If universal service were fully implemented, Israel could unlock NIS 50–70 billion in annual output. Erdan and Edelstein may be the only leaders positioned to make it happen.
The NIS 70 Billion Case for Universal Service — and Why Maybe Only These Two Can Make It Happen
If universal national service were fully implemented in Israel, the economy could unlock NIS 50–70 billion in additional annual output within a generation — roughly 3–4% of GDP. That is the estimate of the Taub Center for Social Policy Studies, consistent with projections from the Bank of Israel and the OECD.
Gilad Erdan and Yuli Edelstein — two former Likud ministers — launched a new right-wing party this week, breaking ranks with Prime Minister Netanyahu over one core demand: universal military or national service, including for the ultra-Orthodox. They are not making an economic argument. They are making a political one. But their new party could be key to making Israel's economy boom — because Erdan and Edelstein are uniquely positioned to force both right and left into a quandary where the Haredim must finally serve, something the mass Zionist public demands.
The Numbers
Israel's Haredi population has grown from 6% in 1990 to 13.2% today, per the Israel Democracy Institute — growing at roughly 4% annually, nearly three times the national average. By 2030: ~16%. By 2050: north of 25%. First-grade classrooms are already a quarter Haredi.
Haredi male labor participation: 53%. Non-Haredi Jewish men: 87%. A 34-point structural gap that widens every year. Haredi household income runs 60% of the national average. The poverty rate exceeds 40% — subsidized by the state through transfers, housing assistance, and child allowances.
The Bank of Israel traces Israel's GDP-per-capita gap with the OECD — roughly 10–15% below peer nations — primarily to two populations: Haredim and Arab citizens. The OECD's 2024 Economic Survey called low Haredi labor integration the single largest measurable drag on Israel's potential output growth.
The Pipeline They're Missing
Israel's military service system is an economic sorting machine — screening, training, and networking young Israelis at 18. The elite units (8200, Unit 81, Talpiot, Mamram) function as pre-venture incubators. Alumni built Check Point, Waze, CyberArk, and dozens of cybersecurity and AI companies.
An estimated 80% of Israel's tech workforce served in the IDF. Tech accounts for 18% of GDP and 50% of exports. Haredi men who skip service don't miss three years — they miss the entire on-ramp to the sectors where Israel's competitive advantage lives.
Why Erdan and Edelstein — and Why Now
The left has demanded Haredi conscription for decades. It hasn't produced policy — because the left can't form a government, and the demand gets dismissed as anti-religious posturing. The Haredi parties — Shas and United Torah Judaism — hold 18 Knesset seats. Every right-wing government since the 1990s has relied on them. The price: blanket exemptions, minimal core curriculum, massive transfer payments. The exemption is the coalition's operating fee.
Erdan and Edelstein are the first credible right-wing leaders to refuse to pay it.
Gilad Erdan served as Public Security Minister, Strategic Affairs Minister, and Israel's Ambassador to the United States and the United Nations — the voice of the country on the world stage during its most contested moments. Yuli Edelstein was a Soviet refusenik who was imprisoned for teaching Hebrew in the USSR, went on to become Speaker of the Knesset — the third-highest office in the state — and served as Health Minister during the COVID-19 crisis. Their national-security credentials are not in question. Their loyalty to the right is not in question. What they are questioning is whether Israel can afford a coalition model that subsidizes its own economic decline.
That is what makes this party different from everything that came before. Erdan and Edelstein are not outsiders. They are coalition-track politicians who can build a governing majority without the Haredi veto — and that changes the math for every party in the Knesset. For the first time, the right has a vehicle that makes universal service a governing proposition, not a protest sign.
October 7 created the opening. Reservists deployed for months while yeshiva students remained exempt. A June 2024 Supreme Court ruling declared the blanket exemption unconstitutional. Compliance has been slow. Erdan and Edelstein are building the party that runs on enforcement — from inside the bloc that has the seats to deliver it.
The 2030 Cliff
Haredi fertility: ~6.5 children per woman vs. a national average of 3.0. The community doubles roughly every 16–20 years. Without structural integration, the Bank of Israel projects GDP growth dropping from 3.5% to below 2% by the mid-2030s — slower than population growth, meaning GDP per capita stagnates or falls. A middle-income convergence in the country with the highest per-capita startup density on earth.
The evidence from inside the community says integration works. Haredi women already participate at 78%. Programs like KamaTech and the Technion's Haredi track show graduates earning 2–3x the median Haredi male income within five years. The bottleneck isn't demand. It's the on-ramp — and military or national service provides it at 18, before the labor market sorts people into tracks they can't leave.
The Bottom Line
Israel's GDP crossed $530 billion in 2024. Its tech sector drives half of exports. Its military runs at 5%+ of GDP. Moody's downgraded its bond rating in part because of the fiscal risks the exemption structure creates.
The economic case for universal service has been made — by the Bank of Israel, the OECD, the Taub Center, and the Supreme Court.
What has been missing is a political vehicle on the right that can act on it. Erdan and Edelstein have built that vehicle and Olam believes they will succeed in much higher numbers than projected. We believe they will see a high of 8–10 seats. Whether Israel can afford not to answer the economic question they've put on the table is another question entirely. There is and can be no doubt that Israel's economy will win with them in the coalition.
Sources: Bank of Israel Annual Report 2024; OECD Economic Survey of Israel 2024; Israel Democracy Institute Statistical Report 2024; Taub Center State of the Nation Report; CBS Labour Force Survey; Supreme Court of Israel, Petition 1877/14 (June 25, 2024); Moody's Israel Sovereign Rating Action (February 2024); IATI Annual Report.
