Is Israel Experiencing Its Biggest Wave of Layoffs Since 2008 Crisis – or Is It All in the Headline?

Boaz Hirsch, head of the state employment service, says job losses 
attract media attention while companies’ hiring is ignored.

Thousands of workers across a range of industries have received termination notices or word that their jobs are in danger in the past few months. The decline in economic growth and exports in the third quarter, together with layoffs announced or carried out at Teva Pharmaceutical Industries, Oil Refineries, Babylon, Office Depot, Hadera Paper Mills, Rotem-Amfert and Negev Textiles in Sderot, suggest that Israel is experiencing its biggest wave of dismissals since the start of the global financial crisis, in 2008.

But the Director General of the Public Employment Service, Boaz Hirsch, insists that in this case appearance is deceiving. “There is no wave of dismissals,” he maintains. “The newspapers write about people being fired but not about those being hired, so an impression is conveyed that there is a wave of layoffs. But there’s no evidence of this in the figures.”

So why do people feel otherwise?

“There’s often a rush to report layoffs before they’ve been finalized. Much has been written about workers fired at Teva, but what’s actually happened? Nothing, so far.”

According to the agency, the number of job-seekers has held steady, at about 214,000, for several months. The number of layoff has also been stable — there were 12,900 in October, about the same as in September.

But figures issued yesterday by the Manufacturers Association of Israel show a net loss of 1,500 manufacturing jobs in the third quarter, representing a 0.4% reduction in jobs in the sector. The president of the organization, Zvi Oren, cited a sharp drop in industrial exports that he said was the result of heavy regulation and the appreciation of the shekel against the dollar.

Job market 
reacts slowly

Hirsch, former deputy director general for foreign trade of the Ministry of Industry, Trade and Labor (now the Economy Ministry), among other positions, tries to be cautiously optimistic.

“Foreign trade reacts quickly to economic changes while the labor market responds relatively belatedly,” he explains. “Will Israel’s unemployment rate [currently 5.9%] get worse? It’s hard to say. Exports are a significant growth engine, and a drop in exports could have an effect. On the other hand, Israel’s labor market is steady and even displaying strength, especially in comparison to what is happening abroad. I think that stability will remain the case for the foreseeable future.”

The main problem for the Israeli worker is low pay. The number of working poor is rising, with the median pay at 6,500 shekels ($1,850) a month.

“True, but the best way to escape the cycle of poverty is through work. In some cases, people from the weaker parts of society have a limited work experience or no employment history at all. They should be brought back into the workforce even if the pay isn’t particularly high .... But don’t forget that among the 10 job categories with the highest demand, in addition to bartenders you’ll also find engineers, technicians, drivers and other professions in industry and services. Some have relatively low barriers to entry and they offer salaries above minimum wage, so options do exist.”

Hirsch, 48, became head of the employment service in March 2012. One of his first challenges was to rehabilitate what had been described as one of the country’s most decayed, ineffective and reviled government agencies. Staff members didn’t have their own computers and couldn’t use email. “We’ve fixed it up,” says Hirsch. “Things are different now.”

One reason for the change was Hirsch’s success in persuading the Finance Ministry to increase the agency’s budget by 30% for 2013 and 2014, after several years in which the bureau was ignored or circumvented by schemes such as the so-called Wisconsin Plan welfare-to-work program.

“The job of the employment service, a unit of the Economy Ministry, is to mediate between job-seekers and employers” and evaluate eligibility for unemployment and related benefits. But until now most unemployed people viewed the 72 employment offices around the country as a rubber stamp for unemployment benefits. The offices were stuck with the unflattering nickname of ‘unemployment office’ or, even worse, ‘sign-in office.’ I don’t have a magic wand and this is a long process, but things will change.”

How?

“The budget was raised by NIS 42 million shekels a year [to 184 million shekels], the job placement rate rose 25%, to 5,000 a month, and 15% of the staff was replaced while the number of employees was reduced by 5%. Around 10,000 people a year receive monthly vouchers for vocational training and workshops to get the skills needed in the labor market.”

These are very small numbers compared to the roughly 500,000 people reporting to employment service offices every year.

“We have much more room to grow and improve. We know what we’re aspiring to, and we want to be in a position where people coming to us feel they’ve received good, pleasant and convenient service, with either a job placement or vocational training course or workshop. We’re aiming at launching a new website in the third quarter of 2014 that will give everyone in Israel better access to our job supply. Anyone having difficulty with digital literacy will be able to physically come to the office.”

What type of jobs are you offering?

“We offer 20,000 jobs in all types of fields, around 6,000 of which are unskilled jobs, 5,000 in sales, service and as agents, 3,000 jobs in industry and a similar number of cashier and stockroom jobs. There are also 2,000 jobs requiring higher education.”

These are mostly low-level, low-paid jobs. Have you given up on high-tech workers and lawyers?

“Absolutely not, but for some parts of the population we are just one means among many for finding a job. Our job isn’t to replace the placement agencies in the private sector. The number of jobs is a function of the resources you’re given, and we’re talking about one-third of the number of available jobs in the market – so it’s not a small number. My challenge is not necessarily to increase the number of jobs but to increase the variety. The question is how to derive the most from a given budget.”

Perhaps the employment service is unnecessary?

“Not at all. There are people in Israel without computer skills and better suited for minimum-wage jobs. The employment service is the only place helping such people today. My job isn’t to help an engineer who is 30 years old find work, but one who’s 50. We can help older people, even displaced high-tech workers who want to learn the newest programming languages. I see the employment service as providing an important social service. Are we giving the best service possible right now? No, but we’re on the right track.”

Hirsch cites Negev Textile as an example, saying 28 of its laid-off workers registered with the employment bureau and that jobs were found for half of them while the others went in other directions. “One retired, other applied for disability, another wanted to open a business and others were directed to workshops,” he says. “They are all being taken care of.”

And the rest?

These workers were in the headlines. The question is what’s happening with all the rest.

“In the periphery, the employment service is the main source of work for people laid off. The private sector doesn’t reach there.”

Long ineffective, the employment service found itself bypassed by other programs such as a project of employment centers for the Arab and Haredi communities initiated by the Economy Ministry together with nongovernmental organizations. Another example is the Wisconsin Plan, aimed at dealing with Israel’s 100,000 chronically unemployed. It operated from 2004 to 2010 and is slated for renewal, this time under the employment service. Hirsch is happy about that change.

“It’s important that a professional, experienced organization in the field of employment will regulate and oversee the Wisconsin Plan.”

What is your position on the employment centers set up by the Economy Ministry for the Arab and Haredi sectors?

“These are decisions made before my time. I’m working with the Economy Ministry to ensure that the employment service become the key operator in the field of employment and the understandings we’ve reached on the Wisconsin Plan lead in that direction.”

If you’ve reached an understanding over Wisconsin, what was last week’s labor slowdown in the agency all about?

“The strike was to protest management’s plan to distribute bonuses to branch managers based on performance.”

Why are you giving bonuses to the managers and not to all the staff? They were right to object.

“We had a sum on money at our disposal and decided to focus in the first stage on the managers because they are the ones with administrative responsibility .... The idea was dropped after talking with the Histadrut labor federation.”

Are you optimistic?

“Yes. A new wind is blowing at the employment service, with people being more committed and enjoying their work. Again, there’s no magic wand but I expect a change for the better in the near future.”

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