Israel hires McKinsey to tackle non-Jewish minority issues

25 August 2014 3 min. read

The government of Israel has hired consulting firm McKinsey & Company to help the country address the problems of Israel’s non-Jewish minorities. Despite the high-profile work, the work is estimated to cost no more than 15 thousand dollars.

Israel has a population of approximately 8.2 million, of which some 1.8 million people (roughly 22% of the country’s population) are of non-Jews origin. Although defined collectively as Arab citizens of Israel, they include a number of different, primarily Arabic-speaking, groups, each with distinct characteristics. The largest group is the Muslim Arabs (~1.2 million), most of whom are Sunni and reside in the north of the country. The Bedouin Arabs consist of approximately 250,000, these Muslims are scattered over a wide area in the South. Other groups include the Christian Arabs (~123,000; mainly in urban areas), the Druze (~122,000; mainly in northern Israel) and the Circassians (<5,000; concentrated in two northern villages).

Isreal hires McKinsey

For years, Israel has seen the standard of living of non-Jews deteriorate, in some cases groups of Arab citizens structurally find themselves in poverty. To tackle the issue, Prime Minister Benjamin Netanyahu recently launched a special panel consisting of 14 ministers and tasked them with providing recommendations on fighting poverty. The ministerial committee’s mandate is to address problems faced by minorities in all areas including employment, welfare, education, health and general development. To support the panel with its project, McKinsey & Company has been hired, according to the Israeli newspaper Hareetz on request of Netanyahu himself.

McKinsey has been given the job to support the panel with providing benchmark data (i.e. how other countries address minorities’ economic and social development) and assessing the impact of potential policy recommendations on the Israeli case. In line with common policy, both the Israeli government as McKinsey have declined to comment on the matter, and as a result it’s not clear how much the American consulting firm will be paid. Sources in the Prime Minister’s Office, however, have told Hareetz that the price wouldn’t top 50,000 shekels ($14,000), which can be deemed a bargain considering the fact that the prestigious firm belongs to one of the most expensive players in the market (see the section Fees & Rates).

Benjamin Netanyahu

The involvement of McKinsey has also sparked criticism in the local media. Critics feel that a consulting firm from abroad has little understanding of the plight of Israeli Arabs. “McKinsey staffers have no special understanding of the situation of Israeli Arabs that isn’t possessed by anyone else,” says one government official to the newspaper. “Moreover, the involvement of a commercial entity that advises private companies in public deliberations and decisions is a source of discomfort. Proximity to decision makers is worth a lot of money,” he said.

Israel Defense Forces
It is not the first time that the Israeli government relies on the services of McKinsey & Company. Over the past years the consultancy has won several tenders to advise government ministries. The biggest and most expensive was in 2008, when McKinsey was appointed to help the Defense Ministry craft a plan to streamline the Israel Defense Forces. The project was initially budgeted to cost 22 million shekels, following completion the amount however ballooned to a hefty 100 million shekels.