Israel’s productivity in 2023 was 15% below G7 level — Jerusalem Post
Israel’s total factor productivity in 2023 was 15% below the average for G7 countries, whereas in 1975 it was 9% above it. This is stated in a report by the Shoresh Institution for Socioeconomic Research, the Jerusalem Post reports. This indicator assesses how efficiently an economy combines labor and capital to produce goods and services.
The report’s author, institute president Professor Dan Ben-David, attributes the country’s deteriorating position to weak educational outcomes, demographic changes, and the emigration of skilled Israelis. In his assessment, these factors reinforce one another and increase the dependence of the economy, healthcare system, and defense on a relatively narrow group of workers.
Lagging output per hour
Another indicator, output per hour worked, also points to a gap. According to Shoresh calculations, Israel outperformed all G7 countries in 1972, but in 2024 it trailed six of the group’s seven states. Output per hour was 34% lower than in Germany and 30% lower than in the United States; Japan was the exception.
The report stresses that these are relative comparisons: they do not mean that the country produces less than before, but indicate slower growth compared with other states. In 2022, one hour of work in Israel’s high-tech sector created 22% more economic value than the OECD average. At the same time, outside the high-tech sector, which employs approximately nine out of ten workers in the country, this indicator was 24% below the OECD average.
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Education and the outflow of specialists
One-fifth of people with the highest incomes accounted for 93% of income tax revenue in 2024, compared with 83% in 2000. Ben-David believes that such concentration makes the country vulnerable to the departure of highly skilled workers.
The report also draws attention to the composition of pupils: in 2026, ultra-Orthodox children made up 25% of first graders, while Arabic-speaking children accounted for another 23%. According to an analysis of PISA 2025 results, students at state religious schools scored below those in 76% of OECD countries, while students at secular Jewish schools scored below those in 81% of countries. Arabic-speaking students lagged behind all OECD countries and six of the seven participating Arab countries. The report notes that most ultra-Orthodox boys who do not study the full core curriculum do not take part in the testing. After the release of PISA results, the Ministry of Education stated that the testing took place amid war, population displacement, and interrupted schooling.
The number of Israeli doctors working in other OECD countries, excluding the United States, rose from the equivalent of 0.7% of the number of doctors in Israel in 2000 to 1.9% in 2023. Ben-David’s Israel 2.0 program provides for an updated mandatory core curriculum for all pupils, state funding only for schools that follow it, a shift in budget priorities, as well as electoral reform and stronger checks and balances.
