Israel’s unemployment rate is falling faster than expected, dropping below 10% in March for the first time since before the pandemic. According to the 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.
Prime Minister Binyamin Netanyahu spoke about the drop in unemployment. “From 25% unemployed at the height of the crisis, we have managed to reach a goal of less than 10%, and the number will continue to drop.
“This is happening thanks to the millions of vaccines which we brought to Israel, which led to the reopening of the economy, to the growth in Israel’s economy, and to a return to normal life.”
Following the announcement, Finance Minister Yisrael Katz instructed National Insurance Institute Director-General Meir Spiegler not to reduce unpaid furlough payments by 10% until June 12, the day when the furlough payments for May will be made.
Katz also said he intends to announce a comprehensive plan for continuing furlough payments after June by that date.
The original furlough 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 had indicated several weeks ago that the benefits might not be reduced.
The improvement in the employment numbers 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,” Katz said following the report.
“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.
As Israel’s economy opens up, the government will be challenged 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.