In contrast to developed countries in the West, where programs aimed at providing incentives for employment and reducing dependency on government support are implemented, no similar, serious changes have been instituted in Israel, according to the Bank of Israel research department.
The department's economists say that the percentage of the adult population in the civilian workforce is much lower than in the West. The gap was particularly noticeable among less educated men of working age, including individuals with an ultra-religious education. The low percentage of Arab women in the workforce also stood out.
The economists believe the low percentage of participation in the workforce has a negative impact on the amount of manufacturing, the standard of living, and the spread of poverty and inequality in Israel. It also leads to massive government transfer payments, intended to resolve the problem of inequality in the distribution of revenue.
Bank of Israel figures show that in 1999 almost 2 million people were not participating in the workforce - 46.2% of the working-age population of 15 and up and 25% of the main working-age group of 25-54 year olds.
In the past decade, the discrepancy between the percentage of Israeli men participating in the workforce, and the corresponding percentage in developed countries, has increased. The percentage of Israelis in the workforce continued to decline more rapidly than in other countries. Participation in the workforce by Israeli women has grown at a faster rate than their counterparts in developed countries, thereby closing the gap to some degree. In 1999, 68% of working-age women were part of the workforce, compared with an average of 72% in Western countries.
Published by Israel's Business Arena on 18 December, 2001