Unemployment Rate in Israel Hits 30-Year Low as Others Struggle

Israel's jobless rate has fallen to a record low as other economies continue to struggle with spiraling deficits and soaring unemployment. But financial analyst Gad Lior writes that work force participation in Israel is still among the world’s lowest.

al-monitor Unemployed men, one of whom carefully counts his money to pay for a cup of coffee (2R), spend their day at a local cafe, August 21. Photo by REUTERS/David Silverman.

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Mar 6, 2012

Unemployment in Israel is on the decline.

The jobless rate fell to a mere 5.4% in the fourth quarter of 2011, compared with 5.6% in the third quarter. In fact, unemployment in Israel hit a 30-year low at the end of 2011. Overall, joblessness in Israel averaged 5.6% in 2011, compared with 6.6% in 2010. The number of employees increased by 87,000 over that period. But work force participation in Israel is still among the lowest in the world, totaling no more than 54.2% in 2011, compared with 53.5% in 2010. That means about half of Israelis over 15 years old who are fit to work aren’t taking part in the work force or even looking for work, and are thus not considered unemployed or taken into account in the statistics.

The new figures, published by Israel Central Bureau of Statistics, also show that the lowest jobless rate in 2011–5.1%–was recorded in the Tel Aviv District. In the past year, high-tech employees accounted for 10.3% of all workers in Israel, compared with 10.2% the previous year.

In another interesting finding, the number of outsourced contractor employees in  security, cleaning and nursing services dropped to about 121,000 in 2011, from about128,000 in 2010.

The number of full-time employees—those working 35 hours a week or more--went up 1.1% in the fourth quarter of 2011, compared with the previous quarter, with the addition of some 25,000 full-time employees, while the number of part-time employees—those working less than 35 hours a week--went down by 0.6% compared with the preceding quarter, reflecting a decrease of about 4,000 part-time workers. Full-time employees accounted for 77.9% of all workers, compared with 77.6% in the previous quarter.

While the unemployment rate among Israeli males in 2011 was 5.2%, among females it stood at 5.7%.

Until 2003, male participation in the civil work force was on the decline. However, in recent years the trend has reversed, particularly among males aged 60 to 69, whose participation rose to 59% in 2011 from 42% in 2004. The figures show a similar rise among females aged 55 to 64, climbing to 54% in 2011 from 44% in 2004.

The number of part-time employees looking in vain for a full-time or additional job reached about 111,000 in 2011, or 16.5% of part-time employees, compared with about 113,000, or 16.7%, in 2010. Of those who were unemployed in 2011, 20.2% had been looking for work for over a year, compared with 22.4% in 2010.

From 2010 to 2011, the unemployment rate dropped in all districts in Israel. The Tel Aviv and Haifa Districts had the lowest 2011 jobless rates at 5.1% and 5.2%, respectively, compared with 5.5% and 7% in 2010. Among Israel's largest cities, with more than 100,000 inhabitants, Tel Aviv had the lowest unemployment rate at 4.4%, followed by Holon at 4.6% and Rishon Lezion at 4.8%. The highest 2011 unemployment rates were in Bnei Brak and Netanya, where they reached 7.9% and 6.8%, respectively.

Nothing to write home about

Those steering the Israeli economy, first and foremost Prime Minister Netanyahu and his finance minister, take pride in the unemployment rates, which are among the lowest in the world. The jobless rate has dropped to a record low of 5.4%, a rare figure even in developed Western countries. However, we have, as a matter of fact, nothing to boast about, not at all.

Only a few days ago, we were informed that all employees of Pri HaGalil, [the largest factory for vegetables’ processing in Israel], were to be sacked. They have been granted a temporary reprieve [following a Haifa District Court ruling against putting the economically ailing firm into immediate receivership.] The same fate awaits some two thousand employees of the cellular communication companies in Israel, hundreds of workers in local financial institutions and many others. The record low unemployment rates will no doubt soar before long. Naturally, workers may be dismissed at times, anywhere. The question is, under what economic circumstances dismissals occur. Given the local market scene, as far as employment is concerned, the situation is rather problematic.

The rate of work force participation in Israel is among the lowest in the world, particularly in the ultra-Orthodox Jewish and Arab communities. Furthermore, quite often, interviewees responding to Central Bureau of Statistics surveys report that they are employed, while, in fact, they work only a few hours a week. According to the Israel Central Bureau of Statistics, for a person to be considered unemployed, he is not supposed to have worked even a single hour during the week the survey takes place. It should be noted that about a third of Israeli employees are engaged on a part-time basis, even though not always of their own free choice. Some of them are working only a few hours a month.

It seems that the Israeli market is presently at an interim phase, where employers are taking stock of the situation. Some have already started firing workers and cutting down on operations. In a few months, we are going to wish for the unemployment rate of 5.5%.

The Israeli government should therefore make a real effort to generate jobs, while coming to the rescue of tottering plants and businesses, and, on the whole, navigate the economy so as to increase the number of full-time jobs available on the local market and minimize the [underprivileged] work force of outsourced contractor employees.

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