The Employment Service data released yesterday boosts the optimism index another notch. For the first time since May 2008, August saw a small decline in the number of job-seekers at Employment Service branches, and at the same time an impressive increase in the number of positions for which employers are seeking new workers.
After the crash of September 2008, about 20,000 workers a month lost their jobs, and only half of them found new employment. In August this year, however, the trend changed. The number of layoffs is now about 15,000 a month, and there is a rise in the number of people finding new jobs.
The Central Bureau of Statistics also recently published similar data. The bureau found that the rate of unemployment remained stable in July at 7.9 percent, the same as May and June. True, the rate didn't decline, but the upward trend had come to an end.
Clearly, the good news is a result of recovery in the economy, which has recently experienced moderate growth. The Bank of Israel also revised its growth forecast upward not long ago. The central bank expects the economy to pull out of the deep slump in which it found itself a year ago, and projects 2.5 percent growth for 2010.
The primary lesson that can be derived from the Israeli economy's rapid recovery from the crisis is that we cannot live beyond our means. One cannot manage an economy in which expenditures are greater than revenues. That is true for the country, and the same rule applies to individual households. Unlike the Americans, who deified consumption, overextended their credit and lived well beyond their means, Israelis demonstrated responsibility and maturity. They did not overextend their credit and didn't inflate the real estate and stock market bubbles to grotesque proportions.
The budget picture is also similar. In recent years, the government of Israel kept budget deficits low and reduced public debt, unlike the conduct of the U.S. administration. The Israeli government has also carried out important reforms, which have strengthened the economy.
The conclusion is clear. Israeli consumers should be encouraged to continue to save, and not to run wild in their consumption habits. It is appropriate to demand of the government, which has greatly increased the deficit for this year and next, that it return to a responsible policy of a low deficit, a restrained budget and the promotion of reforms - and that it move the economy from a 2.5 percent growth rate to 5 percent annual growth. That is the path to improving the employment picture and rapidly reducing unemployment.
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