In addition, the government should encourage employment by offering grants to employers and those returning to the workforce, as well as establishing an effective safety net that would provide for those who have not yet found sufficient employment but not discourage them from seeking work, IES said.
These three principles must stand at the center of any government plan to revitalize Israel’s employment landscape following the coronavirus pandemic, IES said.
Israel’s unemployment rate shifted by as much as 690 percent during the early months of 2020, from a record-low rate of just 3.4% in January and February to an unprecedented 28% in April, when 1.135 million women and women became job seekers.
The broad employment rate, which includes people on unpaid leave, was 9.5% during the first half of June, or 5.5% when people on unpaid leave are excluded, the Central Bureau of Statistics said recently.
The three lockdowns that Israel ordered in response to the pandemic shaped the fluctuations of the job market, IES noted. As each closure began, there was a sharp increase in the number of job seekers, with most going on unpaid leave (Halat). As each lockdown ended, there was a gradual return to work that lasted 6-8 weeks.
This stood in contrast to the trend in the United States, where unemployment trends moved gradually and consistently over time, noted Dr. Gal Zohar, head of research and policy at IES.
The impact of the Halat system on the economy was mixed, IES said. On the one hand, it served as a quick solution that gave employers the flexibility to remove and restore workers as conditions changed. On the other hand, it provided a negative incentive for people to return to work, and likely created a situation where those who were out of work for a long time will find it harder to find jobs after benefits run out.
Job seekers from Arab or ultra-Orthodox societies, those from low socioeconomic clusters and older workers are the ones who will have the hardest times reintegrating into the workforce, IES noted. Those are the segments that will have the least access to the resources needed to upgrade their digital skills to adapt to the new economic realities.
Meanwhile, the problem of young people returning to the workforce is less pressing. Although young people below age 35 represented as much as 50% of those who lost their jobs during the pandemic, and their return to the workforce has been slow, IES expects that they will return in greater numbers as their unemployment benefits are taken away, as is being done now.
“The year 2020 accelerated the changes that characterized the labor market and deepened the gaps in Israeli society. If before the crisis, it was clear that the future labor market would demand higher digital skills, then it has become clear that the future is already here,” said IES CEO Rami Graur. “Beyond that, it is clear that the crisis has pushed those on the margins even further away from the labor market. As a result, 2020 required Israel to promote inclusive growth that will be made possible through strengthening human capital, encouraging employment and establishing an effective safety net. In this way, job seekers from the weaker sections will not only be able to return to the work cycle but will also be able to grow and increase in productivity.”