Not exactly what you hear
Everything is just the opposite of what you hear, as the finance minister says. Under the new Wisconsin project, those who are unemployed now may find themselves poorer than ever before.
A gala ceremony was held last week in the presence of Finance Minister Benjamin Netanyahu and Industry, Trade and Employment Minister Ehud Olmert. At the ceremony, contracts were signed with the four foreign companies that will operate four employment centers for jobless individuals living on income supplement payments - which is known as the Wisconsin program. Netanyahu promised the franchisees of the project that if they succeed at their task, as he is confident they will, he will shorten the duration of the experiment, planned to last two years, and expand it to include unemployed people from all over the country. He also made an effort to calm any fears the franchisees might have lest the state of national unemployment prevent them from realizing their goal, causing them to lose their investment.
"It is not true that make-work is involved," he said. "It involves a transition to full-time rather than part-time jobs. The economy is growing and that benefits everyone. Everything is just the opposite of what you hear."
Barely 24 hours passed between Netanyahu's inspiring announcement and the Bank of Israel's research department published figures showing that 75 percent of the unemployed that found work in 2004 - 60,000 out of 80,000 - are holding part-time jobs.
"The increase in employment in 2004 reflected mainly an increase in the number of workers employed in part-time jobs due to their inability to find full-time jobs," the bank's review stated. "Moreover, in 2004, the number of people working for salaries lower than half the average wage - i.e. less than NIS 3,500 per month - rose to 27 percent of all workers in the economy. These trends raise the fear that these are temporary jobs that cannot remove these workers from poverty in the long term. This increasingly emphasizes the need for policy steps that will support the creation of stable jobs at proper salaries."
Between the years 2001 and 2003, the rate of people employed at part-time jobs was high but steady, at 27.5 percent of the total number of people employed. Ironically enough, in the year the economy emerged from the recession, the rate of people working at part-time jobs rose to 29 percent. That is double the average rate of people working at part-time jobs in countries that are members in the Organization for Economic Cooperation and Development (OECD), which is lower than 15 percent.
The Bank of Israel economists also noted this paradox: "Despite the theory that ties emergence from recession to a reduction in the number of people working at part-time jobs, and counter to the world trend of stability and even a slight drop in the number of part-time jobs with the emergence from the recession in 2003, the recovery of activity in Israel was characterized by a continued rise in the relative weight of those occupied in part-time jobs."
Netanyahu is proud that the employment rate dropped in 2004 from 10.9 percent at the beginning of the year to 10 percent at the end. He considers this an indication of the success of the policy that he has been leading forward to encourage growth and employment. The accepted definitions notwithstanding, a person is erased from the unemployment statistics even if he works only one hour a week. The Bank of Israel figures show that almost the entire drop in unemployment in 2004 can be attributed to part-time work, or as some call it - underemployment.
The supply of jobs is directly opposed to the demand. A Bank of Israel diagram clearly shows that the rate of unemployment, or of workers who unsuccessfully looked for full-time work or a second job, rose from 19 percent in 2000 to 28 percent in 2004. In other words, the jobless can no longer be blamed for their own situation. They want to work but no jobs are available.
So what is the finance minister talking about? Is the economy moving over to full-time jobs? Is it growing and benefiting everyone? According to figures from the research administration in Olmert's ministry, some 75 percent of those who nevertheless found full-time jobs in 2004 started at salaries of up to NIS 4,000 a month - under the poverty level for a family with two children.
In the current situation, it is not clear how the Israeli Wisconsin project operators will succeed in providing full employment for the 41,000 jobless people who are expected to participate in the experiment. Consequently, these unemployed individuals may find themselves making the same amount they are now getting from the National Insurance Institute - about NIS 2,300 for a family with two children or more - only without the attendant benefits of those who receive supplementary income, such as help with the rent. In other words, they will be even poorer than they are today.
Everything is just the opposite of what you hear, as the minister says.