The October 7 War differs from any previous conflict that Israel has been involved in since 2000 with respect to its duration and the sheer number of reservists called to active duty. The Second Lebanon War (2006) lasted for 34 days and involved the call-up of about 60,000 reserve soldiers; Operation Cast Lead (early 2009) lasted for 22 days and did not involve any major call-up of reserve soldiers; and Operation Protective Edge (2014) lasted 50 days and involved the call-up of about 75,000 reserve soldiers. It is as yet unknown just how long this war will last, but it is already clear that it will be significantly longer than the others. Current estimates of the number of reserve soldiers called to arms is between 200,000 and 300,000. In this special chapter, which is the first in the State of the Nation Report 2023, Taub Center researchers survey the situation and point to actions that can be taken while the war is still ongoing and thoseit will be important to take upon its conclusion in order to return the country – its economy, its services, and its people – to the pre-war situation. In some areas, it may be possible to leverage the situation to arrive at a better reality and to improve preparedness for similar situations in the future. The researchers have formulated a list of policy measures — some of which can already be adopted — that will allow public sector systems to provide the solutions that are needed.
Israel’s healthcare system began the war with insufficient budget and manpower and difficulties in functioning. Since the beginning of the war, an unprecedented 7,500 individuals have been injured, with more than 1,450 arriving at hospitals on the first Shabbat (October 7). Most of the injured arrived at the hospitals in the South, in numbers well beyond their capacity. For example, the Soroka Medical Center took in about 700 individuals, of which some 120 were in serious condition while the worst-case scenario previously considered by the hospital was for an intake of no more than 100-200 injured individuals.
The mental health system has suffered from long-term neglect in terms of manpower and infrastructure, particularly after the COVID-19 pandemic. The current crisis may prove to be a turning point and may bring about its rehabilitation and strengthening, with an emphasis on expanding the circle of patients in the public mental healthcare system and constructing a trauma-oriented system to ensure trauma awareness at every stage of treatment.
The sanitary and humanitarian conditions in Gaza have the potential to seriously affect the health of Israelis. The allocation of water to the residents of Gaza is currently about three liters per day, while the WHO recommends between 50 and 100 liters per day. This situation, together with chronic sewage problems — which have been exacerbated in the course of the war — provides fertile ground for infectious diseases that can spread into Israel.
The most important changes and modifications that need to be implemented in the healthcare system according to Taub Center researchers include: a revision of plans for patient allocation among hospitals in Israel; accelerating the opening of the new hospital in Be’er Sheva and providing it with sufficient manpower; upgrading hospitals in Ashkelon, Nahariya, Tiberius, and Safed with respect to their capacity for intake and treatment of trauma victims in an emergency; completion of protective safety measures in all of the hospitals, with an emphasis on hospitals along the border in the South and the North; rehabilitation, reinforcement, and expansion of the mental health and rehabilitation systems to enable them to meet growing needs; and the creation of a trauma-oriented and trauma-aware healthcare system.
The social welfare system in Israel began the war unprepared. On a single day, tens of thousands of residents were added to the rolls of the social welfare services, including 126,000 evacuees at about 220 facilities around the country, requiring a variety of material and emotional assistance.
The vacuum created as a result of the slow response by the public social welfare system during the first two weeks of the war was filled by the activity of more than a thousand civil society initiatives and tens of thousands of volunteers, including about 30,000 high tech workers. Only in the second week of the war was the presence of the Ministry of Welfare and Social Affairs felt. Alongside the Ministry’s efforts to provide services to evacuees, the Ministry of Defense dealt with the injured and the families of fallen members of the security forces while the National Insurance Institute began to identify the injured, the families of hostages and the murdered in order to provide them with immediate financial assistance as well as funding to meet other needs.
Taub Center researchers have identified a number of steps to reinforce the system: the streamlining of processes to convey information about residents from the central government to the local authorities; creation of a mechanism for the coordination of activities and the support of civil society organizations that assist victims of the war; significantly improving the working conditions and salaries of social workers; and expanding the quantity of professional manpower in the social services departments.
The war is a traumatic event with the potential to cause enormous emotional damage to parents and children. Early childhood is the most important period in a person’s life. During this period, there is rapid development of the brain and the nervous system and of cognitive, social, and emotional abilities, which form the basis for the development of skills and abilities that are critical for functioning. During the war, many young children in Israel are being exposed to stress due to the frequent sirens and bomb blasts that they hear. The emotional turmoil, which is accompanied by an extreme disruption of routine, is liable to affect the course of their development. Apart from the obvious decline in quality of life and welfare, the exposure to high levels of stress and the lack of positive stimulation damage a child’s cognitive and emotional development. According to Taub Center researchers, it can be assumed that the accumulated disruptions caused by the war will be seen in serious developmental delays and emotional and learning disorders in the future. Therefore, it is essential that children be exposed to positive and enriching experiences to the greatest extent possible.
Efforts are needed to ensure normal learning routines for children in preschools and schools who have been forced to leave their homes. The population of voluntary and forced evacuees numbers about 250,000 (about 2.5% of Israel’s population), of which about 50,000 are children in preschool or school. The Ministry of Education is working to create temporary schools, but since they are not intended to be a long-term solution, it is worthwhile integrating these students into the local education systems in their new or temporary localities. In places with large concentrations of evacuees, efforts should be made to concentrate students from the same location in the same schools and in the same classes when possible, with the goal of easing their integration into the new schools. In addition, it is important to prepare for continued schooling throughout the country in the event that the war expands and the entire country comes under rocket attacks for a prolonged period of time.
Taub Center researchers are proposing a number of policy alternatives for the education system, including the expansion of individual assistance in the schools and particularly for frontline civilians, with the goal of assisting students who are finding it difficult to close the gaps created as a result of the war; strengthening the school support systems, including guidance counselors, truancy officers, social workers, nurses, and psychologists; and examining alterative models for the bagrut (matriculation) exams in the coming year.
The war is having far-reaching effects on the environment and on public health. Due to the need to ensure an uninterrupted supply of electricity during the war, the government has taken steps that are potentially harmful to the environment, including the issuing of permits to use diesel fuel and coal to produce electricity despite the heavy air pollution they cause and their contribution to morbidity and mortality. Other factors that are liable to endanger public heath include increased emissions of carcinogenic materials into the air as a result of looser supervision over the illegal burning of garbage and ground pollution by poisonous metals during the war that are liable to penetrate into agricultural crops and in turn enter the human body.
In order to reduce the environmental and health risks created by the war, Taub Center researchers recommend increasing supervision and enforcement activity; ensuring that the steps taken to guarantee the continuous supply of electricity will be cancelled upon the conclusion of the war; and decontaminating and rehabilitating polluted land prior to rehabilitation projects for the settlements in the Gaza border area.
The significant effects on the labor market in Israel. The temporary absence from work of about 20% of the work force (more than 900,000 workers) and in particular young workers, many of whom are employed in the high-productivity high tech sector, alongside the direct costs of the war, are affecting all of the country’s economic systems and will continue to do so for a long time to come. In October, about 144,000 workers in the areas adjacent to Gaza and along the northern border were forced to leave their places of work after being evacuated; about 310,000 parents of young children were absent from work when the education system stopped operating normally; and, about 135,000 workers were absent from work due to damage to their place of work. In November, the number of absent workers fell from about 900,000 to 500,000.
According to estimates of the Bank of Israel, the total weekly cost of workers absent from work during the first three weeks of the war was about NIS 2.3 billion, which represents more than 0.1% of GDP per week. This breaks down into absence from work due to the call-up of reservists which costs about half a billion shekels per week; absence from work due to the evacuation of residents which costs about NIS 0.6 billion per week; and absence from work due to the shutdown of educational institutions which costs about NIS 1.25 billion per week.
Central Bureau of Statistics data indicate that 75% of businesses with more than 100 employees have reported that between 1% and 20% of their workers are in reserve duty. This is a significant statistic given the fact that, in 2019, these businesses employed 56% of the workforce and 70% of the workforce in the business sector. In particular, a high proportion of businesses in the high-tech sector have reported call-ups of between 1% and 20% of their employees.
As expected, there has been an increase in working from home during the war especially in high tech and even more so in high tech services. The Bank of Israel estimates that about 12% of the evacuees from the Gaza border area, from Ashkelon, and from the North are working from home, and, in total, 16% of the 4.1 million employees in the economy are working from home.
The Employment Service reports that since the start of the war more than 190,000 applications for unemployment benefits were submitted by the end of November. The vast majority are a result of forced unpaid leave. Therefore, the proposed alternatives include the expansion of programs to return workers to the labor market, including giving incentives to employers; creation of mechanisms that allow for flexible unpaid leave; and the creation of programs to reintegrate reserve soldiers into the workforce if they are unable to return to their former places of work.
The integration of the Arab population in most parts of the Israeli economy, which has improved over the years, suffered a setback during the war. Similarly, the extent of mutual dependence between Jews and Arabs in Israel in the employment sector became clear, especially in the construction industry which has been almost completely paralyzed since October 7. According to Taub Center researchers, the rifts need to be mended and the partnership restored, since participation of Arab and Palestinian workers in the labor force is one of Israel’s most important economic, security, and social interests.
Economic agencies are analyzing the situation and are presenting growth forecasts. According to the Bank of Israel estimates from July 2023, GDP was set to grow by 3.0% in both 2023 and 2024. It also published an estimate of GDP growth during the third quarter of 2023, according to which, GDP in the fourth quarter of 2023 was expected to grow by 2.9% relative to the fourth quarter of 2022. In the revision as a result of the war, the Bank of Israel lowered its expected annual rate of growth for 2023 to 2.0%. This implies negative growth of 2% during the fourth quarter relative to the same quarter in 2022.
In contrast, Standard & Poor’s and the Aaron Institute are presenting a more pessimistic picture. They estimate that growth will be 1.5% in 2023, which implies negative growth of 4% in the fourth quarter relative to the same quarter in 2022. With respect to 2024, the Bank of Israel has lowered its forecasted growth rate by only one percentage point and it estimates that growth will be 2.0%. Its forecast is based on an analysis of the success of the Israeli economy in the aftermath of previous wars, the level of economic activity expected during the course of the war, and the speed of recovery following it, as well as on other optimistic assumptions (that the order of preferences in the 2024 budget will be modified to meet the needs of the economy and that the residents of the North will be allowed to gradually return to their homes). Standard & Poor believes that the economy will grow by only 0.5% and the Aaron Institute believes it will grow by only 1%. It should be remembered that Israel’s population grows by almost 2% annually. Thus, these forecasts are predicting a shrinkage of GDP per capita.
Immigration is likely to be influenced by the developments in Israel and the increasing anti-Semitism abroad. The sharp increase in protests against Israel and the rise in anti-Semitism around the world, including in countries with a large Jewish minority, have made these countries much less attractive for Israelis who are considering emigrating and has made Israel more attractive for Jews who are considering immigrating. Therefore, it can be expected that net migration to Israel will increase during 2024 and 2025. However, if there is a renewal of the internal disagreements that poisoned the social climate and social discourse in Israel during most of 2023, and if the situation of conflict in Gaza and Judea and Samaria persists, Israel will almost certainly become less attractive to potential immigrants.
The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.
For details, or to arrange an interview, please contact Chen Mashiach, Taub Center Spokesperson in Israel: 054-7602151.