Israeli Employers Struggled to Rehire After Fall COVID Lockdown, Figures Show

Broad unemployment rate remained high in first-half December. Bank of Israel warns it could stay in double-digits next year

Nati Tucker
Netanel Gamss
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The Israeli Employment Service's offices, 2018.
The Israeli Employment Service's offices, 2018.Credit: ‪Gal Malka
Nati Tucker
Netanel Gamss

The “accordion effect” was what the government had hoped would be the cycle of each of the coronavirus lockdowns it has imposed. Economic activity would stop when ordered, but resume immediately when restrictions ended.

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That didn’t happen, at least not in the labor market. Figures issued by the Central Bureau of Statistics Monday showed that its broadest measure of unemployment remained at a high 12.7% in the first half of December, long after nearly all the restrictions of the second lockdown were lifted.

The second lockdown, from mid-September to mid-October, raised the jobless rate to as high as 22.7% in the first half of October, as expected. When it ended, unemployment fell slowly, to 14.6% in November and 12.7% in early December.

By comparison, the rate fell to well below 12% in the second half of June, after the first lockdown.

The government lifted nearly all limits on retail, a major source of joblessness during the crisis, including allowing shopping malls to reopen December 9. That said, other sectors remained shut, including places of entertainment and culture; restaurants were only allowed to serve take-out.

The data came out as Bank of Israel Governor Amir Yaron lauded the resiliency of the economy in the first two lockdowns but expressed concern about jobs.

“The unemployment rate did not succeed in going back down to single digits, and various indices show that the main adverse impact has been felt by employees in industries characterized by low productivity and wages,” he said at a media briefing.

He noted that the negative impact has been concentrated in small businesses, particularly those hit by COVID limitations. Yaron cited figures showing a net decline in the number of businesses for the first time in many years, adding that there was still insufficient data to speak of the impact of the third lockdown.

The central bank said it expected the broad jobless rate to fall from 16.3% in fourth-quarter 2020 to high rates relative to the pre-coronavirus economy of 7.7% and 5.4% in 2021 and 2022, respectively, its “optimistic” scenario. Its “pessimistic” forecast sees the rate averaging 11% this year and 7% in 2022.

The National Employment Service said Monday that since the start of the third lockdown 48,500 people had registered with it. Of these, 80% had applied for benefits at least once since the start of the pandemic. In the past two days alone, 5,909 registered.

Rami Grauer, the employment service’s director, said the statistics bureau data did not fully capture the worsening jobs situation.

“The data on the revolving door – job seekers leaving and returning from the work circle – are disturbing,” he said. “But what is more worrying is the future of those job seekers who have been on unpaid leave for many months and laid-off job seekers, who account for 19.2% of all enrollees. Their reintegration into the labor market will be very challenging.”

The statistics bureau said the number of jobless, according to the broadcast measure, fell to about 520,000 in first-half December from 600,000 in second-half November. The broad jobless measure, which was instituted during the coronavirus crisis to provide a better picture of the job market, includes those on unpaid leave as well as those who are unemployed and actively searching for work (the traditional definition) and those who were laid off due to COVID-19 and not seeking work.

The traditional unemployment rate dropped an unexpectedly sharp 0.6 percentage point to 4.8% in first-half December from 5.4% in second-half November. The number of workers on unpaid leave fell by 13,000 to 220,000 in the period, according to the statistics bureau. The number in the third category fell by 15,000 to 15,000.

The statistics bureau also reported that the number of jobs dropped a sharp 16.2% in October from the same time a year ago to just 3.1 million. The biggest declines were, as expected, in the hotels and restaurants sector, where the number of jobs plunged 67.9% year on year. Jobs in culture and entertainment fell 26.9%. By contrast, in high-tech, the number dropped by just 1.4% to 320,000.

Because those who lost their jobs were generally in low-paying positions, the average salary of those who remained employed rose in October, according to the statistics bureau. The average jumped 11% from October 2019 to 11,624 shekels ($3,504 at current exchange rates) a month. Compared with September, the rise was a more moderate 2.2%, it said.

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