IUnemployment Rate Remains Stable Amidst Economic Challenges: 3.4%

Despite a slew of negative economic indicators, the unemployment rate in Israel has managed to maintain its favorable position, according to data released by the Central Bureau of Statistics. The unemployment rate dropped even further in July, reaching an impressive 3.4%, a slight decline from June's rate of 3.5%. This equates to 155.5 thousand unemployed individuals, compared to 158.1 thousand the previous month.

The latest figures, derived from the broad definition of unemployment which encompasses discouraged job seekers, highlight that in July, there were 206.5 thousand individuals without jobs, constituting a rate of 4.5%, mirroring June's figure of 203.1 thousand and the same unemployment rate.

The steady unemployment rate has been attributed to the decline in the employment rate, which dipped slightly to 61.7% in July from 61.8% in June. This trend is not uncommon during holiday months when fewer individuals actively seek employment. It's important to note that, in line with international standards, only those who actively search for work without success are counted as unemployed. Consequently, many unemployed individuals in Israel are not included in the official unemployment data, particularly among the ultra-Orthodox male and Arab female populations who often choose not to participate in the labor force.

The favorable unemployment figures come amidst an array of negative economic data. The Israeli shekel is weakening, interest rates remain high, economic growth is slowing down resulting in decreased tax revenues and an expanding budget deficit. The high-tech sector is grappling with a severe crisis, experiencing a record 90% decline in new investments. Additionally, inflation continues to surpass the government's target rate.

Experts in the field emphasize that the unemployment sector typically reacts more slowly to economic downturns compared to other segments of the economy. Business owners tend to be cautious about releasing skilled employees, even in a worsening economic environment. Similarly, workers tend to hold onto their positions in times of uncertainty, even if they are overqualified for their roles. This phenomenon contributes to the lag in the unemployment rate catching up with the overall economic situation.

The latest data reveals that, as of July 2023, there were 7,058,700 Israelis aged 15 and above who were eligible for employment based on international criteria. Among these, 4,508,400 were actively participating in the workforce, leaving 2,550,300 individuals, both men and women, outside of the labor force.

Presently, 4,352,900 Israelis are gainfully employed, while 15,500 individuals, accounting for 0.6% of the labor force, are categorized as discouraged job seekers. An additional 20,100 Israelis, comprising 0.8%, have lost their jobs due to layoffs or business closures within the past two years.

Despite the challenges across various economic sectors, the consistently low unemployment rate serves as a bright spot, reflecting a degree of resilience in the Israeli labor market. However, experts caution that continued economic pressures could eventually impact this trend if they persist over an extended period.