A million Israelis could lose jobs to computerization, shows report

Thirty-nine percent of those employed in 2011 ages 25-64 were in occupations characterized as at high risk of being replaced by technology within two decades.

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May 16, 2016 06:00
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Writing on a computer keyboard [Illustrative]. (photo credit: INGIMAGE)

 
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Some one million Israelis are working in occupations at risk of disappearing within the next 20 years due to computerization, according to a Taub Center for Social Policy Studies in Israel report released for publication on Monday.

“Research shows that a large percentage of jobs as we know them now are likely to become obsolete in the near future as a result of technological advancement,” the study titled, A Picture of the Nation 2016, states.

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Workers at the highest risk of being replaced by technology include those without college degrees and those already earning less – in other words, those of lower socioeconomic standing.

Thirty-nine percent of those employed in 2011 ages 25-64 were in occupations characterized as at high risk of being replaced by technology within two decades, the researchers wrote. These occupations included watch repairers, tailors, telephone salespeople, data-entry clerks and bank clerks.

An additional 20% of those employed were at medium risk, while 41% of workers, including doctors, psychologists, choreographers and social workers, were considered at low risk.

The proportion of workers in Israel at high risk was a bit lower than in other developed countries, the report said, noting that, in the US, 47% of workers were in high risk jobs and, in Germany, 49%.

Non-Jewish (Muslim, Christian, Druse and other) men stand out as having the highest rate, 57%, of workers in occupations at risk of computerization. This compared to 35% for Jewish men and 39% for both Jewish and non-Jewish women.



One of the main challenges facing the economy – and those angling to get more out of it – is that Israel’s productivity has dropped relative to the OECD average since the 1990s, the study found.

According to the researchers, Israel has two economies: the highly productive export-oriented sectors exposed to competition, such as hi-tech and some manufacturing, and those that are insulated and lagging.

Those lower productivity industries, which require fewer skills and education, pay lower wages.

While sectors that require lower skill levels and education have sputtered, the report said: “Among those with an academic education, the picture is reversed; they have moved to the finance and hi-tech sectors where the salaries are higher.”

According to the study, seven industries accounted for 75% of the productivity gap with the OECD: some business services (such as legal and accounting services); wholesale trade; hotels and restaurants; retail trade; the food, beverage and tobacco sector; land transportation; and auxiliary transportation activities.

And, of course, as any Israeli could tell you, the cost of living remains high.

“Over the past 15 years, excess prices in Israel were persistently higher than in any other OECD country except for Japan,” the study found in an examination of how much prices should rise as a country’s economy grows.

From 2000 to 2014, prices rose the most for housing (44%), home maintenance (62%), food (53%), healthcare (39%), and transportation (26%). Prices of clothing and footwear, however, fell (28%), as did furniture and household goods (20%).

“Reductions in these areas were due primarily to globalization and exposure to imports since the 1990s,” the study said. “The increase in food prices, products that were not meaningfully exposed to imports, accelerated during the second half of the last decade.”

As the cost of living remains high, so, too, does Israel’s poverty rate.

After accounting for taxes and transfers, the poverty rate is almost twice as high as the OECD average with the study finding that one of every five people live below the poverty line.

“Reasons for the relatively large poverty rates in disposable income include relatively low tax rates that result in lower welfare expenditures, and demographic issues including a substantial percentage of large families in low-income deciles,” the researchers concluded.

Israelis have seen their tax rates drop, which alongside a hefty defense budget has left a relatively small portion of the budget for social spending.

The overall shares of government spending on health, education and welfare remained stable, though there was a slight uptick in health and education at the expense of welfare, between 2000 and 2014.

The study found that the budget of the Housing Ministry sharply decreased, from NIS 57 billion in 2000 to NIS 25b. in 2014, while, in contrast, the Welfare and Social Services Ministry’s budget increased during this time from NIS 19b. in 2000 to NIS 45b. in 2014.

As a result of these trends, young people who have not managed to get ahead have found themselves unable to move out of their parents’ homes. The percentage of married people between 29 and 34 living at home doubled from 2% to 4% from 2005 to 2014, while 31% of their single counterparts lived with their parents, up from 26% 19 years earlier. Interestingly, however, fewer 18-to-21-year-olds were living at home than in the past.

This year’s report also revealed a trend reversal in that transfers between educational streams show a move away from religiosity.

Among the Jewish population, the report noted, recent years have seen net migration from more religious to less religious school systems.

As such, more students have moved from haredi schools to state-religious and state- secular schools, and from state-religious schools to state-secular schools than in the opposite direction.

The largest number of transfers was from state-religious schools to state-secular schools, where in 2014/15, 14,700 pupils transferred.

The researchers called this “remarkable” since the national-religious population constitutes the smallest sector at 14-15% of the population.

Turning to higher education, existing trends continued to hold so that academic colleges are attracting more students at the expense of universities; women continue to pursue higher education at higher rates than men in all sectors; and Jewish secular and national-religious students study for higher degrees more than Arabs and haredim.

As for the labor market, the report found that employment is on the rise for both men and women and across all population groups.

The employment rate for men in Israel is lower than the OECD average, though it is trending upward at least partly due to more haredim working.

In contrast, the employment rate of women in Israel surpassed the OECD average as of 2005, and by some 7 percentage points in 2014.

Still, the report noted that more Israeli men than Israeli women work outside the home, though the gap has decreased in the past few decades to only 6 percentage points.

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