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Unemployment in Israel drops below 10% for first time since pandemic

CM 21/04/2021

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Israel’s unemployment rate is falling faster than expected, dropping below 10% in March for the first time since before the pandemic. According to Israel Employment Services, the national unemployment rate reached 9.5% for March, compared to 14% in February.

Unemployment was 9.8% during the first half of March, and just 8.9% during the second half of the month, as Israelis began to enjoy the fruits of the economy’s reopening. Eilat, the southern tourist town that previously had the highest rate of unemployment in Israel, saw its unemployment rate drop by some 60% in March as tourism began to return.
The improvement is “the direct result of the restoring of economic activity made possible by vaccines and the extensive economic safety net we provided to the self-employed, business owners and unemployed, which gave them the economic infrastructure to get through the crisis and return to recovery,” Finance Minister Israel Katz said following the report.
The rapid drop raises new questions about the future of Israel’s unpaid furlough (halat) system, which has been providing extended unemployment benefits for hundreds of thousands of Israelis. The original Halat legislation passed last year stipulated that the benefits would continue through the end of June, unless one of two things happen: If unemployment drops below 10%, benefits will be reduced by 10%, and if the rate drops below 7.5%, the program will be canceled completely.
However, Katz said several weeks ago that he would not allow benefits to be reduced even if unemployment reaches below those thresholds. His message Wednesday did not help clarify that matter.
“We are now working hard to provide special assistance for employers to absorb people who have been out of the employment market for a long time, while at the same time continuing to provide incentives that will help long-time job seekers and increase the budget for vocational training for professions with high wages and productivity,” Katz said. “I am in discussions with senior finance officials to formulate employment policy and next steps for after June, given the decline in unemployment below 10% and the positive trend, without hurting those who are not yet able to return to their work,” he said.

Meanwhile, Prime Minister Benjamin Netanyahu’s economic adviser, Prof. Avi Simhon, told Ynet on Wednesday that he expects benefits to be cut by 10% starting a month from today. Simhon also said in the interview that he does not believe that Israel will be forced to raised taxes in order to finance the costs of the coronavirus crisis.
Israel has not yet clarified what sort of safety net it will provide for those who are still looking for work after June 30. The challenge will be to steer more people toward returning to the workforce while providing for the many households that legitimately need the help. Several plans have been floated to tie future benefits to a person’s age, marital status and efforts to find new work or retrain. 

Source: Jerusalem Post

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