The mystery: How is it that despite the deep recession, despite the large number of layoffs and factory closures that we keep hearing about on the news, unemployment is not increasing? How is it that the unemployment rate has stood at 8.6 percent since the beginning of 2001, month after month, with amazing stability?
The unemployment rate is one of the most important figures in the economy, both financially and socially, but for the finance minister it is a truly critical figure. The unemployment rate is in effect the index by which the public determines whether or not the finance minister has succeeded at his job.
With all due respect to the size of the budget deficit, the balance of payments, the amount of public debt being carried and the implementation of the important reforms - all of these are meaningless to most people. Unemployment, on the other hand, is a sensitive social figure that everyone understands, and for this reason every finance minister displays oversensitivity toward it.
Finance Minister Silvan Shalom is even more sensitive to this figure due to his social awareness. That is the reason for his declaration this week that he wants the economy to grow by 3.5 to 4 percent next year, entailing the creation of 80,000 new jobs, with the aim of filling them with Israelis and not foreign workers.
But still, how is it that unemployment has not increased during the last six months? The answer has three parts. One: We are apparently in a state of reduced productivity, which means that more workers are needed in order to produce the same amount. Two: Very few new workers were hired during the period of high growth that we enjoyed in the first three quarters of 2000, so now there is no need for large-scale dismissals. But the main reason is that the Jews have started to work.
The 100,000 Palestinians who used to come to Israel every day to work in construction, agriculture and services no longer come and apparently will not be returning in the foreseeable future. Their places have begun to be taken by Israeli Jews and Arabs. Professions that in recent years were "conquered" by the Palestinians are returning now to Israeli hands.
This is particularly noticeable in the construction industry. Suddenly, there are skilled Jewish workers in all areas of the building profession. Today one can find electricians, plumbers, gardeners, plasterers, tile-layers, carpenters and more - all Jews - working hard from morning to night, and getting paid well, too. In light of the shortage of workers from the territories, the salaries in the various branches of the construction industry rose. And what is true for the construction industry also holds for other branches of the economy that until the outbreak of the current Intifida depended on workers from the territories. This makes up for the layoffs in other areas.
The phenomenon also demonstrates that we must not give up, that it is possible to fight unemployment. Silvan Shalom intends to fight it with a three-pronged plan of investing in infrastructure, reducing the number of foreign works and putting Israelis back to work.
Investment in the physical infrastructure is the right way to fight unemployment, because Israel's infrastructure - roads, water and sewage - is backward by any standard, and many studies show that improving the infrastructure in various countries accelerated growth. The only danger in such a measure is that instead of making internal adjustments to the budget, Shalom will be tempted into increasing the deficit, which would have negative consequences.
Reducing the number of foreign workers is also good policy, if done while preserving their dignity. As time passes, a social and cultural time bomb is being created. Foreign workers already make up about 10 percent of the work force, second only to Switzerland.
The return to work of Israelis who in the past had chosen not to work is also good policy, because in this area too we have passed beyond the limits of reason. There are 140,000 families living on income support payments, and more people are joining their ranks. The "Wisconsin Plan" forcing every unemployed person to return to the work force and undergo professional retraining, while receiving aid and support, should be adopted. The main thing is for people to return to making a living by their own hands, with self-respect and a future.
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