Central bank to bring workers back to labor force

Although not part of the labor force, discouraged workers are still partially attached to the labor market as they are still willing to work.

Although rapid growth of the local economy improves chances of finding employment, the Bank of Israel is calling for more active policy steps to integrate "discouraged workers" into the workforce before they totally drop out of the labor market. "As far as discouraged workers are concerned, it is important to take advantage of the window of opportunity and encourage their participation in the labor force before they lose the will to work and totally drop out of the labor market," the Bank of Israel said in an extract of a report released Tuesday. "It requires extending and implementing an active policy to encourage employment, a policy that is currently inadequate." According to the findings of the Bank of Israel report, the number of "discouraged workers" - people willing to work but not looking for jobs because they do not think they will find anything suitable - stood at 47,000 in the first three quarters of 2007, constituting 1.6 percent of the civilian workforce. Although not part of the labor force, discouraged workers are still partially attached to the labor market as they are still willing to work, and therefore the chances of their employment are relatively high, the central bank said. "It is thus reasonable to assume that policy measures aimed at raising the rate of participation in the labor force will be more effective among them," the report stated. "The longer they remain out of the labor force, the weaker their attachment to the labor market, and the harder it becomes to bring them back into the employment pool." The findings of the report were backed by manpower surveys analyzing changes in the employment situation of individuals, which showed that the weaker the attachment with the labor market, the greater the chances of becoming discouraged from seeking work and of dropping out of the market. For example, among those who were out of the workforce in a particular quarter, only about 6% were employed in the next quarter, compared to about 21% of discouraged workers who had looked for work in the previous year but who had stopped seeking it because they no longer thought they would find suitable work. "The findings of the report are not surprising," Revital Hendler, CEO of the AllJobs Web site, told The Jerusalem Post Tuesday. "The results are similar to a survey we conducted among 1,473 questioned, which showed that the older the workers are, the longer it takes them to find work." Osnat Peled, of the Bank of Israel's Research Department, told the Post the "discouraged worker effect" was found mainly among people aged 25 to 54. In an effort to encourage employment, especially among those who have not yet entirely cut off their links with the labor market, the central bank recommended the extension of the Lights to Employment program, so that discouraged workers, who do not receive income support payments, can also participate and enjoy the benefits of the program. In addition, programs for professional retraining, which have been heavily curtailed in the last few years, should be expanded so that the skills of the unemployed can be matched more closely to those required in the labor market, the Bank of Israel said. "There is a real opportunity here to integrate discouraged workers who want to work into the labor force by providing them with active assistance of finding work, writing CVs, etc.," Peled said.