Wages Fall and Jobs Evaporate for Israelis Over Age 50

People need to work longer as life expectancy grows, but employers are more likely to fire than hire older people

An old couple in the Southern Israeli city of Arad
Ilan Assayag

When O. left his job at the Tel Aviv advertising agency where he had worked for so many years, he regarded it as a small setback from which he would quickly bounce back. O. hadn’t quit – he had been fired, but as his boss had said, it was time to go. He had no patience for the younger account executives and product managers in the office. His salary was good, but at age 50 he’d had enough of them and was ready to move on.

O. set out to become a freelancer, charging very high rates, high enough that they should have matched his old salary. When he managed to land only a few clients, he attributed it to the unwillingness of some people to pay for quality work. If he wanted to, O. reasoned, he could always find a salaried job at his old pay level.

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The months passed. His jobless benefits ran out and the Employment Service suggested he take a course in digital marketing, which O. refused. The pressure was growing, O.’s savings were getting eaten up and he began to take small jobs “just to stay active.”

Nowadays, O. has become accustomed to telling his wife that this month again, he’ll be bringing in a little less money than the month before. “I’m past the stage of worrying. More worries are behind me,” he says, adding that he’s now thinking of selling the family home and renting.

R.’s story is no different. He worked in high-tech sales and at age 50-plus was convinced there was no one better than him at his kind of work. He could have been CEO if he wanted to. He stormed out in anger from a job a few years ago without a worry about finding something else in an industry starved for good sales people.

Almost two years went by and the few interviews he had didn’t lead to any offers. R. finally found work, but at a much lower salary and one where he reports to a manager who’s younger than he is by nearly a full generation. “I need to get back to work, to get out of the house. Anyway it’ll be easier to find another job this way,” he says.

The stories of O. and R. are the kind that arouse fear in workers over 50, certainly in the private sector. Unless they have a worker’s committee to protect them, they are at the mercy of a manager who may decide their experience is no longer worthwhile, certainly not at the high salary they’re earning.

Older and poorer.

Israeli labor market data bear those fears out. An analysis by the treasury’s wages commissioner this week, which appeared in his annual report, found that average pay starts to level off for people in the early 40s and then begins to decline from age 47. For women, the drop is sharper than for men, and for both sexes it is sharper for those with college degrees than for those without.

People assume that as they advance in years, their salaries will grow, too .A survey taken by the Panel polling firm for TheMarker a year ago, found that 64% of respondent were confident their pay would keep growing until retirement. But the reality in the job market is that this happens only in the public sector, the treasury figures show.

For the other 80% working in the private sector, they face not only a decline but an “employment cliff,” of sharply reduced income or no job at all.

“People expect their pay to be constantly rising, but a person reaches a stage where they become too expensive to employ, when their advantage doesn’t justify their salary,” said Yulia Eitan, head of employment administration for special populations at the Labor Ministry.

“Often younger workers can do the same job for less money or even do it better. If you don’t perform, you could find yourself out,” she added.

Not only does average pay decline, but many old people find themselves out of the workforce entirely long before they are ready to retire. Israel’s labor force participation rate for people ages 25-64 is a high 80.2%, according to the Organization for Economic Cooperation and Development. But it falls as workers age – from 85% for those 35-44, to 69% for those ages 55-65 and to just 16% for those 65 and older.

This large number of older Israelis dropping out of the job market is a growing problem as life expectancies grow and pension systems are hard pressed to meet their commitments to a ballooning population of retirees. Many countries, including Israel with regard to women, want to raise the retirement age, which will only exacerbate the un- and underemployment problem for older people.

Working less.

The Employment Service says that in 2018, the last years for which figures are available, two thirds of job seekers over age 50 failed to find work before their unemployment benefits ran out. A quarter hadn’t found work after two years. The odds of finding a job for people over 50 are the lowest for all age categories.

A study led by Prof. Yoram Margalit for the Israel Democracy Institute found that only 23% of Israelis over age 50 looking for a job had left their previous place of employment voluntarily.

A college degree offered no protection. Among older unemployed, 47% were college graduates and 13% had a doctorate. The rest had either a high school diploma or less (37%) or post-secondary job training (14%). Those looking for work in their 60s were especially needy – just 38% had a working spouse who could help support the family.

Eitan notes that a study by the Prime Minister Office on Israel’s aging population spoke about creating programs for getting Israelis 50 and over into the job market. But, she adds, the government has set the bar too high and is urging the target population be lowered to as young as 45.

The ministry now runs a program with the Joint Distribution Committee in Israel called Middle of the Way for people 45 and older.

“Part of the issue is coping with the sense of shame and difficulty – understanding that you’re not the only one and internalizing the idea that even if you were once a senior executive in the company you worked in, now you’re starting over,” says Eitan.

Matan Hamo, who works with Eitan, says Middle of the Way’s success rate is about 60%, but it only has served only 900 people after three years.

A big part of its work, she says, is trying to get employers to recognize their ageism and see the value of hiring older workers, but there’s much more it could be doing, for instance, by establishing life-long learning courses to keep older workers’ skills up to date. “We can’t provide a comprehensive solution because no decision has been made on a fundamental, systematic decision to provide a full solution,” said Eitan.