Over the Rosh Hashanah holiday, a young acquaintance was bemoaning the fate of his generation. His plans to go into business after completing army service were disrupted by the coronavirus and job offers are these days few and far between. Educated, ambitious and just about to start out, he feels he’s been dealt a bad hand.
True, the coronavirus may take its greatest toll on the elderly and infirm, but today’s young will disproportionately bear its economic cost. Not a few observers are warning that the pandemic may create a lost generation of Israelis with diminished earning capacity and job prospects for years to come.
It’s no small thing for our children to be worse off economically than we are. Diminished earnings mean a lower standard of living, which can easily express itself in angry and extreme politics. In Israel’s case, it could lead to large-scale emigration.
During the first wave of the pandemic, people under age 34 accounted for 47.6% of job seekers registered with Israel’s National Employment Service.
But that number should be kept in perspective. Before the onset of the coronavirus, young people accounted for nearly 42% of job seekers registered with the service. They tend to take low-pay, insecure work and often find themselves between jobs. The coronavirus exacerbated this because those kinds of jobs, such as waiting tables and gig economy services, have evaporated with the lockdowns. They may yet come back.
Like everything else connected with COVID-19, it’s sexier to make dire predictions than to boringly say “we don’t know enough” and “it’s too early to say.” But unless we remain in a state of chronic lockdown (in which case young and old alike are in trouble), the job market should recover. Maybe slowly, but it should recover. The pandemic will create job market upheavals, but it’s not evident they will lead to less employment or lower wages.
The rising generation’s real problem isn’t COVID, but the direction that the Israeli economy is going. Here are five problems even more worrying than the coronavirus:
- Iran is just an excuse for the Gulf to embrace Israeli tech
- Israel’s economy will pay heavily for Bibi’s lockdown retreat
- Has the coronavirus made Israelis lazy as well as sick?
The labor market: High-tech is the only industry where Israel is consistently competitive. Yet despite some recent growth, we haven’t been able to break the glass ceiling of more than 10% of the workforce employed in the sector. The prospects of the other 90% are diminished by poor workplace skills. If you’re not a young engineer, your capacity for rewarding, well-paid work isn’t especially good.
Haredim: The growing ultra-Orthodox minority is creating an insufferable economic burden. As long as their labor force participation rate remains low, the burden of economic activity falls disproportionately on the rest of the Israeli population. And, since the Haredi share of the population is growing, working Israelis will be saddled with ever-mounting taxes to subsidize the growing ultra-Orthodox minority.
Housing: Prices have soared over the last decade to the point that the cost of buying a home, certainly in the center of the country where the jobs are, has become prohibitive. Last year, Israel was among the most expensive places to buy a home on a per-square-meter basis (3,882 euros, or $4,564). An apartment in Tel Aviv cost more than in central London. Even with low mortgage rates, the financial burden of home ownership is going to weigh on young people more than it ever did on their parents.
World trade: The world economy is becoming a less accommodating place, which is bad news for a country like Israel that depends on exports and cross-border investment. The coronavirus has disrupted supply chains but even before the pandemic, a pullback from globalization was underway as evidenced by the U.S.-China trade wars. A less globalized economy will spell fewer job and business opportunities for the rising generation of Israelis.
Climate change: People tend to overlook this threat in the face the more immediate danger from the coronavirus. But it hasn’t gone away, despite the brief respite we enjoyed from global economic paralysis. The recent heat waves are a taste of what’s in store for Israel as temperatures rise a forecasted four to five degrees Celsius by 2100 if emissions continue unabated. If we and the rest of the world undertake measures to halt climate change, the cost will be enormous – and if we don’t, the economic fallout will be even worse. Our children will be paying our air-conditioning bills for decades to come.
So, is the next generation hopelessly lost? Certainly some of these factors, like the coronavirus and world trade, are beyond our power to influence. All we can do is hope and pray for a vaccine and Joe Biden. But others, like the poor quality of schools and the economic burden of the ultra-Orthodox, are entirely in our hands. As the coronavirus crisis has amply demonstrated, capable political leadership, unfortunately, is lacking even for putting out fires.