(photo credit: Ariel Jerozolimski/The Jerusalem Post))
Israel’s labor productivity is the lowest among Organization for Economic
Cooperation and Development (OECD) countries in nearly every business sector,
according to a study released Wednesday in the Taub Center for Social Policy’s
2013 State of the Nation report.
Labor productivity is the amount of
economic value an average worker produces in an hour.
“In all employment
sectors except for agriculture – that is in the building, manufacturing,
wholesale and retail trade, hotels and restaurants, transportation, financial
inter-mediation and real estate sectors – labor productivity in Israel is the
lowest among developed countries with data for recent years,” the report by Taub
director Dan Ben-David said.
Despite the dismal conclusions from the
data, it did not take into account changes in the past five years; the most
recent data available was from 2008.
Productivity is important because it
is linked with overall economic growth and greater socioeconomic
Increasing it depends on high levels of human capital – meaning
a skilled and educated workforce – and capital investments. In Israel, poor
education, lack of infrastructure in areas such as transportation and a
cumbersome government bureaucracy are the primary reasons for low productivity,
the study found.
Even when groups such as the ultra-Orthodox, who don’t
study core subjects such as math, science and reading, and Arabs, whose
education outcomes in Israel rival developing countries, Israel still falls near
the bottom of the OECD results in testing scores.
trends, the report said, the future of Israel’s productivity looks
“Ultra-Orthodox Jews and Arab Israelis comprise almost half of the
country’s primary school pupils, and these are not the only children in Israel
receiving one of the worst basic educations in the Western
Regarding infrastructure, Israel has 2.6 times the number of
vehicles per kilometer of road than the OECD average.
More traffic jams
mean more hours spent trying to get business done, and lower
“Add to this a very cumbersome governmental bureaucracy and
the implication is that even more resources need to be diverted away from actual
production of goods and services,” the report said.
The number of days
required to open a new business (34) is second only to Spain, according to the
study, and 2.5 times the OECD average of 13 days.
Finally, the larger
economic problems of high market concentration, burdensome regulation and lack
of competition push up prices, and pull down productivity.
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