Unemployment Drops to 6.1% in January

Unemployment fell to 6.1% in January, the Central Bureau of Statistics said yesterday; 189,300 Israelis were out of work.

The January figure was below government forecasts. In January 2010 the jobless rate was 7.1% of the civilian workforce, and in January 2009 the figure was 7%. In January 2008, before the global economic crisis, unemployment was 6.4%.

Just as important is that the workforce's participation rate is rising as joblessness is falling. Some 57% of the civilian workforce was employed in January, an all-time high for Israel, though still low for the developed world. If economic growth continues, as forecast, then unemployment will continue falling; it may even become difficult to find workers in certain industries.

Israeli unemployment fell steadily in the second half of last year, from 6.6% in August to 6.5% in September-November. It was down to 6.3% in December.

These figures were a bit higher than the 6.2% unemployment rate in the second quarter of last year. The 6.1% number is the same as the rate in the first quarter of 2008, which dropped to 5.9% in the second quarter - just before the financial crisis. Before that, unemployment was last at 6.1% in 1995.

Unemployment of around 6% is considered close to the natural or frictional rate, the situation where everyone who is interested in working can find a job. In this state of affairs, most of the unemployed are only temporarily between jobs; for example, students who have recently graduated, demobilized soldiers or those switching jobs.

In comparison, unemployment in the United States and the euro zone has stabilized at about 10% in the past few months, though joblessness is about 20% in Spain and only 7% in Germany.