Israel Falls Below OECD Average in Young Adult Academic Attainment After 25 Years

A new report from the Chief Economist Division of Israel's Ministry of Finance reveals that Israel has dropped from third place globally in 2000 to 20th among developed countries in the percentage of young adults (ages 25-34) holding academic degrees. While the rate increased slightly from 41% to 47% over 24 years, this figure is now one percentage point below the OECD average. This marginal growth contrasts sharply with countries like South Korea and Canada, which reached 71% and 69% respectively, highlighting Israel's slowest growth rate in academic attainment among developed nations, second only to Finland.

Despite a 70% increase in total higher education enrollment since 2000, growth has slowed dramatically between 2020 and 2024 to just 1.1% annually, below the population growth rate of about 2%. Enrollment expansion has mainly come from colleges, while universities, with around 141,000 students, have stagnated or declined in some years. The report identifies a critical issue among non-Haredi Jewish men, the key workforce group, whose higher education participation has plateaued since 2010. Alarmingly, the percentage entering academia at age 25 in this group fell from 11.2% in 2021 to 7.9% in 2023. The Ministry attributes this to "partial exhaustion of integration potential" but does not consider recent impacts from war and military reserve duties.

Conversely, the report highlights successful government initiatives for minority groups, such as the doubling of Arab men's participation since 2010 through targeted programs like the "Vatat" accessibility plan and government decisions 922 (2015) and 550 (2021). Arab women's enrollment rates are also gradually aligning with Jewish women's. However, the report stresses that while effective five-year plans exist for minorities, no comparable strategy has been presented for the majority population that will staff Israel's high-tech sector in the coming decade.

A further concern is that academic degrees in Israel do not translate effectively into skills. OECD PIAAC data show that despite high education levels, skill gaps remain compared to developed countries, and labor productivity is lower than expected given educational attainment. The Ministry of Finance plans to examine whether the labor market's education premium is declining, which could indicate saturation. Ultimately, the report warns that no clear policy currently addresses the development of Israel's human capital as a whole, and the consequences of this failure will become evident in the coming years.