Jobless Rate Fell Only Moderately as the Economy Reopened in February

Broad unemployment rate dropped to 15.4% in second half of February from 18.2% in first

Nati Tucker
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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
Nati Tucker

The Israeli economy gradually reopened from the third coronavirus lockdown in the second half of February, but that didn’t express itself fully in the labor market: The Central Bureau of Statistics reported Monday that the broad unemployment rate fell only moderately in the two-week period.

The statistics bureau said the rate in the second half of last month was 15.4%, or 640,000 people, down from 18.2% in the first half and 19.1% in the first half of January.

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The jobless rate remained stubbornly high even after Prime Minister Benjamin Netanyahu took the first steps February 7 to end the lockdown – Israel’s third in less than a year – that had been imposed in the closing days of 2020. That was followed February 21 with the partial reopening of the school system, stores in malls and downtowns, and fitness centers, subject to continued coronavirus restrictions.

The drop between the first and second halves of February meant that some 100,000 unemployed returned to the labor market. The number might have been large except that the second stage of the reopening occurred the week of the Purim holiday, causing employers to delay any rehiring plans. Moreover, restaurants, cafes and wedding halls only reopened in March.

Economists expect that with the economy nearly entirely reopened, the broad jobless rate is likely to fall more sharply to a figure near 10%. The statistics bureau will only publish first-half March figures in another two weeks.

The statistics bureau began using the broader measure of unemployment at the start of the pandemic last spring to reflect the true conditions in the labor market. It encompasses the traditional definition of unemployment as well as other categories, most importantly people who were put on unpaid leave in expectation that they will be called back to their jobs later.

In the second half of February, some 150,000 Israelis on unpaid leave returned to their jobs. However, part of that number was offset by a sharp increase in the formal unemployment rate, which rose to 5.6%, or 225,000 people, in the last two weeks of the month from 4.6%, or 183,000, in the first two weeks. It appears that as businesses reopened, many people on unpaid leave chose not to return to their employers, consigning them to the ordinary unemployed.

The third category in the broad unemployment rate is people who stopped working due to dismissal or their employer’s ceasing operations due to COVID-19 starting in March 2020 and haven’t been actively seeking employment. That figure has remained worrying, stable at about 130,000 people. The government says it plans to offer incentives to them to return to the labor market.

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