Uptick in Long-term Unemployment Points to Coronavirus’ Lasting Effects

Central Bureau of Statistics' figures show official unemployment rate expected to keep increasing, in part due to expectation that some employees who are on unpaid leave will be dismissed

Avi Waksman
Avi Waksman
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Closed shops at a local market in Jerusalem, March 22, 2020.
Closed shops at a local market in Jerusalem, March 22, 2020.Credit: Ohad Zwigenberg
Avi Waksman
Avi Waksman

Israel’s long-term unemployment rate is starting to creep up, according to figures for May published Monday by the Central Bureau of Statistics. The figures are beginning to indicate the medium- to long-term impact of the coronavirus crisis on the country’s economy and workforce.

In previous months, the official unemployment rate – the number of unemployed people aged 15 and up within the workforce, excluding seasonal variation – was still very low, since people on unpaid leave were not considered unemployed according to international statistical definitions. In May, the official rate climbed to 4.2%, up from a revised figure of 3.5% in April. Among people aged 25-64, the percentage of unemployed increased to 3.3%, up from 3% in April.

All workforce forecasts predict that Israel will have significantly higher unemployment by the end of 2020, at 7% or more. The official unemployment rate is expected to continue increasing for several months, in part due to the expectation that some employees who had been placed unpaid leave will be dismissed.

A hint of what’s to come lies in one of the figures published Monday: A workforce survey conducted in May found that 81,000 people didn’t work that month, including 44,000 women. This group wanted to work but didn’t look for employment due to the coronavirus crisis – for instance, because their field of employment was still closed. Had these people said they were looking for work but didn’t find it, Israel’s unemployment rate would already be at least 6%.

The workforce survey, on which the figures are based, is conducted monthly among an average of 18,000 respondents every month. Since economic activity expanded in May, it’s possible the survey included people who returned to work after they were polled.

As of May, some 37.6% of Israel’s employed missed work temporarily, a figure that equals 1.46 million of Israel’s employed residents aged 15 and up.

In April the figure was even higher, with 64.6% of all employed people – 2.54 million people – were off work, including hundreds of thousands in the public sector, who stayed home on paid or partially paid leave.

Of those on temporary leave, some 950,000 people, or 24.4% of the workforce – down from 39% in April – were off work due to reasons related to the coronavirus crisis. Others were off due to vacations, illness or other reasons.

Of the 950,000 people off work due to the virus, some 684,000 were home during the entire week for which they were surveyed. The remainder worked part-time due to a reduction in their hours or a temporary leave.

The sectors with the highest percentages of workers on leave were hospitality and food service (64.4%); art, entertainment and leisure (50.5%); other services (42.4%); transportation, storage, mail and delivery (34.9%); education (32.2%) and management and support services (31.2%).

A higher percentage of older workers were off work due to the virus: 37% of workers aged 65 and up, compared to 26.4% of people aged 60-64, 23.6% of people aged 30-24 and 26.9% of people aged 25-29.

Workforce participation declined slightly between April and May, to 61.6%, down from 61.9%. Among people of prime working age, defined as 25-64, it declined to 78.5%, down from 78.6%.

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