Israel’s Unique Demography – Implications and Planning for the Future

Summary of the Taub Center International Policy Conference

Date: October 19, 2020

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The Taub Center was pleased to host its annual Herbert M. Singer International Policy Conference, this year on the topic: “Israel’s Unique Demography – Implications and Planning for the Future.” With its high overall population growth, high fertility, and rapidly aging population, Israel is an outlier among developed countries. What implications does today’s high fertility rate have for the education system in the near- and medium-term? What kind of planning is necessary to grapple with a large influx of young adults into higher education and the labor market? To what degree is our health system equipped to deal with the growing elderly population? The conference addressed these questions and more.

The conference began with short introductory speeches from Chair of the Taub Center Board Helen Abeles, President of the Herbert and Nell Singer Foundation Jay Sandak, and Taub Center Director General Suzie Patt Benvenisti. These were immediately followed by plenary lectures from our two guest speakers: Prof. Herb Smith and Prof. Ron Lee, with a discussion moderated by Taub Center Research Director Prof. Alex Weinreb.

Prof. Herb Smith of the University of Pennsylvania spoke about changing age structures in the world population as a whole as well as within many countries in recent years, focusing particularly on the implications of aging populations (Click for his presentation). As Prof. Smith said, “If I had one takeaway message from what I want to talk about today, it’s that everything we’re talking about now is new. We in the world are going places where we have never been before.”

He pointed, in particular, to the increasing number of societies where there is an “upward flow” of resources to the elderly. This has enormous implications for policy and for intergenerational conflict over policy prioritization. In this regard, Prof. Smith emphasized the uniqueness of Israel’s situation: “You have a comparatively young age structure for a developed economy.”

This lecture was followed by a lecture from Prof. Ron Lee of the University of California at Berkeley on National Transfer Accounts (NTA) and changing population age distributions, both in Israel and in other high income countries (Click for his presentation). Prof. Lee spoke about how income is reallocated across age and over time through capital, transfers, and borrowing and lending.

He further explained that each of these can take place through the family, the market, or the public sector and that NTA seeks to estimate all the different flows of resources across all ages through these different mechanisms and institutions. National Transfer Accounts take into account dependency ratios as well as factors such as labor income, consumption, and asset income by age. As Prof Lee said, “The economic consequences of aging depend very much on country-specific conditions…These are things that are measured in NTA and that help us distinguish between what population aging will mean in different countries.”

The conference’s second session contained three panels focusing on the effect of Israel’s demographic trends on different areas of strategic policy planning: education, economics, and health.

In the first panel on education, moderated by Taub Center Education Policy Program Chair Nachum Blass, we heard from Moti Taubin, Head of the Strategy Unit at the Ministry of Education, and Prof. Yaffa Zilbershats, Chairman of the Planning and Budgeting Committee of the Israel Council for Higher Education.

Moti Taubin spoke about how Israel’s education system places more of an emphasis on teaching values and knowledge, while other countries’ education systems invest more in teaching skills in preparation for the labor market. He also discussed 13 basic skills, spanning cognitive, personal, interpersonal, and physical skills, that Israel’s Ministry of Education has identified as those they expect to impart on every Israeli student before they graduate.

“We seek to standardize the expectations of the students,” Taubin said. “That is not to say that every student will reach the same score in math. Rather, we’re talking about standardized expectations in the sense that each student will develop similar areas of skills…we’ll set a benchmark that every student must reach that will allow for success and social mobility in the world and the future labor market.”

Prof. Yaffa Zilbershats spoke about trends in higher education learning in Israel, both in recent years and moving forward (Click for her presentation, in Hebrew). The share of academic students has increased greatly in the past few decades, which Prof. Zilbershats attributes, at least in part, to the rise of academic colleges in Israel. She also emphasized the importance not only in the number of students, which has increased dramatically this year in the wake of the coronavirus crisis, but also in the composition of the student body: “It’s not just how many are learning, but who is learning. It is very important for us…that students reflect the relative share of population groups in Israeli society.”

She continued to explain that the biggest accomplishment in this respect has been the Arab Israeli population, which makes up 21% of the country’s overall population. While the goal was for 17% of the academic student population to be Arab by 2022, that percentage has already reached 17.2% in 2020. The share of Haredi students in higher education has also continued to grow over the past decade, though it remains below the goal of 6% set for 2022.

Taub Center President Prof. Avi Weiss moderated the panel on economic strategic planning, which included Prof. Michel Stravchinsky, Director of the Research Department at the Bank of Israel, and Einav Aharoni-Yonas, CEO of JDC-Tevet.

Prof. Michel Stravchinsky spoke about the economic implications of demographic changes in Israel (Click for his presentation, in Hebrew). From every demographic projection we know that Israel’s population, and therefore the labor market, will experience a big increase of two population groups: Arab Israelis and Haredim – populations with high rates of poverty due to low educational achievements and low participation in the labor market.

“In other countries the problem is population aging,” he said. “In Israel that’s not the problem. The aging of the population has some effect, but the real challenge is how we turn our young people, primarily these two groups, into groups that contribute to productivity, contribute to growth.” Of course, there are other issues in the economy – such as improving institutions and reducing the difficulty of doing business – but Prof. Stravchinsky emphasized that education is critical and the most important element for the government to address in the coming years.

Einav Aharoni-Yonas spoke about three important groups that need to be better integrated into Israel’s labor market: disadvantaged population groups such as Haredim and Arab Israelis, the older population of those aged 45+, and the younger population where there is a need to strengthen vocational training. As Aharoni-Yonas explained, the coronavirus crisis has further complicated the situation, as many Israelis lost their jobs and livelihoods during this time.

However, she emphasized that a better use of data and technology, as well as creating partnerships between government, academic institutions, employers, vocational training, and manpower organizations, can improve Israel’s labor market: “There’s a division in the world, not just in Israel, that the government takes active responsibility for the ‘pipeline’ – looking out for citizens through elementary, middle, and high school, the army, and academia – but once a person finds a job, that responsibility is transferred to the employer. I think…we need to create a new contract between the government and the business sector and produce new models…that allow everyone to work towards the desired social outcome.”

The final panel on health was moderated by Taub Center Health Policy Program Chair Prof. Dov Chernichovsky (Click for his presentation, in Hebrew). The panel featured Prof. Yitzhak Brick, of the Department of Gerontology at the University of Haifa, Prof. Bishara Bisharat, Chairman of The Arab Population Health Society- IMA, and Rachel Berner Shalem, Deputy Director of Strategy at the Ministry of Health.

As Prof. Yitzhak Brick explained, aging is really a huge accomplishment of humankind. About 80% of Israel’s aging population are independent and in relatively good health, and these people contribute to consumption, many continue to work past retirement, and many glean a lot of personal meaning from doing productive and interesting things during this period of life. “The question arises: what exactly should the government’s policy be regarding this population?” Brick asked. “I say the policy should be very simple. It should be an enabling policy, a policy that removes barriers, and a policy that is based on the dignity of this population and living in dignity.” Therefore, our main goal needs to be closing the gap between overall life expectancy and expected years for living in good health.

Prof. Bishara Bisharat spoke about particular health challenges facing the Arab population, where the population is aging at a faster rate than in the Jewish population, and the importance of health education and leadership. “There are two major health problems in the Arab population ­– diabetes and smoking – and these are exacerbated in old age,” he explained. Diabetes can also be the foundation for a number of other diseases. Bisharat discussed Israel’s high rates of mortality from diabetes in comparison to other OECD countries, due in large part to the Arab Israeli population, and spoke about the importance of increasing preventative measures within this population group – such as increasing education about nutrition and increasing the number of family doctors.

Rachel Berner Shalem discussed the implications of the increase in consumption of health services among the elderly population in Israel (Click for her presentation, in Hebrew). As she said, “People aged 65+ make up 12% of the population and consume 37% of health services, and this will of course increase dramatically when the number of people aged 65+ in the population increases significantly.

This fact raises two issues that need to be addressed: a) a significant improvement in services provided to the elderly and b) an improvement, or at least not a deterioration, in the services provided to everyone else.” What steps can be taken toward this goal? Berner Shalem says that, among other things, increasing geriatric and palliative care medical staff, improving care in the community and at home, providing government assistance for primary care givers, and making the health system more efficient could help the country prepare for the demographic changes that are sure to come.