Human Capital in Israel

Developing human capital in Israel is the key to narrowing the labor productivity gap as a key to reducing income disparities.

Credit: Michal Fattal

Prof. Karnit Flug: “The Israeli education system does not foster equal opportunity; The quality of teachers, teaching practices and curriculum has to be dramatically improved...The quality of workers' skills in Israel has been lower for decades in international comparisons and is one of the causes leading to Israel’s low level of production."

Dr. Eitan Regev: “Students who complete five units in high school math matriculations earn 40% higher salaries than those who complete four units.”

Excerpts:

Prof. Karnit Flug, Vice-President for Research, Israel Democracy Institute: “The quality of workers' skills in Israel has been lower for decades in international comparisons. Over the past few decades, the gaps in productivity have not diminished and are one of the causes to the lower standard of living in Israel in comparison with other developed countries."

Prof. Flug opened the session "Human Capital in Israel: Narrowing the Labor Productivity Gap as a Key to Reducing Income Disparities” on the second day of the 2019 Eli Hurvitz Conference on Economy and Society by saying: “The gaps in levels of skills is apparent in the disparities in salaries between the different industries and sectors in Israel. Industries that compete internationally are characterized by higher skilled workers with higher income. Local industries, that do not have to compete internationally, are characterized by low levels of productivity and income. These gaps in employee GDP reflect, among other things, gaps in levels of skills and relevance to the labor market among different sectors. This is also reflected in international testing in reading comprehension, quantitative problem solving, and functional capabilities in a digital environment. The inter-sectoral gaps in GDP per employee are reflected in disparities in employee income, accordingly.

Prof. Flug noted that "the deficiencies in skills necessary for successful integration into the labor market, and the gaps between Israel’s education system graduates in relevant skills, can be mitigated, to some extent, by extensive and effective vocational training. Moreover, the vocational training system should also allow for updating and adapting the skills required throughout the working period in life. However, the scope of professional training in Israel is relatively low and does not constitute a significant factor in closing the skills gaps."

“Looking ahead, the question is whether today’s education system is providing tomorrow’s graduates with the necessary abilities and skills that will ensure successful integration in the labor market. Israeli students’ latest PISA tests results do not look promising. Israeli students’ achievements in comparison to OECD countries are extremely low in all areas examined. The gaps between students from different socio-economic sectors are extremely high as they are, and they continue to grow, especially between Arab and Jewish students. In other words the Israeli education system does not foster equal opportunity.”

Prof. Flug summarized saying: “The education system must be upgraded by improving the quality of the teachers, teaching practices and curriculum by allocating additional resources to low socio-economic level schools –in particular in the Arab sector. This will better equip students with relevant skills and prepare the education system graduates for the future labor market.”

Dr. Eitan Regev, Israel Democracy Institute: “Students who successfully complete five units in their high school math matriculation exams can expect to earn 40% more than students who complete four units in math and 80% more than students who only completed three units. Our study from 2017 surveyed students born between 1978 and 1988 who completed three, four and five units in their math matriculations. Regev added that efforts to expand the number of graduates who complete five units in math matriculations were incredibly successful – from less than 9,000 graduates in 2012 to more than 19,000 in 2019.”

The Eli Hurvitz Conference on Economy and Society – Israel’s leading economic conference, is taking place today in Jerusalem. In the first session “The Next Government’s Economic Strategy: Where are we Headed?” leaders of Israeli economy came together to discuss long-term strategic issues of importance to the government and the country. The conference is based on research and expert discussions, and brings together a wide range of experts, government officials and business leaders from the public and private sectors.