The employment rate of non-Haredi Jews is higher than the OECD average and has already surpassed the government’s 2020 goal of 83%, as has the employment rate of Haredi (ultra-Orthodox) women.
By AVI WEISSWomen learn how to work in Israel’s hi-tech sector as part of a Start-Up Nation Central program at WeWork’s new offices in Jerusalem on January 10(photo credit: MARC ISRAEL SELLEM)In order for employment to continue to be a viable source of economic growth in Israel, we need to shift our focus from improving the quantity to improving the quality of employment.On the one hand, Israel’s employment has risen among both men and women, and across all population groups in recent years and many of the employment goals for 2020 set by the government a decade ago have been reached or surpassed. This increase in employment has contributed greatly to Israel’s economic growth in the past few years and put Israel in a good position relative to the OECD.The employment rate of non-Haredi Jews is higher than the OECD average and has already surpassed the government’s 2020 goal of 83%, as has the employment rate of Haredi (ultra-Orthodox) women, which, at 76%, is well above the 2020 goal of 63%. Not only has overall employment increased among Haredi women (though about half still work part-time), but there are other promising trends: more are studying technological studies in seminaries, fewer are employed in the field of education, and the percentage employed in hi-tech has risen from less than 1% in the middle of the last decade to about 3%.Similarly, Arab Israeli women have made great strides in employment, though there are still large gaps between them and Jewish women (both Haredi and non-Haredi). After several years of stagnation, the employment rate of Arab Israeli women nearly doubled since 2003 and stands at about 40%. This is an increase of more than 6 percentage points since 2016 and is very close to the government’s 2020 target of 41%.Furthermore, there are indications that this trend will continue. Most of the employment increase for this population group stems from the improved education of Arab Israeli women, and, as more Arab Israeli women pursue higher education, their employment is likely to continue rising. However, despite studying STEM subjects and enrolling in the high technological track in high school at higher rates than Jewish girls, Arab Israeli women still pursue academic degrees and careers in the field of education at very high rates. Thus, for many, studying STEM subjects does not yet translate into pursuing careers in STEM fields, which are often characterized by higher wages. It is also important to note that, even with the huge increase in recent years, 40% is still a low employment rate relative to other population groups.Despite already surpassing the government’s 2020 employment goals for non-Haredi Jews and Haredi women, and just about meeting the goals for Arab Israeli women and men, the one population group that has fallen well short of the government goal is Haredi men. After rising by more than 15 percentage points between 2003 and 2015, the employment rate of Haredi men has declined slightly in recent years, and stands at about 48% – far from the 63% goal set by the government. This decline may partially be a result of increased transfer payments that took effect in 2015.In summary, most population groups in Israel have reached a near peak in employment and, while there is still room to grow employment among Haredi men and Arab Israeli women, the extent to which this is likely to occur might be limited, at least in the short term, due to cultural considerations. Therefore, as we look ahead to goals for the coming decade, we need to shift the focus to increasing human capital and quality employment.For example, while the employment rate of Arab Israeli men is relatively high and fairly close to the government goal, 50% of Arab Israeli men (whose education levels have not risen as much as those of Arab Israeli women) work in occupations characterized by low wages: manufacturing, construction, and agriculture. These are also physically demanding occupations, and, consequently, Arab Israeli men show a major decline in employment rates from age 50 and on.Also, while the share of non-Haredi Jewish men in Israel employed in the hi-tech industry (characterized by high wages and high productivity) has increased since the mid-1990s and is exceptionally high by international standards, the share of Arab Israeli and Haredi men working in the industry remains negligible. Women are also underrepresented in hi-tech (a worldwide phenomenon), despite participating in the labor market at very high rates, and most of the women employed in the industry are non-Haredi Jews. In short, there is still much work to be done to narrow the gaps between population groups in quality employment and to enhance Israel’s human capital overall.All told, increased employment has been the main source of Israel’s per capita GDP growth since 2012, as other potential sources of growth, such as labor productivity, have not contributed. Given the limited room left to grow the labor market, continued GDP growth in the coming decade will have to come from alternative sources, such as an increase in the quality of the human capital, which requires improving the education system and providing training to population groups that are currently underrepresented in the more productive industries. Such an investment in human capital could be an important avenue for strengthening Israel’s economy.Prof. Avi Weiss is president of the Taub Center for Social Policy Studies in Israel and professor of economics at Bar-Ilan University
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