The Incentive Problem: An Economic Lever in the Haredi Draft Crisis
Israel’s post-October 7 manpower shortage cannot be solved by waiting for Haredi enlistment to rise organically. The current system actively subsidizes non-service while asking a shrinking group of reservists to shoulder an ever-growing burden. Bennett’s proposal seeks to reverse those incentives by shifting state benefits away from long-term non-service and toward those who serve.
One of the issues looming largest over the coming elections is the issue of the Haredi draft.
IDF officials now warn of severe manpower shortages in the tens of thousands, while reservists continue serving repeated and extended rounds of miluim.
Many Israelis personally know reservists whose marriages, businesses, and families are fracturing under the strain. Parents are spending months away from their children. Entire reserve units are reporting growing burnout and difficulty sustaining the current pace of service. Even those continuing to serve are doing so under increasingly exhausting conditions.
Yet even amid this growing crisis, Haredi enlistment remains extremely low relative to the broader population. At the same time, the Haredi population continues to grow rapidly.
Meanwhile, the Haredi parties continue demanding larger budgets for institutions and benefits that shield their community from service.
The current system does not merely fail to solve the problem. It reinforces it.
At the core of the issue is a basic incentive structure problem. The state actively subsidizes non-service through housing assistance, daycare support, and welfare mechanisms that disproportionately benefit families in which adult men are exempt from military service, while reservists bear repeated financial and personal costs with relatively limited structural compensation. Over time, this produces a stable equilibrium in which non-service is often the economically rational choice, while enlistment carries both direct costs and strong social discouragement within communities. As a result, even those who might otherwise consider service face strong incentives to remain within the existing framework, which in turn helps sustain the system itself.
Netanyahu’s government has been trying to pass a draft law designed to satisfy the demands of the Haredi parties. Unfortunately, those demands are specifically structured around preserving mass non-service. That is why even some Likud MKs have resisted aspects of the legislation. Still, any future coalition dependent on Shas and UTJ will almost certainly face heavy pressure to preserve the current framework in one form or another.
This brings us to........
