A new Israeli demographic order

In many countries around the world, there is a concern that falling fertility rates, fewer workers and an ageing population will bring problems: who will pay for the social services that many liberal democracies rely on? Who will man the armies in the future? In Israel, there seems to be another demographic problem that is causing similar concerns. (Of course, for Israel the question of recruits for its armed forces is of more pressing concern than for many other nations.) But what is Israel's demographic problem? Doesn't Israel have a thriving, growing population? Well, according to Israeli President Reuven Rivlin, speaking during Israel's prestigious Herzliya Conference, the changing internal demographics of the country are resulting in a “New Israeli Order”. This internal demographic change is aside from any real or apparent external demographic changes (such as an external Palestinian demographic threat, a topic we've discussed before). So:

“As recently as the 1990s, Rivlin observed, Israeli society was built on a clear and solid mainstream Zionist majority, with three small minorities alongside it: Arabs (i.e. Palestinian citizens of Israel proper), ultra-Orthodox (Haredis) and religious-nationalists (i.e. the settlers). Now, Rivlin explained using pie charts projected on a massive screen, 'the demographic processes that are restructuring or redesigning the shape of Israeli society have, in fact, created a “new Israeli order”…in which there is no longer a clear majority, nor clear minority groups.'”
For example, in 1990, 52 percent of Israeli children went to the state school system, the “mamlachti” education incorporating mainstream Zionism and the primacy of the state. In separate school systems, Arabs made up 23 percent of elementary-school children, Haredis 9 percent and religious-nationalists, 16 percent. Fastforward to the projected proportions in 2018, and the numbers in the mamlachti state school system will be 38 percent. Haredis will have jumped to 28 percent, Arabs to 25 percent and religious-nationalists will have declined slightly to 15 percent. As Levin noted there are now four minority “tribes” within Israel.
This has economic implications: half of the future workforce (Arabs and Haredis) will be severely underrepresented. This has military implications: where once the Israeli Defence Force was the “main tool for crafting Israeliness”, close to half the future population will not serve in the army.
In 2013, the Israeli government sought to do something about this: pushing through legislation that reduced government subsidies to Haredis and eliminating the traditional ultra-Orthodox exemption from military service. In March, Prime Minister Netenyahu was returned to power with support from the ultra-Orthodox parties who demanded a reversal of the 2013 laws. Will it be likely that the current government will be able to integrate the growing Arab and Haredi populations into the army and the workforce and Israeli society at large? If not, what will that mean for the future security of Israel?

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