Israeli Jobless Rate Falls to 9.8%, Triggering Benefit Cut

Broad unemployment measure dropped to 9.8% in August from 10.3% in July

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The Israeli Employment Bureau where the jobless must report to receive  benefits.
The Israeli Employment Bureau where the jobless must report to receive benefits.Credit: The Israeli Employment Bureau
Sivan Klingbail

A key measure of unemployment dropped in August to a level that will trigger a 10% drop in jobless benefits, according to figures released by the Central Bureau of Statistics on Monday.

The bureau said the unemployment rate that includes both the official rate as well as people who have lost their jobs temporarily due to the coronavirus crisis fell to 9.8% last month – a total of 406,200 people. In July, the unemployment rate was 10.3%.

Under the extended unemployment program the government adopted for the pandemic, which extends unemployment benefits through next June, if the unemployment rate falls below 10%, benefits will gradually drop, too.

With joblessness at 9.8%, that means a 10% drop in benefits goes in effect 30 days from now for Israelis who qualify for help under the extended benefit period.

The Finance Ministry played down the significance of the drop in a statement. “The reduction is symbolic and is aimed at encouraging people to return to work,” it said. “Further measures will be announced vis-a-vis employment, the purpose of which is to increase the labor force participation rate and reduce the cost of employees on unpaid leave.”

The reduction comes as Israel is poised to enter a second lockdown on Friday. The treasury said on Monday said it expected joblessness to resume declining after the closure ends in three weeks’ time, but in the meantime the National Insurance Institute is predicting that 200,000 to 300,000 more people may lose their jobs.

The treasury said the lockdown will cost the Israeli economy 6.5 billion shekels ($1.9 billion), with the brunt of losses being sustained by small businesses that are being forced to close. These include not only restaurants and most retailers but also the hotels that had reopened to strong demand during the summer months due to a surge of Israeli guests.

Prime Minister Benjamin Netanyahu ordered Finance Minister Yisrael Katz to come up with a new economic aid package by Thursday to help tide the economy over the second lockdown. These measures will likely include incentives for employers not to put their workers on unpaid leave.

Among other joblessness measures now being used by the Central Bureau of Statistics, the broadest one of all – which includes people laid off since March – also showed a decline to 11.2% in August, or 467,900 people, compared with 11.9% in July.

The only rate that showed an increase was the official rate that had been used exclusively until the onset of the pandemic:

It increased to 5.4% last month, up from 5.1% in July.

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