Prof. Nathan Sussman: Israel is in a vicious, downward economic cycle

Michal Fink, Ministry of Economy and Industry: Israel’s Competition is Not Emerging countries, but Developed Countries

“The structure of the labor market is expected to change, said Daphna Aviran-Nitzan, Director of IDI’s Center for Governance and Economy, at the second session of the Eli Hurvitz Conference on Economy and Society.

Speaking about the changing labor market, she said, “Today, people are changing jobs much more frequently. You become an entrepreneur. You become a freelancer. There is a rise in the amount of older workers. Working from home. Working on line. Current policy doesn’t take these trends into consideration. The borders between work and life are being undermined. How can we adapt to these changes?”

The focus of the second session was if Israel is ready to do business in the future labor market.

Prof. Nathan Sussman, Director of the Bank of Israel Research Department, said that Israel’s productivity is among the lowest of OECD countries, and that this has been an ongoing problem for the last four decades. He believes the cause for this is inequality.

“Inequality in Israel leads to low achievements, which leads to low skills, which leads to low productivity, which leads to low GDP, which leads to a low quality of living,” noted Sussman. “These problems are only growing larger as the population grows. We are doing far too little, for example, in investing in vocational training for older people. We are in a vicious cycle – it is in motion and it won’t let us out.”

Aharon Aharon, Head, Israel Innovation Authority, said that digitization is a double-edged sword: “The bad news is that machines will soon be smarter and robots will be working alongside people, changing the nature of the workforce. The good news is that those who gain are people who will know how to adjust to this changing reality. Countries that will agree to direct a large part of their population toward advanced technologies will gain.”

He said that he hopes Israel will be on the ‘gaining’ side, adding that Israel’s high-tech market has three strengths: “One – our ability to work in small groups in a multi-disciplinary fashion; two – entrepreneurship is very strong here; and three – our unique curiosity.”

Michal Tzuk, Deputy Director General of the Ministry of Labor, Welfare and Social Services, said she does not consider Israel to be worse off than any other OECD country. However, she said her ministry must focus on several fronts to ensure progress: updating training systems to make them more relevant and responsive; adjusting supply and demand; and providing “skills, skills, skills!”

Michal Fink, Deputy Director General of Strategy and Policy at the Ministry of Economy and Industry, noted that when it comes to technology, Israel’s competition is not emerging countries, but developed countries.

“We are always worried about revolutions, but need life-long learning. More advanced technology will not necessarily mean less job,” she said.

Yoram Yaacovi, CEO of Microsoft Israel’s R&D Center, said that “in 10 to 20 years there won’t be a high-tech industry, but rather other fields we don’t know about today. High-tech will be in every industry.”

Reem Younis, co-founder of Nazareth-based Alpha Omega, said that more than 20% of students at Haifa’s Technion are Arab-Israeli. Where do they go? She said they are leaving the country. This is because while Israel does not have a problem integrating junior engineers into existing high-tech companies, not enough is being done to help senior engineers break in.

Imad Telhami, Founder and CEO of Babcom Centers, said, “This generation that is entering the workforce are the Y and Z generations. This generation has no ego, or a much smaller ego, and these people learn faster than we ever thought. If we want the entire country to be engineers, we must recognize their unique perspectives.”

Dalia Narkys, Former Chair of ManpowerGroup Israel and Director of East Mediterranean Countries, ManpowerGroup Global, noted that more than one-third of employers say they cannot find employees to hire.

“But when you look around, you see that employers are not doing enough to help employees adapt and bridge this gap,” she said. “Employers need to open their minds and know that people who undergo training can be adapted into the workplace.”

Narkys noted that at ManpowerGroup thought it would be revolutionary to integrate the ultra-Orthodox into the company, “but then we realized it was easy to integrate them, and the same thing with Arab society.”

She did note that the country needs to decide who is responsible for funding this life-long learning: the government, the employer or the employee.


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