by Keren Setton
JERUSALEM, Oct. 21 (Xinhua) -- Israel sees a sharp rise in unemployment amid the COVID-19 pandemic. Almost one million Israelis have found themselves without a job since the outbreak of the virus in March. Before that, the country had a record-breaking low unemployment rate of less than four percent.
After two lockdowns and an intermediate period which saw a very partial recovery, the Israeli economy is struggling to reach pre-pandemic levels of employment. However, some experts believe that once the pandemic is over, Israel will bounce back.
The high unemployment level, almost 25%, also includes people on open-ended furloughs. The unemployed will receive government pay until June 2021. This plan has drawn criticism from people who say the funding discourages people from going back to jobs if they become available.
According to Israel's Employment Service, a large portion of the unemployed are teaching assistants, store salespeople and workers from the restaurant sector. Almost half of the jobless are under the age of 34 and the majority of them are women, many of whom are forced to stay at home with children who are not going to schools as they remain closed.
Consequently, the pandemic has also led to a drop in the number of job openings.
Many European countries adopted a job retention scheme, in which workers keep their jobs while reducing their working hours. Under such models, the government and employers share the cost of the wages, with a percentage of the salary being reduced.
According to the Organization for Economic Co-operation and Development (OECD), "the full impact of the pandemic is yet to be felt" in countries that adopt this model. The numbers may show less unemployment, but in fact people are working less.
In Israel, the government decided on the long-term furlough model. Some have disapproved, while some experts believe it was not a bad idea.
"It's not a mistake, it was in fact a very good decision," said Prof. Elise Brezis, head of the Aharon Meir Center for Banking and Economic Policy at Bar-Ilan University. "Israel has taken care of its workers, maybe less generously than other countries, but nonetheless."
"Right now it may look like other countries have better numbers than Israel, but these countries are giving so much oxygen, that they are going to fall in a few years and Israel will be in a better situation," Brezis told Xinhua.
Israel's Gross Domestic Product (GDP) is based on approximately 60 percent private consumption, similar to other modern economies.
"If consumers would have been under stress, the private consumption would have gone down and this would have worsened the crisis, so the unemployment pay helps maintain consumption," said Shlomo Maoz, a prominent Israeli economist who has held leading positions in private firms and several public service positions.
According to details released by the Bank of Israel (BOI), there was a sharp decrease in private consumption in the second quarter of 2020. This could have been further exacerbated with no unemployment pay.
It is worth noting that there are about half a million self-employed workers and small business owners in Israel, which have received little or no financial support during the crisis. For this, the government has yet to find a solution.
However, some employers who have wanted to re-hire workers in the interim period between the two lock-downs or simply wanted them back permanently, found that some of them preferred receiving government funding than going back to work. A more flexible model could have been adopted, allowing workers to work when needed and receive government aid when during unemployment periods.
There are sectors, such as tourism and restaurants, which have taken a major blow. Special attention will be needed in order to take care of the future of these workers, many of which will need to find new occupations, noted the experts.
"This will come later," said Brezis, who is against people who are calling for re-training schemes at this time. "We are now in the midst of a crisis, do we know now what our future needs will be?"
According to the OECD projections, Israel's GDP reduction forecast is not as high as some European countries, leading analysts to believe its economy has been less hard hit than others in the world.
However, the political instability and lack of a state budget is harmful and could make Israel even more vulnerable to the economic ramifications of the pandemic. Enditem
