Coronavirus unemployment is a crisis for Israel's young workers

"Many younger workers will spend the longest on leave because they often work in sectors at the heart of the crisis."

Workers at a Tel Aviv office (photo credit: REUTERS)
Workers at a Tel Aviv office
(photo credit: REUTERS)
As the government accelerates a return to regular economic activity, the streets of Israel's major cities and towns may give the impression that normalcy has been restored far sooner than expected. Israel's unemployment figures still paint a different picture.
The unemployment picture is also becoming increasingly blurry. Suspecting that many workers returning to work have failed to inform relevant authorities, the Israeli Employment Service is currently not publishing the full details of the nation's unemployment rate.
As of early last week, a total of 1,141,968 Israelis or some 27.4% of the workforce were claiming benefits - including over one million new applicants since the start of the outbreak. Almost 88% were employees placed on unpaid leave.
Encouraging figures were published by the Employment Service on Monday and Tuesday, identifying for the first time a higher number of employees returning to work on both days than new unemployment benefits applicants.
Between 4 p.m. on Sunday and 4 p.m. on Tuesday, nearly 17,700 employees informed the Employment Service that they had returned to work, while only about 4,700 new applications for assistance were submitted. In total, some 38,800 employees have reported their return to work so far, although authorities believe the number is significantly higher.
While the full picture of Israel's unemployment remains foggy, economics expert Daphna Aviram-Nitzan believes one aspect is clear: unprecedented unemployment is principally a crisis for the younger generation.
"Young workers were the first ones to lose their jobs, and it is not clear that they will return to work now that we are slowly permitting market activity," said Aviram-Nitzan, the director of the Israel Democracy Institute's (IDI) Center for Governance and the Economy.
"Many younger workers will spend the longest on leave because they often work in sectors at the heart of the crisis. At the same time, they are entitled to unemployment benefits for the shortest time."
According to a survey carried out by IDI at the peak of the outbreak, between March 29 and April 2, some 60% of salaried employees aged 18-24 were either placed on unpaid leave, made redundant or on paid vacation.
The figure drops to just 29% among employees aged 35-44, before climbing again to 34% of employees aged 45-64 and workers older than 65.
Similar trends are witnessed when measuring employees' confidence regarding a return to their former workplace. The survey did not measure self-employed worker confidence.
Only 24% of 18-24 year-old employees said they "very confident" of returning to their former position, compared to 35% among workers aged 35-44. Again, the number slides to 26% among 45-64 year olds and just 15% for workers aged over 15%.
"There is a good side and bad side to the situation. The bad side is that Israel could witness very high unemployment rates among its younger workers, like we saw in Greece, Italy, Spain after the 2008 financial crisis," Aviram-Nitzan said.
"The good side is that young people can still seek new education, can change their career paths and succeed. Most do not have families so can manage easier than unemployed workers with children."
Particularly of concern for young Israelis currently out of work is their relative shortage in savings. Some 54% of 18-24 year-old workers expect to run out of funds within two months - including 25% with less than one month of available cash.
At the other end of the spectrum, 69% of workers aged over 65 say that they have more than two months of available funds. Over one-fifth (21%) can support themselves for more than a year without work.
Some older workers are likely to be harmed disproportionately, Aviram-Nitzan said. Those at highest risk are workers made redundant prior to being eligible to withdraw their state pension, and those reliant on pension funds closely tied to the floundering stock market.
"The government must - right now - stimulate or give subsidies to employers to encourage them to bring back their workers," Aviram-Nitzan said, lamenting Israel's reliance on unemployment benefits rather than providing assistance via employers.
"For the next crisis, we should adopt the European mechanism. There, governments give money to employers for some of their workers' salaries and that enables greater flexibility. Employers can ask their workers to do some part-time work as the economy reopens."
Adopting such a system, Aviram-Nitzan said, enables businesses to enjoy some cashflow, collect taxes rather than only paying unemployment benefits, and will cost less in the long-term as some vulnerable companies avoid collapse.