Half a Million Israelis to Be Laid Off in March Because of Coronavirus, State Forecasts

The National Insurance Institute's unemployment department normally handles 17,000-20,000 new unemployment requests a month, but is expecting 400,000 in March

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People walk past closed stores inside the Dizengoff shopping center in Tel Aviv, Israel, on March 15, 2020.
People walk past closed stores inside the Dizengoff shopping center in Tel Aviv, Israel, on March 15, 2020.Credit: NIR ELIAS/ REUTERS
Sivan Klingbail
Adi Dovrat-Meseritz

An estimated 500,000 Israelis will be newly out of work by the end of the month, according to forecasts by the National Insurance Institute and Finance Ministry.

As of Wednesday morning, 180,000 people had registered as unemployed.

NII officials predict that unemployment payments will increase by more than six times by the end of the month, costing the state some as much as 2.5 billion shekels ($663 million), up from the average of 340 million shekels a month paid in January and February.

Should the current situation continue, the number could reach as much as 1 million unemployed after the end of the Passover holiday in April, according to the Finance Ministry’s forecast.

The state may wind up paying 4 billion shekels a month in unemployment benefits, the Finance Ministry stated earlier this week.

The forecast does not include the self-employed, young people who joined the labor force within the past six months, and people over age 67, all of whom are not eligible for unemployment pay.

The head of the NII’s unemployment department, Uriel Kazum, stated that his institution is used to handling 17,000-20,000 new unemployment requests a month, but it is expecting 400,000 new requests for March.

NII has so far received 93,000 new requests for March, as of Wednesday, and an even larger number of people laid off or on unpaid leave who registered with the Employment Bureau who are expected to start applying for unemployment pay.

Kazum estimates that these 400,000 people will be eligible for 700-900 million shekels in payments in March alone. This is a relatively low figure given the forecast number of unemployed, because many of them will have stopped working only in the middle of the month. By April the figure is likely to be much higher.

NII head Meir Shpiegler said his agency was making great efforts to ensure that it would have enough money to pay anyone eligible for unemployment. He also noted that the current terms for receiving unemployment – having worked 12 out of the past 18 months – are being relaxed to six months out of the past 18, making many young people eligible who otherwise would not have been.

The efforts to control the pandemic are likely to put NII in rough financial straits. It has been running a financial surplus of 8-12 billion shekels for the past four years. This surplus is likely to cover payments for several months given the forecast scope of unemployment, but it will be eaten up quickly.

Shpiegler stated on Wednesday that NII would first use up its surplus, and then demand the Finance Ministry return to it the 250 billion shekels in surplus collections that it had transferred to the ministry since 1980.

An alley with mostly shuttered shops are seen in a market in Jerusalem's Old City March 18, 2020. Credit: RONEN ZVULUN/ REUTERS

According to the current agreement with public sector workers, until Passover they are on leave at the expense of their vacation days.

Should Israel continue to be in a near- or total shutdown in the wake of the global coronavirus pandemic, some 250,000 employees of local authorities or government ministries could find themselves unemployed.

On Tuesday night, less than 24 hours after the Finance Ministry revealed a list of steps to address the financial aspects of the crisis, along with its forecasts predicting the virus prevention efforts’ dire effects on the economy, the Health Ministry released new, more far-reaching restrictions limiting the public’s movement and closing stores not deemed “essential.”

“Some people within the government were calling for a full closure a week ago, and certainly over the past few days, but if the crisis continues after April with a more severe shutdown than we have right now, I have no doubt that the economy will have a hard time getting out of this,” said a senior Israeli finance official. The package released earlier this week was supposed to give a small boost, but the Finance Ministry realizes more steps are needed in the future, the official said.

Bank of Israel Governor Amir Yaron said Tuesday that the Finance Ministry’s measures are a step in the right direction, but that a significant financial safety net, with a proper budget line from the state budget, would be needed in order to enable broader action.

The government is limited by the lack of approved budget, and is operating on the budget approved for 2019.

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