Amid a military operation, a widening deficit, and a surge of violence in Arab society, Israel faces a compounded challenge – security, social, and economic. A Bank of Israel report published this week makes clear that precisely at this moment, advancing a new five-year plan for Arab society is essential.
Now more than ever, as Israel urgently needs new growth engines, a critical question is on the table: whether to continue the government’s five-year plan for Arab society, which has become one of the most significant drivers of the Israeli economy.
In the midst of a tense security reality that once again sharpens national priorities, and as the wave of violence in Arab society continues to dominate public discourse, a parallel – quieter, yet no less significant – debate is taking place: Will the State of Israel adopt a new five-year plan to succeed the current one, set to conclude at the end of 2026?
At first glance, this may seem like just another budget discussion. In reality, it is one of the most consequential economic decisions currently facing Israel’s economy.
Using the human capital within Israeli society
This decision takes on even greater weight in the current context. Due to the ongoing fighting and the sharp rise in public spending, the budget deficit is expected to reach approximately 5.1% of GDP. As fiscal pressure intensifies and the need for new growth engines becomes more urgent, the question is how to fully realize the human capital that already exists within Israeli society.
A five-year plan is not merely a social initiative – it is a growth engine.
One figure is enough to understand the scale of the opportunity: NIS 180 billion. This is the potential increase in GDP if wage gaps within Arab society are closed, according to Bank of Israel reports. Closing these gaps could add roughly 9% to national GDP. Even a 1% increase in labor income within Arab society would contribute 0.2% to GDP. These are not symbolic numbers – they define an economic strategy.
In recent years, as the government has systematically invested in infrastructure, education, and employment through these five-year plans, measurable results have followed: improved educational outcomes, higher matriculation eligibility rates, and a growing number of Arab students in higher education.
One of the most notable examples is the employment of Arab women. The employment rate has recently reached a record high of around 51%, and this progress already contributes approximately NIS 15 billion to Israel’s GDP. Still, despite these gains, Arab women earn significantly less on average, underscoring how far this economic potential remains from being fully realized.
Untapped potential within Arab society
But economic progress requires continuity. A policy that ends without a forward-looking framework does not merely stall – it returns uncertainty to center stage, undoing the stable foundation that enabled progress in the first place. Yet, progress is still incomplete. Arab society remains underrepresented in the Israeli business sector, particularly in high-quality, higher-paying roles.
At the same time, the Israeli business sector has reported a growing shortage of skilled workers in advanced fields. This creates an economic paradox: on one hand, a shortage of skilled labor; on the other, significant untapped human potential within Arab society.
When one-fifth of the country’s citizens are not realizing their full earning potential, this is no longer just a social issue – it is a macroeconomic one. And yet the public conversation often focuses elsewhere: on crime, on violence, and on why this is the wrong moment for investment.
But numerous studies show that the most effective long-term way to reduce crime is through education, employment, and economic development. A strong economy fosters social stability, and lasting security also depends on a functioning economy.
This is not only a matter of policy. For the business sector, meaningful integration of diverse human capital is a mechanism for building economic and organizational resilience – and it can help the Israeli economy better navigate volatility and the challenges of the current period.
Therefore, the question of continuing the five-year plan is not a technical one. It is a test of long-term economic policy. A country that seeks growth must know how to identify its economic assets and manage them wisely. The human capital within Arab society is one of the most significant assets of the Israeli economy, yet it remains underutilized.
Precisely in a challenging economic period, as the state faces a widening deficit and rising expenditures, maintaining continuous investment in advancing quality employment through an additional five-year plan is not a sectoral benefit – it is a strategic decision aimed at restoring long-term economic growth.
NIS 180 billion is not a slogan. It is a measure of economic responsibility. Arab society is not a budgetary burden but one of the greatest economic opportunities for the State of Israel in the coming decade.
The writer is the CEO of Co-Impact – a partnership promoting Arab employment in the business sector.