The International Monetary Fund (IMF) has warned Israel of possible instability due to the high unemployment and deep poverty among Arab-Israelis and ultra-orthodox Haredi Jews.
"Severe poverty is concentrated in these groups," it said in a report on the Israeli economy.
Only 40 per cent of Haredi men have jobs, and only 20 per cent of Arab-Israeli women are employed, it said, and their wage levels are low compared to other Israeli groups.
"Stability in Israel in the long run will remain in question unless the low participation in labour markets of minority populations - notably the Arab-Israeli and Haredi communities - is addressed," it said.
"As these groups are set to grow to half of the entire population in 30 years, up from a quarter now, these participation issues are macroeconomic in scale."
"Both communities want work, and the realisation of that goal should be encouraged."
The IMF said that if employment levels, wages and productivity levels in both groups could be brought up to national averages, it would give a 15 per cent boost to economic output and a provide strong injection for government revenues.
The Fund recommended the government help provide more basic child care and transportation in Arab areas, and include Haredi men in the armed forces "in ways that support their employment and productive potential."
"Both groups also need their particular education requirements to be addressed, notably equalisation of education provision at all levels in Arab-Israeli communities with that elsewhere, and focused provision of adult education to address Haredi needs."
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