(photo credit: REUTERS/BAZ RATNER)
The two main groups that economists say Israel must integrate into the labor market are heading in opposite directions, according to a report released on Sunday by the Finance Ministry chief economist.
The report found that in 2015, the percentage of working-age haredi (ultra-Orthodox) men who were working increased three percentage points over the previous year, reaching 52 percent.
At the same time, the labor participation of Arab women fell roughly 1 percentage point.
Bank of Israel Gov. Karnit Flug warned in late January that integrating those two populations was crucial for Israel’s mediumand long-term economic health.
“I think it’s a strategic challenge; we don’t have the option of not succeeding,” Flug said. “Their integration is crucial for them and for the Israeli economy.”
Overall, the report found that Israel’s labor participation rate dropped 0.1 percentage points to 64.1% in 2015, although the entirety of the decline came from non-Jewish Israelis. Overall Jewish labor participation increased 0.1 percentage points.
The high participation, which increased from 59.4% in 2002 to 64.2% in 2014, was accompanied by a falling unemployment rate, which hit 5.3% in 2015. Both trends showed signs of slowing, the report said, as the improvements to the market were becoming “exhausted.”
The increase in haredi men’s participation, the report speculated, could have resulted from cuts to child allotments orchestrated by then-finance minister Yair Lapid in 2013-2014. Haredi women’s participation stood high – in the mid-70% range.
Among Arab women, however, participation in the labor force dropped to 32.3%, moving further away from the 41% participation rate goal the government had set for the group to reach by 2020. The participation rate of Arab men was 76.1%.
Participation rates among non-haredi Jews in Israel tend to be well above 80%, significantly higher than the OECD average.