Israel Fails to Solve Data Chaos That Caused $300m in Jobless Aid to Be Paid by Mistake

Panel proposed solutions that have yet to be implemented because of election, lack of government synchronization and surging unemployment

Nati Tucker
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A store for rent in Tel Aviv, two month ago.
A store for rent in Tel Aviv, two month ago.Credit: Tomer Appelbaum
Nati Tucker

The revelation that the government paid out close to a billion shekels ($300 million) in jobless benefits to people who weren’t entitled to them has exposed the serious shortcoming in collecting up-to-date data on the labor market.

Warnings about the problem were made last year by a committee headed by now two former officials, treasury director general Keren Terner Eyal and acting director general of the Prime Minister’s Office, Ronen Peretz. The committee’s report noted that collecting data was “one of the biggest problems in formulating good policies for coping with the crisis.”

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The source of the problem, the report said, is that figures on overall employment, the identities of individual employed people and job openings come from different arms of the government and at different frequencies. At times, they contradict one another.

Official unemployment data is provided by the Central Bureau of Statistics based on a monthly survey (during the coronavirus crisis, increased to twice monthly) drawn from a representative sample of Israel’s population. The results are usually issued about two weeks later, so that data from the first half of February have not yet been released.

The National Employment Service has access to verified and more up-to-date numbers. That is because under the law, anyone applying for unemployment benefits must first register with the service, which then passes on the names and other details to the National Insurance Institute.

During the pandemic, the employment service has been publishing daily figures on the number of unemployed. But its definition of unemployed is not the generally accepted one because it counts everyone registered with it rather than those who are already in the labor market and searching for new work.

The employment service data became less reliable during the pandemic when it suspended the requirement for job seekers to come to its offices. They were supposed to notify the service if they had found work online, but many of them failed to do so – which, it emerged last week, caused unemployment numbers to be erroneously inflated.

As the government body that pays out jobless benefits, meanwhile, the NII is responsible for keeping data on employment. During the pandemic, it sought to get information directly from the employers and the unemployed to help verify its data. But even this data often proved faulty because many hirees were relying on their new employer to report they were now working.

The NII also has data on employment, versus unemployment, because employers must make social security payments directly to the institute. But its figures are released with a delay of two-and-a-half months.

That means the employment data isn’t aligned with unemployment data. Someone is regarded by the bureau as unemployed if they didn’t work at all the week of the survey, but someone is considered employed even if they were paid for just one day’s work over the course of a month.

The Israel Tax Authority also compiles employment data in order to collect taxes directly from wage earners, but it keeps its information secret.

Labor demand is only published quarterly by the statistics bureau based on a survey of employers. No government body exists that can synchronize that data with other employment figures to create a broad picture of the labor market that policymakers can use, the report concluded.

The team of ministry directors general had proposed a framework for creating synchronized and consistent data on the labor market, but it was never formally adopted. Terner Eyal left her job in October and Peretz left his the month before that. Lower-level officials have been trying to implement the proposal, but with ministers now in the midst of an election campaign, there has been little progress.

The first part of the plan, which the Knesset approved during the coronavirus crisis but has not been implemented, requires employers to report monthly on the number of employees they have and other relevant data. Today, they are only required to report twice annually.

A database like that would go a long way toward creating a comprehensive view of the labor market, but it will take time to implement. Big employers are only scheduled to begin reporting monthly in April and smaller ones only next October.

Another recommendation is to create a dashboard with all current unemployment data. The treasury has created one, but it only includes statistics bureau numbers and figures on NII allowances. The data aren’t synchronized and don’t include employment service figures.

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