[email protected]: Willing to work

Labor force holdouts may be amenable to improved work incentives.

There is a fairly broad consensus on the reason for Israel's unusually high relative poverty rates. The most accepted narrative comes in three parts: The very high poverty rate in Israel is largely due to low rates of work-force participation. Poverty among two-worker families exists but it is very low. Low participation rates in turn are particularly salient in two groups: ultra-Orthodox (haredi) men and Arab women. These low participation rates are due to entrenched cultural factors: haredi men would much rather be involved in full-time Torah study, and Arab communities frown on women working outside the home due to allegiance to traditional sex roles where the man is the breadwinner and the women stays home to raise the children. As a result, changing habits will be a generation-long challenge. Here, I will discuss the last assumption. To what extent are participation rates due to slowly changing cultural factors, and to what extent to dynamic labor market forces? First, the facts. While government offices typically publish information on the entire work force, I will concentrate here on work force participation for those under the age of 45. This is where the differences in work force participation are most extreme and yet potentially the most susceptible to change. (Many studies have shown that it is very difficult for older workers to find steady work at this age in an unfamiliar profession. This holds even if for people who have always been employed, such as factory workers who lose their jobs in middle age due to plant closings.) In this age group, the labor force participation rate for haredi men in 2006 was 41% - only half the 82.8% rate of non-haredi men. The participation rate for Arab women was 24.5% - less than a third of the 78.1% rate for non-Arab women. So the striking difference in participation rates is confirmed. (Figures are from the Social Survey, in which age, affiliation and work force participation are self-reported.) Are these differences carved in stone? A few researchers have challenged the assumption that lifetime, full-time Torah study for men is not an inherent trait of ultra-Orthodox society, pointing out that ultra-Orthodox Jews abroad mostly work and, in fact, tend to be quite successful. I think this is borne out by the work force figures in Israel. While the participation rate for haredi men in 2006 was 41%, this is a vast increase over the rate in 2003, when it was only 34%. Such a large increase in only three years is much too rapid to be attributed to cultural transformation; a much more obvious explanation is the change in labor market conditions, including cuts in social benefits. The change is even more striking if we focus on the youngest men, those between the ages of 25 and 34. In this group, labor force participation grew from 50.6% to 69.4% in these same three years - an increase of almost 40%! It seems that haredi men are willing and able to work if conditions necessitate it. There is also a public challenge to the assumption that Arab women don't want to work. The Worker's Advice Center, a non-profit organization favoring organized labor and lobbying for workers' rights, asserts that the reason for the very low participation rates in this population is the lack of suitable conditions. Wages are very low, transportation is poor, and childcare is lacking. Worst of all, Arab women are being priced out of agricultural labor by foreign laborers who are not subject to minimum wage legislation. They claim that they receive hundreds of requests from Arab women asking for help in finding employment. These claims are worthy of study. On the one hand, participation rates for Arab women are so low, and so stable, that it seems difficult to attribute the low rates primarily to external conditions, which are ever-changing. On the other hand, it could well be that there are offsetting conditions: more Arab women are interested in working, but work is more difficult to find due to more competition from foreign workers and perhaps due to rising minimum wages which drove some traditionally Arab industries such as sewing abroad. While income inequality in Israel is still great, and work force participation still low, there is increasing evidence that given proper incentives, work habits are subject to change, sometimes quite rapid. Perhaps with astute policy, economic and social polarity in Israel will begin to decrease in the coming years. [email protected] The author is research director at the Business Ethics Center of Jerusalem (www.besr.org), an independent institute in the Jerusalem College of Technology.