About 2.2 million of those of working age in Israel --
between ages 15 and 64 -- are not working nor are they
seeking work. According to recent figures of the Vaad
Hayeshivos, 37,000 men (who may not work at all) received
draft deferrals under the old arrangements, so that all of
these constitute less than 2 percent of all those not
working. Other chareidi men generally work at a rate similar
to all other Israelis.
Israel's total potential work force is estimated at 4.8
million, and 255,000 of these were actively searching work
and not able to find it in the first quarter of the year,
according to a report by Bank of Israel.
The Bank of Israel recommended that steps be taken to
increase work force participation. While many developed
countries have made such employment reforms, Israel has taken
no action.
Israel's employment level of about 50 to 60 percent is low in
comparison to other developed countries. Britain, Austria,
Denmark and New Zealand, that have all implemented reforms in
employment policy, had an employment level of about 72
percent of their total work force in 2000.
US, Britain, France, Germany and Japan -- known as the G5
countries and considered economically the most advanced --
employ 70 percent of their work forces. The Organization for
Economic Cooperation and Development (OECD), which represents
about 30 developed countries including Greece and Turkey,
employed 67 percent. All the figures do not include military
personnel.
The Bank of Israel surveyed steps taken elsewhere to increase
employment levels and discussed their effectiveness. Fiscal
cuts coupled with employment policy reform based on the
Wisconsin Plan, was implemented by the US Clinton
administration in the 90s to encourage higher employment by
cutting benefits to the unemployed. The lower benefits, such
as discounts and direct payments, serve as an incentive to
work.
All countries that reformed employment policy improved
employment level. Reforms that have been accepted by
developed countries to combat unemployment include
subsidizing salaries instead of giving out unemployment
benefits as a dole, making unemployment conditional upon
actively searching for work and reducing income taxes for low
income workers.
The Bank also advised lowering incentives to use foreign
workers by mandating a minimum wage and social security
benefits for them. The present policy of deportations and
detentions of illegal workers coupled with immigration
restrictions are ineffective because of the high incentive.
Israel's foreign workers made up 12.8 percent of the work
force in 1999, much higher than the OECD average of 5.3
percent.
Cutting aid to one-wage-earner families will encourage Muslim
women to join the work force. Figures show that only 14
percent of Muslim women are employed compared to 70 percent
of the Jewish female population.
The report advised using private job placement agencies with
special expertise and better familiarity with the job market,
especially the hi-tech market. They should be given financial
incentives to find work for the unemployed. Job placement
should work in tandem with occupational training courses.
The Bank also recommended changes in the educational system
that will lead in the long term to a better educated work
force. It also suggested improving transportation from the
periphery to the large cities that are usually located in
central Israel.
