The labor market was expected to expand after government benefits for unpaid leave (Halat) tapered off at the end of June. But things haven’t exactly worked out that way.
Earlier this week, the Central Bureau of Statistics said that the broad unemployment figure for the first half of July rose slightly to nine percent, compared to 8.8% during the second half of June. Some 383,700 people did not participate in the workforce during the first two weeks of July, as compared to 376,600 in the last two weeks of June. For comparison, that’s about 184,000 more people unemployed than on the eve of the pandemic in January 2020, when unemployment was at a record low, according to the Finance Ministry. This is despite there being an estimated 130,000 unfilled positions available in companies around Israel.
That sputter is a blow to Israel’s economic recovery. In April and May jobless numbers were improving faster than expected as the country broke free from the shackles of its third lockdown. Restaurants and other industries that primarily employ young, unskilled laborers were having trouble hiring staff, but, it was believed, that would come to an end once the government’s generous salary replacement program stopped paying out July 1. That’s when Halat payments ended for everyone under age 45, part of new Finance Minister Avigdor Liberman’s aggressive plan to get everyone back to work.
However, it doesn’t seem to be working. Workers are not rejoining the workforce in droves, and a number of reasons are being suggested. Summertime means parents are home with the kids, companies have streamlined their operations, and rising coronavirus infection numbers have people expecting that another lockdown is impending. Or, possibly, it may be that some populations have gotten stuck in a state of chronic unemployment.
“I think it is mainly because of a fear that corona is coming back,” said Netanel Ivgi, owner of the Ivgi Delicatessen in Jerusalem’s Mahaneh Yehuda market. “People think there is going to be a new lockdown, so there is no reason to come back to work.”
Ivgi said that he and other shop owners in the market did not see any uptick at all in potential hires, and that the business is suffering from a lack of manpower. “We are trying to expand the business, but we don’t have the people to help,” he said. “My wife is coming in to help me, and I do deliveries myself at night. Our store prides itself on providing excellent personal service, and when we are stretched thin, this becomes more difficult.”
Uzi Tzabag, owner of the Yafale restaurant in Talpiot, described similar challenges. “We keep getting hit by new waves,” he said. “After the lockdown ended a few months ago, it was catastrophic here, but then we started to hire some people and get back on our feet. But we are still short on staff, and the quality of people that are available has gone down. I’ve found myself settling for workers that I wouldn’t have hired previously. I see that I can’t provide the level of service our clients expect. If it wasn’t for the fact that 80% of my customers have been coming here for years, I would go out of business.”
These aren’t the problems that Israel’s hi-tech sector is having. Flush with cash as investors pour into local start-ups, the challenges start-ups face in hiring are quite different.
“The problem here is not related to unemployment leave. It is because of the growth of the hi-tech sector. With all of the investments being made, and all the new positions being created, there aren’t enough workers to fill all the jobs,” said Lipaz Tzitrinovich Daudi, recruitment manager at Gloat, an AI-powered human resource marketplace platform. “It actually seems that everyone is looking for new opportunities, at least passively if not actively. There are also more jobs moving to the periphery, due to the transition to hybrid work.”
Leeyha Laor, vice president of human resources at Tel Aviv-based performance optimization company Granulate, agreed. “The market is very competitive now, and we haven’t seen a difference since Halat ended,” she said. “The only difference in the past few months is that we are now interviewing candidates live in our office, instead of on Zoom.”