Preliminary estimates by the Israeli Ministry of Finance showed that the cost of the Israeli army reserve forces from the start of Operation “Al-Aqsa Flood” on October 7 until the end of last November amounted to 20 billion shekels ($5.5 billion), in addition to the direct damage and losses to the economy. And the Israeli labor market, which is witnessing high unemployment rates.
As Israel’s war on Gaza entered its 65th day, the economic newspaper “The Marker” highlighted, in its report and analysis, the cost of reserve forces, and its repercussions on the Israeli labor market, which is witnessing an unprecedented rise, as well as its repercussions on the general budget, which recorded a deficit of 3.4 percent. % last November.
The newspaper pointed out that the cost of recruiting reserve forces, which the Israeli Ministry of Finance estimates at two billion shekels per week ($540 million), is much higher than that estimated by the Bank of Israel, which estimated the cost of lost working days as a result of mobilizing reserve forces at about 500 million shekels per week ($135 million). shekels).
This comes as the Office of the Accountant General of the Israeli Ministry of Finance announced – yesterday, Sunday – that the general budget deficit jumped sharply to reach 3.4% in relation to the gross domestic product last November, compared to 2.6% in the previous October, and this deficit is due to The sharp increase in government spending during the war.
According to data from the Accountant General’s Office, the deficit will reach 62 billion shekels, while it currently stands at 34 billion shekels (about 10 billion dollars).
The Accountant General estimates that the deficit in 2023 will end at 4%, while the amended budget law set the permissible deficit target at only 3.7%.
Economical cost
Regarding these estimates and the economic reality, the Israeli Ministry of Finance expresses its concern about the cost of reserve forces, labor market losses, and the extent of the massive and unprecedented economic damage resulting from the massive recruitment of these forces, according to economic affairs analyst Merav Arlozorov.
The newspaper quoted Arlozorov as saying, “Two months of continuous military service exhausts the officers and reserve forces,” noting that if the Israeli army needs them again, it will find it difficult to respond to the renewed service of the reserve forces.
Arlozorov said, “If the fighting intensifies on the northern front with Lebanon, and the speed of battles escalates, the reserve forces will be exhausted.”
The cost of mobilizing reserve forces since last October 7 is estimated at between 300 and 400 million shekels per day ($80 million to 110 million), and despite the huge economic cost and the depletion of reserve soldiers two consecutive months after their recruitment, the Israeli army has not yet demobilized. Only a very small percentage of reserve conscripts.
The Israeli Ministry of Finance estimated the direct cost of the reserve day – paying wages to reservists, equipment, food, etc. – at 70 million shekels ($19 million), per 100,000 conscripts, but according to Arlozorov, it is not known how many reservists the Israeli army has recruited since the beginning of the war. On Gaza.
Cumulative damage
With the start of the “Al-Aqsa Flood Battle” and the Israeli Prime Minister, Benjamin Netanyahu, declaring a state of emergency, the Knesset approved the recruitment of 350,000 conscripts from the reserve forces.
Assuming – the economic affairs analyst says – that there are about 200,000 reserve soldiers, their direct cost will amount to about 150 to 200 million shekels per day (about 41 million to 54 million dollars), in addition to the damage caused to the economy as a result of the absence of these forces from the labor market. The average monthly wage per capita is 12,000 shekels ($3,250).
The Israeli Ministry of Finance estimates that the damage to GDP is 50% higher than the direct cost, meaning the Israeli economy is suffering an additional daily damage of NIS 200 million ($54 million).
The cumulative damage amounts to about 20 billion shekels, and Arlozorov says that this constitutes “unprecedented economic damage, as such an intense and prolonged mobilization of reserve forces has never occurred before, perhaps even during the Yom Kippur War and the months that followed.”
High unemployment rates
These estimates reflect the reality in the Israeli labor market, which recorded an unprecedented rise in unemployment rates, as the number of job seekers last November reached 332,000, an increase of 47% compared to the previous October, according to a report by the Employment Office. To the Israeli National Insurance Corporation.
According to the data contained in the Employment Office report, 123,000 out of 332,000 job seekers were new registrants last November, while 2,209,000 were job seekers who were registered in the employment service last October as well.
According to the Central Department of Statistics, the widespread unemployment rate jumped two and a half times within one month, reaching 10.4% last October, the highest rate recorded since April 2021, and it is expected to continue rising if the war continues.
Journalist Nathaniel Gomes, correspondent for the economic newspaper “The Maker”, said that the Israeli labor market – after two months of the war on Gaza – has entered a state of emergency, as he notes that young people are flocking to employment offices in search of work and registering for unemployment benefits.
Gomez pointed out that the flow of people searching for work in November 2023 was 326% higher than in 2022 on an annual basis, and 47% higher on a monthly basis compared to last October, which indicates the economy’s adaptation to the emergency routine in light of the war. , according to his expression.
