Unemployment Drops Again

Updated: Mar 9

Throughout the 2010s, Israel experienced falling unemployement rates. According to new data from the Central Bureau of Statistics, unemployment fell to a shocking low of 3.4% in December 2019. The fastest increase in the number of jobs were vehicle trading and repair, information and communications, food services and local and public administration. The number of women in the workforce increased dramatically.



What caused unemplyment to go down?

A recent article in Globes cites different experts’ perspectives on the matter.

Dr. Tali Larom, a senior economic researcher at IDC, suggests that financial policies made between 2002-2003 set the stage for the increase in employment we see today. During those years, the Finance Ministers made cuts to unemployment benefits and set a higher retirement age. They also implemented a negative income tax, whereby individuals earning over a minimal amount and below a certain sum would receive an annual goverment stipend. These changes and more encouraged individuals to enter the job market at higher rates, especially in the Haredi and Arab sectors.

Prof. Momi Dahan of Hebrew University credits the economic boom as responsible for lower unemployment. He claims that there is simply an increase in the number of available jobs and that this phenomena is not unique to Israel. Unemployment is falling all over the word.

Prof. Dahan explains another benefit of a tight job market: higher salaries. Low unemployment doesn't necessarily equal pay increase, but very low unemployment does. Once unemployment in Israel fell below 4%, wages rose.

Low unemployment is beneficial for society as it lowers wage gaps and increases economic growth. Looking forward, experts are unsure whether the rate can continue dropping without government intervention due to the rapid population growth in sectors with proportionately lower representation in the workforce. Hopefully, steps can be taken to ensure the rate keeps dropping and the Israeli economy continues its upward trend.

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