Israeli Job Market Was Bouncing Back From First Lockdown as New One Declared

This time around, more workers are going to be outright fired and more businesses are going to collapse, retail executives say

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A restaurant during the coronavirus.
A restaurant during the coronavirus.Credit: Moti Milrod
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Sivan Klingbail

Israel’s unemployment situation has improved slightly – right before the country heads into another lockdown. There were 58,700 available jobs as of August, versus 53,100 in July, according to Central Bureau of Statistics data.

The number of available jobs plummeted when the coronavirus crisis began in March, dropping from 98,000 to 39,500, and the number of people out of work shot up.

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The number of available jobs as of August indicates that the road to recovery is still long, but the trend is positive. The food service and hospitality industries had a strong increase in demand for workers, with a 59% increase in job openings for waiters and bartenders, and a 26% increase in openings for cooks.

There was also a 23% increase in demand for workers in sales.

Sales and hospitality are two fields slated to be shuttered when the lockdown begins on Friday. The second lockdown has created anxiety among business owners, who question whether they’ll be able to recover from it.

However, Employment Bureau figures from August indicate that for the first time since the government started easing restrictions on April 19, more people are registering as unemployed than reporting that they’ve returned to work.

For every one person who returned to work in August, another 2.5 registered as unemployed. While this may be due partly to seasonal trends, Employment Bureau experts cautioned that it may also be that anyone else placed on leave in March is unlikely to get their job back.

Dr. Gal Zohar, head of research and policy at the Employment Bureau, noted that while people generally placed on leave for the summer return to work in September, that trend isn’t prominent this year.

Bureau figures indicate that a significant percentage of people are still on unpaid leave. Some 38% of July’s jobless and 31% in August were on unpaid leave. Unpaid leave was not widely used before the current crisis.

Zohar cautioned that the problem with unpaid leave is that it’s not limited in duration, and therefore it’s important to ensure the everyone being placed on leave – particularly during the second lockdown – does indeed return to work.

However, some employers are not waiting to see what compensation the government will offer for worker retention this time around, and are already planning to put workers on unpaid leave. The problem stems from a lack of faith in the government and its compensation plans, they say.

“We learned our lesson in the first lockdown, when the government penalized employers who didn’t put workers on leave or took them back quickly,” says Avi Shomer, one of the owners of the Tsomet Sfarim bookstore chain and a member of the managing board of the Incorporation of Fashion and Commerce Chains.

Under the compensation models used so far, employers who put workers on unpaid leave were essentially able to shift their payroll expenses onto the government via unemployment pay, and were then compensated again via the grants given to workplaces that took workers back from leave.

Retail sector executives say that this time around, more workers are going to be outright fired, and more businesses are going to collapse. Workers are less willing to be placed on unpaid leave, and landlords are less ready to accept reduced rent payments, says Yaakov Peretz, the CEO and owner of Steve Madden in Israel, Replay, NYOU and Razili. When the second lockdown was announced, his company decided to place 450 out of 500 workers on unpaid leave, he said.

The National Insurance Institute estimated that some 200,000-300,000 workers will be put on unpaid leave this week, while the Finance Ministry expects the figure to be even higher.

With reporting by Adi Dovrat-Meseritz.

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