Is the job recovery in Israel running out of steam?

The labor market is expected to improve significantly after the end of government allowances for unpaid leave (Halat) at the end of June. But things didn’t exactly work out that way.

Earlier this week, the Central Bureau of Statistics said the general unemployment figure for the first half of July had risen slightly to 9 percent, from 8.8 percent in the second half of June. Some 383,700 people did not participate in the labor market in the first two weeks of July, compared to 376,600 in the last two weeks of June. By comparison, this is about 184,000 more unemployed than on the eve of the pandemic in January 2020, when unemployment was at an all time high, according to the finance ministry. This despite the estimated 130,000 vacancies available in companies across Israel.

This crackdown is a blow to Israel’s economic recovery. In April and May, the number of unemployed improved faster than expected as the country broke free from the shackles of its third lockdown. Restaurants and other industries that primarily employ young, unskilled workers struggled to hire staff, but it was believed that would end once the government’s generous wage replacement program ceased to pay on July 1. 45 years, as part of new Finance Minister Avigdor Liberman’s aggressive plan to get everyone back to work.

However, that doesn’t seem to work. Workers are not joining the labor market in droves, and a number of reasons are put forward. Summer means parents are at home with the kids, businesses have streamlined operations, and the growing number of coronavirus infections has people expecting another lockdown to be imminent. Or, perhaps, some populations may be stuck in a state of chronic unemployment.

“I think it’s mainly because of the fear that the crown will return,” said Netanel Ivgi, owner of the Ivgi Delicatessen grocery store in Jerusalem’s Mahane Yehuda Market. “People think there’s going to be a new seger (lockdown) so there’s no reason to come back to work.”
Ivgi said he and other Shuk store owners had seen no increase in potential hires and the company was suffering from a lack of manpower. “We’re trying to grow the business, but we don’t have the people to help us,” he said. “My wife comes to help me and I do the deliveries myself at night. Our store prides itself on providing great, personalized service, and when we’re out of breath it gets harder.(LR) Uzi Tzabag, owner of the Yafale restaurant; Netanel Ivgi, owner of the Ivgi delicatessen; and Leeyha Laor, vice president of human resources at Granulate (Courtesy)

Uzi Tzabag, owner of Yafale restaurant in Talpiot, described similar challenges. “We continue to be hit by new waves,” he said. “After the lockdown ended a few months ago, it was a disaster here, but then we started hiring people and getting back on our feet. But we are still understaffed and the quality of available people has declined. I found myself settling for workers that I wouldn’t have hired before. I find that I cannot provide the level of service our customers have come to expect. Without the fact that 80% of my clients have been coming here for years, I would be bankrupt. “

These are not the problems facing the high tech sector in Israel. As investors flock to local startups, the challenges startups face when hiring are quite different.

“The problem here is not related to Halat. This is because of the growth of the high tech sector. With all the investments that are made, and all the new positions that are created, there are not enough workers to fill all the jobs, ”said Lipaz Tzitrinovich Daudi, head of recruitment at Gloat, a platform for AI-powered human resources market. “It actually seems that everyone is looking for new opportunities, at least passively if not actively. There are also more jobs moving to the periphery, due to the transition to hybrid work.

Leeyha Laor, vice president of human resources at Granulate, a performance optimization company based in Tel Aviv, agrees. “The market is very competitive now, and we haven’t seen a difference since the end of Halat,” she said. “The only difference over the past few months is that we are now interviewing applicants live in our office, instead of on Zoom.”

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