Posted on 06/16/2003 9:04:25 PM PDT by anotherview
Jun. 17, 2003
Official unemployment remains at 10.8%, real figure may exceed 20%
By MATI WAGNER
April's unemployment rate remained at the March level of 10.8 percent, representing 281,400 unemployed, the Central Bureau of Statistics reported Monday.
Bank of Israel economists said the unemployment rate would reach a record 11.5%-12%, or approximately 313,300 people, by the end of the year.
The unemployment rate has been rising on average by 0.1% per month since the beginning of the year, amounting to a 0.4% rise since December 2002, reflecting an additional 20,420 unemployed. The number of unemployed has risen by 15,630 since September 2002, a 0.6% increase.
The CBS attributed the rise in unemployment, in large part, to the outbreak of Palestinian violence in late 2000. An additional 54,705 persons are out of work since then, a 2.1% rise.
Terrorist attacks have dampened both tourism and foreign investments, resulting in lower growth. Most economists expect zero growth in 2003. Economic stagnation means no new jobs will be created.
Another damper on the employment level is the public-sector wage agreement. According to the agreement signed between the Histadrut and the Treasury, 2,000 public-sector employees will be laid off over the next two years. The sides also agreed to freeze new job appointments in the public sector.
According to Treasury wage director Yuval Rachlevsky, there is a 3% annual contraction of the public-sector workforce as a result of retirements and resignations. Rachlevsky said he hopes the reduction in the size of the public sector will be compensated by a comparative rise in the private sector workforce.
However, in the short term there is a consensus among economists that unemployment will rise.
Another factor hurting the employment level is the high number of foreign workers. In past years the large influx of foreign workers pushed out Israelis from lower-income employment. In an attempt to make employing Israeli workers more attractive, the government imposed a 8% tax on foreign workers' salaries. The tax was included in the emergency economic program passed by the Knesset a few weeks ago.
A cut in National Insurance Institute child allowances and other welfare transfer payments is partly intended to coax more people into the workforce. However, the ongoing recession has not created new jobs. As a result, the unemployment rate is expected to rise as more of the unemployed begin to actively search for jobs.
The ongoing rise in unemployment has been coupled with falling real wages. Public-sector workers forfeited their cost-of-living allowance as part of the agreement reached between the Histadrut and the Treasury.
In the private sector, employees prefer to hold on to jobs even if this means suffering a real wage cut. The positive side of this process is a rise in productivity per capita.
The best and the brightest young Israelis are fleeing abroad.
The Israelis are not saints, but who is? I think I know enough of Israel to confidently state that the moment that Palestinians stop killing Jews, the peace lobby in Israel will bring about a better state of affairs than the Palestinians could ever win by force of arms.
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