Fewer Jobless Means Pressure to Raise Wages

Economic growth in most sectors has been evident for four years. In 2004 and 2005 employers were hesitant to hire new workers, but in 2007, when growth seemed to become regularized, the unemployment numbers started dropping.

Israel's jobless rate is nearing that in developed countries, and the trend of higher participation in the workforce is a good sign. Sometimes there is a conflict between the two - increasing the workforce and reducing unemployment - but luckily Israel's economy in recent years has been able to do both.

Economic growth is the main reason that this has been possible. True, there are other factors that have contributed, including the state's efforts to reduce joblessness, but they are secondary in importance.

Today, unemployment is described by local economists as "frictional." This means most of those who are actually looking for work are finding it, as most of the unemployed are men and women just starting out in the job market, such as new graduates or demobilized soldiers, or people who are only between jobs.

For those with higher education, at least 15 years of schooling, unemployment is particularly low - at the level of only a few percent.

Now, due to the rapid drop in jobless rates in a number of sectors, both high and low tech, 2008 is expected to see a shortage of workers. In practice, such a shortage is already being felt, and this means upward pressure on wages in some industries.