"Corona crisis did not lead to a wave of resignations and a mass exit from the labor market"

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by Ifi Reporter Category:Capital Market Aug 25, 2022

A review by the chief economist at the Ministry of Finance indicates that in Israel, the corona crisis did not lead to a wave of resignations and a mass exit from the labor market. According to the review, as of June 2022, the employment and participation rates in Israel have somewhat exceeded their pre-crisis level. The employment rate of those aged 15 and over in June 2022 was 61%, 0.1 percentage point higher than before the crisis, and the participation rate (63.4%) exceeded its pre-crisis level by half a percentage point. Nominally, the number of participants in the labor market in June 2022 was about 214 thousand higher than before the crisis and the number of employed people increased by 187 thousand.
It also appears from the findings in the review, that throughout the crisis there was no widespread and prolonged phenomenon of resignations and exiting the labor market in Israel. The decrease in employment throughout the crisis was mainly due to a significant increase in the number of those laid off and going on sick leave, while the number of those resigning who are not working in the last two years was not unusual compared to before the crisis.
In addition to this, over the past two years there has not been a high level of the number of people resigning voluntarily due to dissatisfaction with the working conditions, and in the last months (after the peak of the crisis) a relatively low level of resignations was observed for this reason.
The Chief Economist also points out that there was no substantial change during the crisis in the proportion of employees who changed jobs, despite the relative flexibility in moving between workplaces made possible by the Halat arrangement. The analysis shows that most of those who stay in Halat eventually return to work for the same employer.
For comparison, the review also focuses on what happened in the world at that time. For example, in Great Britain and especially in the USA there is a lot of talk about the "Great Resignation" phenomenon, but at the same time, in countries such as Canada, Japan and New Zealand, no unusual wave of resignations has been observed, and some claim that the current wave of resignations is not unusual in the USA either. in relation to the pre-pandemic situation.
The review also examined the transition of workers between employment branches during the crisis period and after. The findings show that in the first half of 2022, there was a significant increase in the proportion of those employed in the high-tech industry, while on the other hand, a decrease was observed in the proportion of those employed in the commerce, hospitality and food industries.
According to the chief economist, the proportion of high-tech workers among all employed in the economy rose to 9.9% in the first half of 2022, compared to 8.3% in the corresponding months of 2019. This is a high increase compared to the rate of increase in high-tech employees in the last decade - while the share of high-tech employees in the total number of employees in the economy increased in 2012-2019 by 0.26% on average per year, or by 0.45% on average per year in 2017-2019.
In fact, the review shows that in recent months there has been a change in the sectoral employment mix in the form of an increase in the share of industries with high productivity (and those that contribute to reducing the general productivity gap in Israel compared to the OECD countries), and on the other hand a decrease in the share of industries with relatively low productivity.
The review also shows that while in high-tech the increase in demand for workers during the crisis was reflected in a significant increase in wages, in some industries that experienced a decrease in their rate of employment during the crisis, such as trade, hospitality and food and art, entertainment and leisure, there was only a moderate increase in wages compared to before the crisis, despite an increase in the number of vacancies in them.
The wage increase in the hospitality and food industries (5.1%) and entertainment and leisure arts (4.3%) during the crisis period was also low compared to the multi-year average. In high-tech, wages increased in January-April 2022 at a high rate of 21% compared to the corresponding period in 2019.

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