Israel’s employers expect to lay off workers and not to hire new ones in the third quarter of 2020, according to a survey conducted by the company Manpower.
This means even more people may be laid off beyond the 500,000-700,000 people who already lost their jobs amid the coronavirus crisis.
The first sign of this may have been broad-scale layoffs at insurance companies, as reported on Monday in TheMarker in Hebrew.
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Manpower’s report comes on top of the Employment Bureau figures released at the beginning of the week showing that since the government began reopening the economy on April 19, only 350,000 people returned to work, while 123,400 people registered as newly unemployed.
The various employment statistics show the depth to which the economy has been impacted: While forecasts for the second quarter show a net gain of 9% for employment, the trend is expected to reverse course in the third quarter, which is forecast to end with a 7% loss in jobs.
“For the first time since 2011, when Manpower Israel started participating in the international group’s workforce forecast surveys, employers have a negative forecast,” said Manpower Israel CEO Michal Dan Harel.
Employers in all seven sectors of the economy report weak hiring plans: Companies in manufacturing reported plans to cut jobs by 17%; finances and business services, restaurants and hotels all reported on plans to cut between 11% and 16% of jobs; the construction industry expects to cut jobs by 9%; and retail and wholesale expects a 5% job loss. Smaller job losses are forecast in other services, and in natural resource exploitation.
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The shift is particularly drastic compared to the third quarter of 2019, above all for manufacturing, restaurants and hotels, which reported net gains for that quarter, although the trend holds for all the industries surveyed.
“The coronavirus crisis created an unusual economic crisis. There’s a sense of this at all the companies,” states Dan Harel. “Companies are saying it’ll take them time to return to themselves. There’s also a not-so-small group of companies that realized they can manage with fewer employees – and thus cut jobs and hours. Some shifted workers from job to job in order to minimize layoffs.”
A significant group of companies were hard hit, and are recovering slowly, she added.
“We’re also seeing more applicants for every job, while the supply is shrinking. Employers cut salaries, and are expecting to see more experienced applicants applying for lower salaries. But the workers haven’t yet internalized that it’s now an employer’s market, and thus for many of them their expectations don’t meet the circumstances.”
On the other hand, she notes, “Employees have started taking an interest in how stable the company is, something we haven’t seen for years. Currently employees aren’t just looking at how much of a budget they’ll receive for meals and what conditions they’ll receive. Many want to know how stable the company is, whether it’s laid off workers, and they’re trying to figure out what’ll happen if there’s a second coronavirus wave. These are the first signs of change,” she said.
Mid-size employers were the hardest hit, she says.
“Small companies are typically thinner in terms of their expenditure, and the bigger companies have resources. The mid-sized companies took a hard hit. Many of them found that their revenue is too high to receive compensation from the government,” she says. Companies with 50 to 249 employees expect to lay off 19% of their manpower, while very small companies (fewer than 10 workers) expect to lay off only 5%, and small companies (10 to 49 workers) and large companies (more than 250 workers) expect to actually increase their workforce by 4%.
The bleak picture isn’t unique to Israel. Manpower surveyed 34,000 employers in 43 nations to draft a forecast for the third quarter. Employers in 35 of these countries and territories said on average that they intend to shrink their workforces by the end of September. Employers in seven countries – Japan, India, China, Taiwan, the United States, Croatia and Norway – reported plans to expand hiring on average, while employers in Hong Kong reported that hiring would stagnate.
The Israeli survey included 500 employers.