For years Israeli policy makers have focused with some success on coaxing ultra-Orthodox men and Arab women into the workforce. But as research from the Israel Democracy Institute shows, fewer and fewer Arab men have jobs and their wage growth is lagging behind other Israelis.
And the problem, says Eitan Regev, an economist and a research fellow at the Israel Democracy Institute, is likely to worsen as the needs of Israel’s high-tech economy diverge from the kind of jobs Israeli Arab men can perform because of their low education levels.
Among Jewish workers, only 35% of men and 39% of women are employed in tasks that are likely to be replaced by computers. For the Arab community, these numbers are 57% and 39%, respectively.
“Today, when the political-security dimension is no longer the main obstacle to the optimal integration of Arab men in the labor market and the increase in their earning capacity, the great story is their level of formal education and its relevance to the modern labor market,” Regev said in his study.
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In fact, the labor force participation rate of Israeli Arab men has been in long-term decline. Since such a decline among male Israelis – both Jews and Arabs over age 15 – began to reverse about 15 years ago, Jewish men have seen their rate climb about 12%, double the rate for Arab men.
The result is that as of last year the labor force participation rate for Arab men was 62%, six percentage points less than for Jewish men. The result is not a loss of labor for the Israeli economy, but spells lower income for Arab families.
Regev traces the lower rate among Arab men to two factors. One is the skyrocketing growth of Arab women in Israel’s labor force, especially over the last two decades. In 1995, only 16.5% of non-Jewish women were in the labor force; by 2015 the rate was nearly double that.
The result was there was less pressure on Arab men to find work if they didn’t feel up to it, because they are less likely to be their family’s sole breadwinner. In addition, as Arab women poured into the job market, they competed with men for jobs – and often came with better credentials.
That’s because their education level has skyrocketed in recent years. Among Arab men, only 25% have a bagrut (high school matriculation) certification, compared with 42% of Arab women. Many Arab boys drop out of high school to help support their families at the cost of their long-term career prospects.
The skills and training gap is manifested in pay. In 2015, the average monthly wage of an Israeli Arab male was 8,304 shekels ($2,287 at current exchange rates), 58.5% of what a Jewish male earned. In 2013, Arab men’s wages were lower in real terms than they were in 2001. Arab women earned 67% of what their Jewish sisters did, the Israel Democracy Institute said in its report.
“Most male Arabs work in physical jobs and in relatively low technological intensity – in industry, construction, and similar professions,” Regev said in the report. “In these areas, especially in industry, the rate of technological change is rapid, and automation and robotics are eliminating the need for certain physical tasks and the employees who perform them.”
Regev said the solution is to reduce the dropout rate for Arab boys, offer programs to entice them into technology and spend more on school in Arab towns and villages, which typically have more modest budgets.
Industry should help, too, by developing on-site training programs with government aid to retrain workers for high-skilled employment.