Israel must prepare for tomorrow’s labor market today

Countries that are well prepared will enjoy accelerated innovation and growth, and a rise in employment levels.

An electronic board displaying market data is seen at the entrance to the Tel Aviv Stock Exchange (photo credit: REUTERS)
An electronic board displaying market data is seen at the entrance to the Tel Aviv Stock Exchange
(photo credit: REUTERS)
OVER THE next few years, experts around the world believe far-reaching changes will occur in the labor market. These trends will be caused by a range of technological developments, demographic shifts, deepening globalization processes, and changes in the way we conceive the market. These shifts present a real danger to the economic and political stability of countries that do not take the necessary steps to prepare.
How so? Countries that are not well-prepared in advance of these shifts will experience a significant rise in unemployment, especially among population groups that choose not to adapt to the changing needs of the market. Similarly, a lack of preparedness is expected to lead to a lack of professional workers, which will restrict growth and cause a sharp rise in the wages of in-demand workers. The results will be reduced competitiveness, unstable labor relations, and growth in social polarization due to widening income gaps among workers.
In contrast, countries that are well prepared will enjoy accelerated innovation and growth, and a rise in employment levels.
The Israel Democracy Institute (IDI) has identified the need for Israel to develop a well-reasoned approach to preparing for the future world of employment. Several months ago, IDI established a working group to formulate a multi-systemic strategic plan on this subject.
The group is comprised of representatives from relevant government ministries, employers’ and employees’ organizations, and various research institutions. Although this working group is still in its infancy, its members have already identified several issues that require urgent attention if the Jewish state is to be prepared for the future.
One of the first steps required is to reduce the mismatch between workforce supply, as provided by the education system and professional training institutions, and workforce demand, as defined by the needs of the business sector. Today, this disparity results in a lack of available workers for certain professions, such as engineering.
To address this challenge, the team emphasizes the need to develop a dynamic mapping system that will be regularly updated, and make it possible to identify gaps between supply and demand regarding various professions and skill sets. Such a system would need to meet the planning needs of the professional training system in the short-term, for curricular design in academia in the medium- term, and the education system from kindergarten through high school in the long-term.
Another area of activity identified as necessary by the group is that of strengthening Israel’s active labor market policy (ALMP).
By providing professional training to people who are already employed, and not just to those who are left out of the labor market, we will ensure that employees’ skills are better suited to employers’ needs, which will prevent layoffs and help us maintain a competitive edge. Ultimately, such a policy will contribute to the stability of the labor market, too.
Moreover, international experience has shown that this kind of training has very high potential for increasing labor productivity within companies and for increasing employees’ job security, as they become more skilled and thus a more attractive prospect in the labor market. This recommendation is given weight by the fact that Israel invests only 0.2 percent of its GDP in ALMP, compared with an average of 0.6 percent across OECD countries.
context of education and training, great importance should be placed on cooperation and information sharing among the various government ministries, and between them and representatives of the business sector and workers’ organizations. Each one of these companies and organizations plays an important role in the overall labor market.
Similarly, there is a growing need to reinforce our life-long learning (LLL) capabilities. This is a challenge that needs to be addressed by all those who play a role in the labor market, encompassing the education provided by parents at home, the formal education system, and employers, who must join forces with the state to develop learning mechanisms. This will enable employees to better cope with the rapid changes expected.
Another area that requires thought and planning is that of flexible working agreements that will improve employees’ welfare and allow employers greater flexibility, based on new technologies being developed or already in existence. In this regard, Israel lags behind the Western world, as many countries already have flexible work arrangements, including European Union countries, the United States, and Australia.
The future might seem distant, but it is almost here. Israel is the “Start-up Nation.” To maintain our edge, we must work together to make the needed changes outlined above.
Daphna Aviram-Nitzan is the director of the Center for Governance and the Economy at the Israel Democracy Institute