The Israeli Workforce: From Crisis to Opportunity
The labor market panel at the Israel Democracy Institute’s Eli Hurvitz Conference on Economics and Society dealt with the challenges and opportunities of the employment market in the post-Covid era.
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Highlights
Itzik Shmuli, minister of labor, social affairs, and social services: “The COVID crisis has silenced and made redundant whole industries. It has left many young and self-employed workers in a vulnerable position. Vocational training is a key tool for dealing with this dramatic situation. In this context, the government will invest about a billion shekels in vocational training and will be able to provide grants to employers who will integrate workers who have undergone professional training. Our goal as a government is that by the end of 2021, 100,000 Israelis will be able to benefit from retraining and will receive assistance with their reintegration into the workplace with the proper conditions.
Minister Shmuli added: “The fact that the state budget was taken hostage for political reasons by the Prime Minister is an economic and national tragedy. Elections were and remain a terrible alternative at this time, but Netanyahu leaves us no choice when an entire country is at war and he seeks exit ramps for his own personal reasons.”
Minister Itzik Shmuli: “The fact that the state budget was taken hostage by the Prime Minister for political reasons constitutes an economic and national tragedy.”
Shira Greenberg, chief economist at the Ministry of Finance: “You can see that before the crisis there were 92,000 vacant positions and now we stand at 55,000. This is a significant decrease, and that is the main problem in the current crisis….In our estimation, with the advent of vaccines and control over the disease, the economic situation will improve and by 2021, if the health crisis is over quickly, we will be around a 7% unemployment area, still almost double the pre-crisis situation.”
Greenberg concluded: “The state must act to release the constraints of the economy, create jobs, reduce employment costs, and assist employers via various models such as employee retention grants. In this context, flexible unemployment pay will allow employers to employ workers and still receive grants from the state and thus reduce the employment costs of that worker. Our proposed employee retention grant provides a parallel solution and allows employees to even work part-time. Any response that reduces the employment costs of employees is a correct response in such a crisis.”
Moti Elisha, director of employment regulation at the Ministry of Labor, Social Affairs, and Social Services: “We are prepared to tailor vocational training to high-demand professions. We have stopped training for over 150,000 positions that are no longer necessary as a way of adapting to the labor market crisis. In addition, we are going to sign a partnership agreement with the employers today and with the leadership of the business sector tomorrow. Many institutes, including the Israel Democracy Institute, have pointed out that what is lacking in the labor market is to bring together the supply and demand for the needs of the vacancies. We believe it is a game-changing tool that will greatly increase aid to all. In addition, we will create a language tool for the Arab and ultra-Orthodox communities, since without professional training and language skills, it is difficult to integrate into work. We will be in real danger if we do not invest in both of these populations.
Prof. Michel Strawczynski, director of the Bank of Israel’s Research Department: “One of the differences between Israel and the other countries was the adoption of the unemployment model. Our research shows that those same workers respond directly to lockdowns. For example, the peak of unemployment in Israel – more than 34% – was recorded in April during the first lockdown. But only for a very short point in time – only in mid-April. As the economy opened up, this component of unemployment, namely, workers temporarily unemployed due to COVID (as defined by the CBS), became smaller. And this is one of the main conclusions of our study: the unemployment component is a temporary factor that is a direct result of lockdown.”
Rami Garor, director general of the Israeli Employment Service: “We must have an overall strategy because a lot of entities are, out of a good will to help the job market go back to normal, firing in different directions, but that only makes it harder. In June 2021, unemployment benefits will end and the transition to social benefits will be rapid, so this is a honey trap. A gradual way must be found to lower the safety net and not all at once. Not all job seekers will return to the job market; the further away from the date of termination of employment, the more difficult it is to get people back to work. It is a pity that we did not take the time to impart required skills, because we are low on an international level, even if we discount populations like the Arabs and the ultra-Orthodox. Therefore, one must start training today, especially short-term trainings. We should have done this six months ago.
Roi Cohen, president of LAHAV, the Israel Chamber of Independent Organizations and Businesses: “Due to an ego-based quarrel between the Minister of Finance and the Minister of Labor, the issue of vocational training is stuck. Because the self-employed are not entitled to unemployment benefits, they cannot knock on the door and seek professional training.”
Kobi Bar-Nathan, director of salary and employment agreements at the Ministry of Finance: “We intend to improve productivity and service for citizens in the public sector, and this is our opportunity to move into a world of fewer inputs and more outputs…. [Managerial flexibility] has a negative connotation, but we were able to include things that were very difficult to include in the past: change in hours and places of work, change of role or tasks, receiving the public – we see that all these things have greatly improved.”
Arnon Bar-David, chair of the Histadrut – General Federation of Labor: “I am now trying to pass the Unemployment Benefit for the Self-Employed Law and the Safety Net for the Self-Employed Law which will give self-employed workers a safety net similar to employees and unemployment benefits. Regarding training, the Histadrut does not have to manage professional training for employees; this is the role of the state. I definitely think the world of training is not managed properly. We have agreed to lend a hand and cooperate in order to give it a renewed drive, but the Histadrut should not manage it.”
Liron Hantz, deputy director general of strategy and policy planning at the Ministry for Social Equality: “More than 47% of those who received unemployment pay in the first lockdown were young. This damages their career paths, training, aspirations, accomplishments, and degrees and also has emotional consequences. Of these young people, 89% have indicated that they are experiencing depression and emotional difficulties and lack an additional safety net. We have had to make active moves in recent months in order for them to receive support beyond what the government provides. In other words, the corona crisis is the biggest disparity crisis of our time.
Hassan Tawafra, head of the Ministry for Social Equality’s Authority for Economic Development in the Arab Sector: “The crisis has affected Arab youth much more than Jewish youth. One in two young people in Arab society is sitting idle, not integrated in higher education or employment. Concerns are growing due to both gaps in the skills of Arab workers – training, digital literacy, and language – and gaps in physical and digital infrastructure.”
The Eli Hurvitz Conference on Economy and Society – formerly the Caesarea Economic Policy Planning Forum – is widely recognized as Israel's most influential economic conference. For 27 years, the conference has served as a crossroads where public discourse and professional knowledge in economics and society meet, with the aim of improving decision-making processes in the administration and improving the quality of Israel's social and economic policy for the benefit of the entire public. The conference this year focuses on: macroeconomic policy in times of economic crisis; the labor market; the Israeli education system; governance in a time of crisis; strengthening the health system's readiness for crisis situations; and the relationship between local and central government. The conference is the apex of research and theoretical and practical research by working and thinking groups comprised of senior officials in the Ministry of Economy, Ministry of Labor, Ministry of Finance, the Prime Minister's Office, academics, IDI experts, civil society representatives, and other partners. Together, the teams led research and developed policy recommendations on issues closely related to the conference sessions, which will be presented during the conference, held online this year from December 14 to December 16.