Israel's Civilian Spending Trails OECD Average by Billions

Israel's civilian expenditure is significantly lower than the average in developed countries, according to a new study by the Arlozorov Forum. Researchers Shira Biblash and Yoni Ben Basat found that Israel spends NIS 205 billion less annually than the average OECD country and NIS 354 billion less than benchmark nations similar to Israel in size and economic structure. Even after accounting for defense spending and age differences, Israel lags behind.

The study revealed that in 2025, Israel's civilian expenditure stood at 33.1% of its GDP, compared to the OECD average of 42.7% and the benchmark countries' average of 49.7%. These disparities translate to annual shortfalls of NIS 32 billion in education, NIS 50 billion in social welfare, NIS 43 billion in government services, and NIS 13 billion in healthcare. The only area where Israel exceeds the OECD average is "culture and religion," though other cultural spheres show Israel falling behind.

Contrary to common assumptions, the research suggests that high defense spending and coalition funds are not the primary drivers of this civilian spending gap. While defense expenditures are indeed higher in Israel, the study estimates that even if other OECD countries matched Israel's defense spending, a gap of NIS 89 billion would remain with the OECD average and NIS 240 billion with benchmark countries. Similarly, coalition funds, which have increased significantly, represent a small fraction of the overall civilian spending deficit.

Significant gaps were also identified in social welfare, with OECD countries spending 3.4 times more on family and children, amounting to approximately NIS 53 billion. Israel also spends less on the elderly and unemployed, though it spends more on disability and illness. In education, a substantial NIS 19 billion gap exists in post-primary education. The study also highlights deficits in environmental protection and government services, with Israel spending only a quarter of the OECD average on government research and development.

Biblash and Ben Basat argue that closing these gaps requires a substantial and sustained increase in overall civilian expenditure, rather than isolated adjustments. They recommend shifting the focus from budget allocation to defining the level of public services Israel aims to provide its citizens and securing the necessary funding, stating that Israel cannot offer comparable services without similar public investment.