Addressing the Maariv Annual Business Summit, Prof. Leo Leiderman, chief economic adviser of Bank Hapoalim, Israel’s largest commercial bank, said that the Israeli economy is in good condition as 2022 approaches. “The economy has economic momentum,” he stated.
Leiderman noted that the biggest problem in the short term is the shortage of workers for available positions, noting that according to the latest figures, there are 290,000 unemployed in Israel and 143,000 jobs that need to be filled. “In the short term, the issue that hurts the most and limits the growth of the economy is one issue - the shortage of workers. Interestingly", he added, "This is a universal problem, well known in the U.S. and Europe.”
Leiderman said that there is a current mismatch between the jobs available and the skills of the unemployed. "We need a comprehensive program of professional training and retooling that effectively will increase the occupational mobility of the labor force.
Training and retooling should be done jointly by public sector agencies and employers in the private sector. A lot of what is needed could be accomplished via on-the-job training."
While the overall picture is positive, Leiderman noted that the Omicron variant of the coronavirus is of some concern. Nevertheless, he said that from a macroeconomic viewpoint, Israel will be one of the least affected countries due to its extensive vaccine and booster campaign and due to the features of the economy such as a high weight of the high tech sector.
Looking back a year to December 2020, when the Pfizer and Moderna vaccines were first issued, Leiderman said that there is much that is now taken for granted. He added that the fact that Israel has a stable government, and a state budget is also taken for granted but is a significant accomplishment.
Looking ahead for the long term beyond 2022, Leiderman stated that Israel has numerous structural issues that need to be solved and cited the state of infrastructures, the public transportation system, and the educational system.
“The educational system needs updating, and we need to improve the bureaucracy and regulatory systems and stabilize the situation in mixed Jewish-Arab cities in Israel, which can also cause instability. Last, but not least, construction of new homes and apartments has to increase dramatically in view of the strong excess demand for housing in the economy.”
This article was written in cooperation with Bank HaPoalim