Israel's Low Unemployment Rate at Risk Amidst "Iron Swords" War: 3.4%

In September, Israel celebrated a record low unemployment rate of 3.4%. However, the nation now faces the ominous threat of a sharp increase in joblessness as the "Iron Swords" war, which erupted in early October, inflicts severe damage on businesses and companies. The Israeli economy, once boasting one of the lowest unemployment rates globally, is bracing for a troubling surge in joblessness during the ongoing conflict.

Although exact projections remain unavailable, reports are already emerging of tens of thousands of workers placed on temporary leave, primarily in industries like tourism, entertainment, and restaurants. The Ministry of Finance and the National Insurance are not currently considering a return to the pandemic-era furlough support system, fearing that employees may experience significant salary reductions under this plan. Furthermore, many workers have not yet met the necessary 12-month employment requirement out of the last 18 months to receive up to 70% in unemployment benefits, a prerequisite in effect since April 2022.

New data from the Central Bureau of Statistics (CBS) illustrates the situation. In September, Israel counted 151.1 thousand unemployed individuals, representing 3.4% of the workforce and job seekers. This was a slight improvement from August, which saw 155.9 thousand people jobless, constituting 3.5% of the population.

When factoring in those employed individuals who were temporarily absent from their jobs, the number of unemployed in September rose to 163.6 thousand, or 3.6%, down from 171.0 thousand (3.8%) in August. Taking into account workers laid off due to workplace closures over the past two years (a lingering consequence of the COVID-19 pandemic), the unemployment rate for September stood at 4.0%, encompassing 181.5 thousand people, a slight decrease from August's 4.1% rate with 186.0 thousand jobless individuals.

Including those who have abandoned their job search efforts, the highest unemployment rate reached 4.2% in September, involving 191.5 thousand individuals. This was a decrease from August's 4.5% rate, which affected 205.3 thousand Israelis, though still marked over two hundred thousand people unemployed.

In total, Israel had 7,085,300 people aged 15 and over in September, as per international definitions. Out of this population, 4,493,800 Israelis were part of the labor force, equating to 63.4%. Meanwhile, 2,591,500 men and women remained outside the labor force during September, refraining from work or job-seeking activities.

As the "Iron Swords" war unfolds, Israel faces an uncertain economic future, with increasing joblessness threatening to reverse the nation's low unemployment rate. The government will need to implement strategic measures to support affected workers and businesses during this challenging period.