Steinitz: Haredi, Arab workforce integration still too slow

Our goal is to be one of the top 15 economies within 15 years, Netanyahu says.

December 13, 2010 23:10
3 minute read.
Finance Minister Yuval Steinitz

311_Yuval Steinitz. (photo credit: Tamar Matsafi)

Although the level of participation in the labor market increased significantly since the beginning of the year, the integration of the haredi and Arab population is still slow, Finance Minister Yuval Steinitz said Monday.

“The level of participation of the haredi and Arab population is an important parameter, and we have a problem here,” he said at the Globes Israel Business Conference in Tel Aviv. “In 2010, there was a significant increase in participation in the Israeli labor force.

Approaching the end of 2010, we can see that the measures taken in 2009 are bearing fruit. Participation in the labor force rose from 56.5 percent to 58% today, with an upward trend.

“We also see some growth in the participation of haredim and Arabs in the workforce. However this is not enough.

We need to exceed 60% in the coming years, but it’s a major improvement.”

After the increase in unemployment was stemmed in late 2009, by mid-2010 the level had returned to its precrisis level of 6.2%-6.5%, Steinitz said.

“When we talk about narrowing social gaps, the most important step is to reduce unemployment, and we are one of the few countries that has succeeded in this matter,” he said.

“Unemployment is a disease.”

Together with a decline in unemployment and an increase in the level of participation in the labor market since the beginning of the year, the number of new jobs has grown, Steinitz said.

“This year, 100,000 new jobs were created in the public and private sector, compared with 7,900 in 2009,” he said. “To maintain a static situation, 50,000 new jobs a year need to be created.

Therefore, in order to grow, we need more than 50,000 new jobs to be created.”

Bank of Israel Governor Stanley Fischer, speaking at the conference, said the local employment situation was in good shape.

“Although the unemployment rate has seen a moderate rise over the past few months to about 6.6%, the rise is a result of a fast increase in the rate of participation in the labor market and not because of a decline in the number of employed,” he said. “Without the impact of the work participation rate, the unemployment level is about 5.5%.”

Prime Minister Binyamin Netanyahu, speaking at the conference, reiterated the government’s goal for Israel’s economy to be included as one the 15 leading economies in terms of GDP per capita within 15 years.

“It is a possible target but not an easy one,” he said. “We need to grow 1.5% above the current per capita GDP growth per year. Growth is the key to our national and social needs. To sustain growth we need to keep five basic rules.”

Netanyahu said the first rule is to control spending limits, which should not be higher than revenues, and government spending must be kept within the set fiscal framework.

“Preserving the fiscal framework is crucial,” he said. “It cannot be escaped, just as a household or businesses cannot escape it. Don’t spend more than you make. It is perhaps one of the most powerful lessons learned over the past several years – in my opinion of the past decades.”

Netanyahu said the second rule is the creation of a competitive environment for a growing economy, which can thrive by reducing taxes to a level that is attractive for investment and that boosts spending. The government plans to gradually cut corporate taxes from the current 26% to 18% by 2016.

His third rule is fostering innovation and education.

His fourth rule is the development of proper infrastructures for the periphery and for water to create stronger growth.

His fifth rule is keeping government intervention at a minimum in an effort to boost business activity.

“At times our bureaucracy is impossible,” Netanyahu said. “Government bureaucracy is intrusive, sometimes exaggerated, and we must make sure that the interface between private companies and the government is essentially minimal. Only dealing with our bureaucracy will lead to the advancement of the Israeli economy and meeting our national needs.”

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