Avi Nissenkorn, Histadrut Labor Union Chair: Government has Failed to Fix Inconceivable Socioeconomic Gaps

Eran Yaakov, Ministry of Finance: We’re trying to meet future workforce demands while dealing with laws from the 1950s

In a third panel at the Eli Hurvitz Conference on Economy and Society titled “Are we prepared for the labor market of 2030?” Avi Nissenkorn, Chairman of the Histadrut, charged that the government of Israel has failed to fix the “inconceivable socioeconomic gaps,” which will impact the future labor market.

“Government runs away from major reforms,” said Nissenkorn. “Regarding the disability allowance, it was connected to the average wage for years. In 2003 there was a correction that became permanent. This was a mistake since it has deepened social gaps. The disability allowance must again be linked to the average wages of the market. In addition, we need a one-time correction since it has eroded over the course of many years. Regarding the pension allowance, it used to be linked to the average salary and needs a one-time correction, to shrink social gaps.”

Shraga Brosh, President of Manufacturers' Association of Israel, said that regulation in Israel is intolerable and that as a result, Israel is losing its competitiveness. In fact, on world indicators, Israel falls 33% below the US for productivity.

The solution is vocational training, he said.

“CNC (computer numerical control) technicians are different than in the past and the system does not train them,” said Brosh. “We have to supply the rods and not the fish.”

Eran Yakov, Supervisor of Wages and Labor Agreements at Ministry of Finance, said, “The average Israeli salary is decent. The problem is the problem of productivity. … We are trying to meet the workforce demands of 2030 while dealing with laws from the 1950s.”

Amir Levi, Director of Budgets Department, Ministry of Finance, talked about predictions made by the Central Bureau of Statistics indicating that by 2059 around 50% of the population with be ultra-Orthodox or Arab.

“This could be disturbing but it could also be a huge potential,” said Levi.

He noted that today even those ultra-Orthodox men that enter the workforce do so 10 years after non-Orthodox men, with a loss of 3.8 billion shekels total to Israel’s GDP over that 10-year period.

Prof. Avi Simhon, Director of the National Economic Council in the Prime Minister’s Office, said: “We have a problem with vocational education. The problem is that we see how people with practical certificates and degrees are earning relatively low wages, while these jobs, we are told, are the key to rising to the challenges presented by the future labor market.”

Simhon said the Industrial Revolution did no lead to a decrease in the demand for workers.

“There will be a large premium for people with unique skills. A graduate with a degree from the Technion in electrical engineering is earning about NIS 25,000 per month after two years. The market is rewarding people with special skills. Those without special skills will find themselves competing with China, the Philippines and Thailand.”

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