Labor market figures published by the Organization for Economic Cooperation and Development (OECD) should provide the Minister of Finance with some satisfaction, for a change. The employment report for the first quarter of 2014 shows that the increase in the Israeli employment rate was 13%, the highest in the OECD, and far greater than the OECD average of 2%. The comparison was between 2010 figures and the seasonally adjusted figures for the first quarter of 2014.The employment rate consists of the ratio between the number of employed and the number of working age people. The figures also indicate that the employment rate in Israel was particularly high in the 55-64 age bracket - about 10% higher than the OECD average. In addition, the employment rate in Israel among women was 6.5% above the OEC average.
These figures are particularly encouraging, given the fact that in 2010, Israel was near the bottom in its employment rate, 5% below the OECD average, an important parameter describing the proportion of people of working age wanting to work who found work and are actually working.
A significant challenge
Any celebration, however, would be premature. A considerable part of the steep increase resulted from a change in the calculation method used by the Central Bureau of Statistics since the beginning of 2012, a change that by its nature can be expected to boost the employment rate. The change included counting those serving in the permanent army as employed people (people of working age, all of whom are working). Some of the increase is also due to a rise in part-time and low-paid jobs, especially among women.
"Some of the rise in employment in recent years reflected the entry of haredim (ultra-Orthodox) and Arabs, whose employment rate rose gradually after 2003 (with a halt in 2009 caused by the crisis). The continuation of this trend involves a significant challenge for economic policy, which should adapt itself to the future challenges," Hebrew University of Jerusalem and Van Leer Institute Professor Michel Strawczynski, who is seeking to take advantage of the positive data to raise several questions about employment policy, asserted.
"These populations entered the labor market in minimum wage jobs, with minimal participation in the technology sectors leading the growth process in Israel," Strawczynski says. "Economic policy plays an important role in improving their absorption in the labor market: significant bolstering of professional courses and the system of scholarships for colleges and universities for these populations is necessary."
Strawczynsky also believes that unemployment insurance should be revised. "The period of unemployment in Israel is among the lowest in the OECD. Theoretically, this is likely to enhance the job seeking process among employees. In practice, however, it causes problems among low-paid individuals, and is likely to have a negative effect on the populations dealing with these phenomena for the first time. A negative experience in the labor market is likely to drive them out of it, in contrast to the government's stated goals," he claimed.
Strawczynski further alleges that policymakers should deal with the issue of whether to continue the process of raising the retirement age, particularly for women, who retire at a younger age than men, given the continual rise in the life expectancy, pointing out, "Even in the employment rate among women, Israel is in 17th place indicating strong demand for their qualifications."
Published by Globes [online], Israel business news - www.globes-online.com - on July 16, 2014
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