Workforce participation seen falling to 59% by 2030

Participation in the labor force will fall by 6% by 2030, if the participation of haredim and Arabs remains at its current level.

A study by the Ministry of Industry, Trade and Labor to examine changes in Israel's population make-up and their effect on the labor market has reached worrying conclusions. It found that, in 20 years, the proportion working age population will fall to 59%, partly due to the increase in segments of the population which have a lower level of participation than other segments.

The study by Dr. Eliyahu Ben-Moshe sought to identify and quantify expected changes in the structure and composition of Israel's population by religion and community over the next 20 years, with a focus on working-age populations.

The study notes that, in 2010, Israel was already one of the most densely populated countries in the world, at 330 persons per square kilometer, similar to Japan.

The study's medium scenario predicts a population of 11 million in 2030, or 450 persons per square kilometer, more than any developed country, including the Netherlands, which has 200 persons per square kilometer.

As for the labor market, the study found that, by 2030, there will be a sharp change in the population structure, which will already be seen in the coming decade. The proportion of over-65s will rise to 14% from the current 10%, and the percentage of the working age population will fall to 59% from 62%. This decline will be most pronounced in the primary working-age segment (25-54).

More haredim and Arabs, fewer working hands

A key finding of the study, in the medium scenario, indicates that the proportion of Israel's secular Jewish population will fall from 33% in 2010 to 27% in 2030, while the traditional religious segment will fall to 15% from 18%. In contrast, in both the medium and high-end scenario, the haredi (ultra-orthodox) population will soar, rising from 11% of the total population in 2010 to 19% in 2030, and the proportion of the Muslim population will rise from 17% to 19%.

This demographic change means a 6% reduction in participation in the labor force, assuming that the participation of haredim and Arabs remains at its current level.

Published by Globes [online], Israel business news - - on April 9, 2012

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