Study shows Israeli employment at record high, pay gaps remain

While the country's unemployment rate is a "healthy" 4%, the report details considerable obstacles that still remain in the integration of Arab women and ultra-Orthodox men into the workforce.

August 1, 2019 16:41
4 minute read.
A worker tends to systems in the back of a Mobileye autonomous driving test vehicle, at the Mobileye

A worker tends to systems in the back of a Mobileye autonomous driving test vehicle, at the Mobileye headquarters in Jerusalem, May 15, 2018.. (photo credit: REUTERS)

The employment rate of Israelis age 25-64 stands at an all-time high of 78.3%, significantly higher than the OECD average of 73.7%, according to a report published Wednesday by the Labor Ministry.

While the country’s unemployment rate is a “healthy” 4%, the report details considerable obstacles that still remain in the integration of Arab women and haredi (ultra-Orthodox) men into the workforce. Major wage gaps between population groups are also noted.
“Today the unemployment rate stands at approximately 4%, a very low rate portraying unemployment which is largely – if not entirely – ‘healthy’ unemployment originating from people moving between jobs,” the report stated, but also cautioned against unnecessary celebration. “We must remember that in the case of a future depression, unemployment is expected to rise. The weaker groups in the population will be the first to be harmed.”

Despite rising employment over the past decade, Arab women and ultra-Orthodox men remain the two population groups that are struggling to integrate into the Israeli workforce, the report states. Only 38.2% of Arab women and 50.2% of ultra-Orthodox men are employed.

Employment among ultra-Orthodox women and Arab men has increased significantly in recent years, with approximately 76% of both population groups now employed, just below the high national average.

The average Israeli employee earns approximately NIS 11,500 per month, but large wage gaps exist between different population groups and genders.

“Unsurprisingly, the highest wages are earned by non-ultra-Orthodox Jewish men,” the report said. “Women’s wages are lower than men’s wages, and Arab and ultra-Orthodox wages are below those of non-ultra-Orthodox men.”

The average non-ultra-Orthodox Jewish man earns NIS 15,372 per month, compared with NIS 9,928 among women. Arab men earn NIS 8,552, compared with just NIS 5,791 among Arab women. The average wage among ultra-Orthodox men stands at NIS 8,467, compared with NIS 7,527 among ultra-Orthodox women.

“Wage and employment disparities are particularly important as the demographic characteristics of Israel are expected to change in the coming decades,” the report stated.

According to data gathered by the Central Bureau of Statistics in 2015, the majority of Israel’s working age population was not ultra-Orthodox. The ultra-Orthodox population (7%) and Arab population (19%) only constituted 26% of the workforce.

Among children age 0-14, however, 19% of the population is ultra-Orthodox and 25% is Arab. In other words, approximately 44% of today’s children or Israel’s future workforce are members of population groups struggling to integrate into the workforce.

By 2030, the Labor Ministry targets an expanded Israeli workforce of approximately 3.85 million employees, compared with 3.1 million today. Ultra-Orthodox Jews and Arabs are expected to represent between 63% and 70% of the “additional” workforce.

“A significant proportion of the monthly pay gaps is explained by differences in working hours that characterize the various population groups,” the report said.

Indeed, approximately 61% of working ultra-Orthodox women and 44% of ultra-Orthodox men are employed part-time. Only 9% of employed Arab men work part-time, but wages remain significantly below the national average.

IN THE CASE of hourly salaries, secular Jewish men earn NIS 78 per hour on average, compared with NIS 61 among secular Jewish women. Ultra-Orthodox men earn NIS 53 per hour, below the NIS 60 average of ultra-Orthodox women. Arab men earn NIS 44 per hour and Arab women earn NIS 43 per hour on average.

Due to higher income distribution inequality than in most advanced economies, the report notes a significant gap in labor productivity, or GDP per hour worked, between Israel and the upper half of OECD countries. Per hour worked, Israel’s GDP stands at $35.70, compared with the OECD average of $48.20.

“My ministry is working to reduce social gaps and provide optimal tools for employment-challenged populations to integrate into the workforce and earn respectable wages,” said Labor and Social Services Minister Haim Katz. “This report that we are publishing for the first time is intended to present the state of the labor market in Israel and the extensive activity to promote the economic and social resilience of Israeli citizens, including increasing resources, improving and developing new programs, along with future planning and adapting services to changing employment situations.”

Evaluating employment trends in recent years, the report identifies professions that are on the rise and in decline.
“On one hand, we are seeing a decline in the number of conventional metal-processing jobs, and on the other hand, an increase in the number of computer chip-based jobs,” the report stated.

Professions with the highest increase in demand in the past five years are computer programmers (40% increase), electrical engineers (48%), marketing and advertising agents (45%) and vehicle technicians and engineers (33%).

On the other end of the spectrum, professions in decline include general office clerks (10%), professional typists (13%), telephone sales representatives (15%) and gas station employees (17%).

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