The "ultra orthodox", besides not serving in the military, also tend to use Israel's welfare system to support themselves while spending their days engaged in Torah studies. NY Times, 60 percent of the haredim men do not work. Israel also spends a lot of money subsidizing their seminaries.
Since their Shas Party has long held the balance of power between the right and left, they were able to get lots of goodies.
....When the state was founded in 1948, David Ben-Gurion, granted full-time yeshiva students state financing and exemption from army service... ‘to refill the ranks of Torah scholarship destroyed in the Holocaust’. ......Then, there were 400 students.... Today, there are about 60,000.
...The ‘haredim’, ... make up 10 percent of Israel’s population of ‘7.5 million’, but are increasing rapidly.....more than 60 percent of ultra-Orthodox men in Israel do not work,..... about 56 percent of ultra-Orthodox live below the poverty line...... Most are dependent on welfare payments like income support, child allowances or married student stipends. .....In addition to the men,.... more than 50 percent of haredi women do not work..... The ‘haredim’ still marry young and favor large families with eight children or more.”.....
These excerpts certainly explain why Israel should address this problem...it sounds an awful lot like the US ‘Generational’ Welfare Recipients who cannot break the cycle....who are now flooding the “Disability” benefit handouts, since they made it more difficult to remain on Welfare.