Israel’s problem: Lots of jobs, not enough workers to fill them - analysis

Unemployment is at a two-year low of 3.6%, about the same as in the United States but less than the 6.8% average in the European Union countries and the 5% rate in the OECD.

Israeli national flags flutter in front of an office tower at a business park housing high tech companies, at Ofer Park in Petah Tikva. (photo credit: RONEN ZVULUN / REUTERS)
Israeli national flags flutter in front of an office tower at a business park housing high tech companies, at Ofer Park in Petah Tikva.
(photo credit: RONEN ZVULUN / REUTERS)

Turn on your television and you will see ads aimed at recruiting preschool teachers. Pick up a newspaper and you’ll read how Israel granted permits to 3,500 Palestinians to work in manufacturing jobs. Stand on line waiting to check in at Ben-Gurion Airport and you will realize there are not enough security screeners.

Wherever you turn, you are bound to notice that Israel is facing a severe labor shortage.

Unemployment is at a two-year low of 3.6%, the exact same as in the US but less than the 6.8% average in the EU countries and the 5% rate in the OECD.

However, the employment rate, meaning the number of people in the 15-64 working-age population who are actually employed, is lower in Israel – 66.6% at the end of 2021, according to OECD statistics – than the OECD average of 67.7% and the EU average of 68.3%. In the US, the number stood at 69.4%.

Haredi men and Arab women

Israel’s lower than OECD average employment rate can be attributed largely to haredi men and Arab women who are vastly underrepresented in the workforce.

 PALESTINIAN WORKERS cross back to the West Bank from their jobs over the Green Line. (credit: FLASH90) PALESTINIAN WORKERS cross back to the West Bank from their jobs over the Green Line. (credit: FLASH90)

Now, as the economy is getting back to full speed after the corona pandemic, what is being discovered is that there are plenty of jobs but not enough people to fill them. And this shortfall is being felt across the board in many different professions, both low- and hi-tech

In recent days, the government has announced various plans and projects aimed at easing the situation. For instance, the cabinet on Sunday approved the issuing of 3,500 permits for Palestinians to work in manufacturing and service sector positions, bringing the number of such permits up to 12,000.

Currently, 100,000 Palestinians from the West Bank and Gaza – where unemployment is at more than 25%, according to World Bank figures – have Israeli work permits, mostly for labor in agriculture or construction.

And last week, while in Morocco, Interior Minister Ayelet Shaked announced a project that would bring to Israel Moroccan construction workers and caregivers for the elderly. The Morocco World News website quoted the Histadrut’s Yitzhak Moyal, who accompanied Shaked, as saying the Israeli job market can offer significant incentives to Moroccan workers, including the potential to make twice as much as the average annual salary in Morocco.

According to the website, Moyal said that Israel is looking to bring in 15,000 Moroccan construction workers that “could really improve the pace of construction in Israel.”

Lack of workers in hi-tech

The lack of workers, however, is not only a problem in manufacturing, construction, healthcare and education, but is also a problem – maybe even especially a problem – in hi-tech.

In March, a Moroccan business delegation was in Israel. According to an al-Monitor report, one issue raised was for the Israeli hi-tech industry to use an abundance of Moroccan engineering graduates unable to find work in Morocco’s small hi-tech sector.

Prime Minister Naftali Bennett was asked on Tuesday at Tel Aviv University’s Cyber Week conference what Israel can do to relieve the urgent shortfall in hi-tech workers in the country.

Bennett said that there is “plenty of investment, plenty of everything, but we need more people,” and that the country has “exhausted the immediate bucket of talent.” An astounding $25.6 billion was invested in Israeli hi-tech last year, necessitating scores of engineers and programmers.

Where will workers come from?

Bennett enumerated four potential sources of workers for Israel’s hi-tech industry.

The first source is haredi men, whom Bennett said are “really smart, but not inside the economy.” He said getting them into hi-tech will be challenging, however, “because these folks don’t know English.”

He said the second pool of workers is Arab women, whom he described as “massively unemployed generally.” According to Bennett, “there are lots of smart Arab women we want to bring in, and we are working on it.” To do so, he added, will require the hi-tech sector to be open to “bring in folks who are different, not from the same club.”

The third source is Israel’s periphery in the Galilee and the Negev, which he said were “underserved,” something he characterized as just “stupid policy.”

And the final source of potential workers, Bennett said, is to bring in Palestinians to work in hi-tech. “I hope to see it work, that folks from Ramallah and Nablus can come. We’ll see how it goes.”

Microsoft senior executive Michal Braverman-Blumenstyk noted another potential source: Israelis working in hi-tech abroad. She put the number of Israeli “hi-tech people” working outside Israel at more than 150,000, and suggested appointing a coordinator to work to bring some of these people home by providing incentives.

Great idea, but to implement it, you need a government. And this illustrates yet another negative result of the country going to an election again for the third time in three-and-a-half years: it severely limits the country’s ability both to plan and to implement those plans. For that, the country needs a degree of continuity in the relevant government ministries – a degree of continuity it has not enjoyed for years.