Israel’s six-year project to improve its Arab community’s job prospects will also help to bolster slowing economic growth, Manuel Trajtenberg, who helped to draft the plan, said in an interview.

Israeli Arabs have lagged behind the Jewish majority economically and have accused the government and Jewish employers of discrimination. The state has pledged to narrow the gap and sees promoting higher education among Arabs as key.

“There is a huge potential there for economic gains, economic benefits, first of all for the Arab community itself and for the Israeli economy at large,” said Trajtenberg, chairman of the budgeting and planning committee of the Council for Higher Education in Israel, which formulated the plan.

As the global economic slump hurts exports, Israel is seeking ways to spur growth, which was 2.4 percent in the fourth quarter, the slowest in more than three years. Technology accounts for nearly half of industrial exports, making higher education central to its success.

Over the life of the higher education council’s program for Arabs, the state plans to spend 305 million shekels ($82 million) to subsidize preparatory courses for entrance exams, offer tutoring and career counseling for university students, and scholarships for advanced degrees. Some programs are already running.

Limited Scope

“This is a definitely a positive step,” said Yousef Jabareen, head of the Dirasat Arab Center for Law and Policy in Nazareth. “However, it is limited in its scope and it will not create substantial transformation of the situation unless additional issues are addressed.”

At a time when the next government will be asked to cut billions of shekels from the 2013 budget, Jabareen wants more funding for higher education in Arabic. He charges that college entrance exams are “culturally biased” toward Jewish students, and he opposes minimum age requirements for some faculties that suit Jewish students who perform army or community service after high school, but hamper Arab students, who generally do not.

Arabs, who account for 20 percent of Israel’s nearly 8 million people, lag the population on each level of educational achievement and have a higher drop-out rate, according to government data. They make up 12 percent of university students studying for their first degree, 8.2 percent of masters students, and 4.4 percent of doctoral students.

Those who do attend university favor professions such as medicine, pharmacy, nursing and teaching, which enjoy prestige in their community, and are less present in business schools.

Educational Gaps

Israeli Arabs make up a fifth of the population and produce 8 percent of economic output. Their households earn on average 40 percent less than Jewish counterparts, according to government figures.

If those gaps were narrowed by half, “you can have a significant increase in GDP,” said Trajtenberg, 62, a Tel Aviv University professor and former head of the National Economic Council, in a March 6 interview.

Unlike Palestinians in the Israeli-occupied West Bank, Israeli Arabs enjoy equal rights under the law. But they have long complained of discrimination in employment and government services, including funding for their separate school system.

Arab underemployment is part of a bigger set of labor force problems hurting economic growth. Nearly 80 percent of Arab women and more than half of ultra-Orthodox Jewish men do not work. Cultural mores have kept many Arab women at home, raising families. Ultra-Orthodox men who don’t work receive state stipends so they can devote their time to religious study.

The labor force participation patterns have helped to fuel a 20 percent poverty rate that was the highest in the 34-state Organisation for Economic Cooperation and Development, according to the group’s December 2011 economic survey of Israel.

“There are large populations that are not at the center of activity,” said Trajtenberg. “It is our responsibility as a society to open the gates to bring them in.”