The Crisis as an Opportunity: Employment and Human Capital Policy

The COVID-19 pandemic and the ensuing economic crisis have pushed the labor market in Israel back by about a decade, with the effective employment rate among the 25-64 age group reaching around 73% in April 2021, similar to the 2011 rate. The blow to employment has been disproportionate, concentrated mainly among low-skilled, low-income workers, and prolonged unemployment even after the resolution of the health crisis may cause many workers, particularly those belonging to population groups characterized by low skills and educational attainment, to be ejected out of the workforce in the long run as well. The crisis has accentuated and exacerbated the two major labor market challenges: population groups characterized by low employment rates, mainly Haredi men, Arab women and in recent years also Arab men; and low levels of productivity and wages, particularly among individuals who do not pursue academic studies. The Israeli economy therefore urgently needs a comprehensive employment and human capital policy which should include setting targets, establishing large-scale employment schemes providing vocational diagnosis, guidance and placement, implementing a comprehensive reform in the vocational training system according to the outline proposed by the Employment 2030 Committee and expanding the numbers of participants in vocational training, and establishing an Employment Ministry.