(photo credit: Ariel Jerozolimski [file])
The employment rate in Israel continues to be significantly lower than in developed countries, according to a labor market report published by the Bank of Israel on Sunday.
"Due to the heterogeneity of the population in Israel and low employment rates among the ultra-Orthodox, the Arab sector and among individuals with a low level of education, the overall employment rate is significantly lower than in the OECD," according the annual report.
"To reduce the gap between Israel and the OECD countries in employment rates, the government's socioeconomic agenda for 2008-2010 includes the objective of increasing the employment rate among the main working-age population (aged 2564) to 71.7 percent by 2010. Although the employment objective in the agenda applies to the population as a whole, the policy to achieve it is also meant to integrate into employment those populations with low employment rates, i. e. the ultra Orthodox, Arabs and the low educated."
Increased participation of these populations into the labor market would reduce poverty by raising the labor income of weak segments of the population, the report added.
"It can be seen that the employment rates for men and women, excluding the ultra-Orthodox, and Arabs, were above the target set by the agenda already in 2007; the employment rate among Arab men was close to the target and the employment rates for the other groups were significantly lower than the target, despite the increase among ultra-Orthodox and Arab women in recent years," according to the report.
In 2007, the lowest employment rates were found among Arab women, with a rate of 22.6%, while 32% of ultra-Orthodox men and 34% of people with less than a high school education worked.
"The rate of employment among men would have reached 77.7% if the proportions of the three groups (ultra-Orthodox, Arabs and the rest of the population) had remain unchanged since 1995. If the rate of employment for each group had remained constant since 1995, the rate of employment among men would have reached 79.3%," according to theoretical calculations for 1995-2007 presented in the report.
However in reality, the rate of employment among men stood at 76.8% in 2007.
"This implies that the drop in the employment rate was a result of both the change in the composition of the population (the relative growth of groups with a weaker connection to the labor market) and the decrease in the specific rates of employment," the report said.
In the second part of the analysis for 1995-2007, the population aged 25-64 was divided into three groups according to level of education: less than high school education; high school education (including vocational and agricultural high schools); and tertiary education - but not including individuals with a yeshiva education.
"It can be seen that the group with tertiary education is overrepresented and the group with less than high school education is underrepresented in the number of employed relative to their proportions in the population.
This implies that the group with tertiary education makes a larger contribution to the economy's employment rate. That contribution is also increasing over time, primarily as a result of the group's increasing proportion of the population," the report found.
"On the other hand, the proportions of the other two groups have declined, both due to the drop in the proportions of these groups in the population aged 25-64 and to the drop in their employment rate."
The employment rate for Israelis with tertiary education was similar to that for the same group in the OECD countries, while the rates for the less-educated groups were significantly lower than for the same groups in the OECD.
"A particularly large gap is found for the group with less than high school education. This group's employment rate in Israel is more than 20 percentage points less than the average for the OECD countries," according to the report. "The conclusion to be reached from this comparison is that groups with low levels of education should be integrated within the labor market to raise the economy's general employment rate."
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