Israel’s Unemployment Rate Declined in 2014, Fourth Quarter

At 5.9 percent, Israel had one of the lowest unemployment rates in the developed world last year.

Unemployed Israelis
Emil Salman

Israel’s unemployment rate dropped sharply in 2014 and in the final quarter of last year, although it edged up in December, the Central Bureau of Statistics said on Thursday.

According to CBS figures, the jobless rate on average for all of last year for people over age 15 fell to 5.9% from 6.2% the year before. In the fourth quarter, the rate dropped to 5.7% from 6.2% in the third quarter, revised down from a previous estimate of 6.4%. But in December it rose to 5.7%, from 5.6% in November.

The decline came in spite of the fact that economic growth slowed last year, in part due to last summer’s Operation Protective Edge. Nevertheless, the economy generated more than enough jobs to meet a swelling supply of workers.

The CBS said the number of people in the workforce grew by 223,000 last year to 3.78 million. The labor force participation rate, which includes working age people either holding a job or actively seeking one, climbed to 64.2% of the adult population from 63.7% in 2013.

The growth in the labor force participation rate was especially strong among women, rising a full percentage point to 59.2% last year, the CBS said. Among men the rate remains much higher, but grew just 0.1 point to 69.5%.

Israel’s jobless rate also remains low compared to most of Europe and the United States. Israel’s third-quarter rate of 6.2% compared with an average of 7.3% for all countries belonging to the Organization for Economic Cooperation and Development and 10.1% for the European Union. France’s rate is 10.3% and Sweden’s 7.9%, although Germany’s is just 5%.

The government has adopted a long-term policy of bringing more people into the labor force, particular among ultra-Orthodox Jews and Israeli Arabs, both of whom have traditionally had much lower rates of labor force participation. The problem has grown more urgent as Israel’s population ages and the growth rate slows.

Many economists say that the jobless rate in Israel now represents almost entirely frictional unemployment, comprising people who are unemployed simply because they are between jobs or just completed military service or studies.

Israelis, who work more hours than their peers in most of the developed world, worked fewer hours in 2014. The average person put in a work week of 35.6 hours, down from 35.9 in 2013. The percentage who were burning the midnight oil by working 50 hours or more a week dropped sharply to 13.8% of the total from 15.1% in 2013, the CBS said.

While Israel’s overall labor force participation rate is relatively high, among Israeli Arabs it is much lower while the jobless rate is higher. In 2014, the rate for those aged 15 and over was just 46%, more than 18 percentage points below the national average, the CBS reported. At 64.3%, the rate among Israeli Arab men was about equal to the national average, but for women it was just 27.6%.

While the unemployment rate for Israeli Arabs dropped sharply in 2014 to 7.8% from 9.4% the year before, it was much higher than the national average. Moreover, among Arab women it was 9.6%.