of shekels is undeniable evidence. Yet, it is not only a financial price we are paying. That is just a symptom of the deeper issue.
The true costs are the loss of an entire generation’s potential and the missed opportunity to build a more equitable and prosperous society.
Investing in education and infrastructure is urgent. It is not simply an economic necessity, it is a moral imperative.
The right investment today will pay off many times over in the long run – assuming we are wise enough to take action.
The writer is CEO of Alfanar, a nonprofit organization dedicated to empowering the Israeli Arab sector through employment advancement programs, reducing socioeconomic and educational gaps and promoting initiatives for social and economic development.
