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As COVID wanes, Israel’s restaurants are full of customers but low on staff

Young workers typically employed in eateries and bars are not coming back, opting for unemployment benefits over shift work; this threatens already-shaken industry

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Customers enjoy dining at restaurants at the Sarona market  in Tel Aviv on April 21, 2021. (Miriam Alster/Flash90)
Customers enjoy dining at restaurants at the Sarona market in Tel Aviv on April 21, 2021. (Miriam Alster/Flash90)

At an Aroma Espresso Bar in Tel Aviv last week, diners were seated outdoors, sipping cappuccinos, nibbling sandwiches and reveling in the simple pleasure of being maskless among people.

Similarly, at the Matilda café and restaurant in the leafy neighborhood of Maoz Aviv, customers were digging into their meals as a cool breeze tempered the warmth of the sun and the vicious virus that kept people at home for months seemed, at that moment, a distant bad dream.

As Israel emerges from the coronavirus pandemic due to its world-leading vaccination campaign, the economy seems to be getting back on track. Restaurant reservations are hard to come by and cafés are bursting with people in good cheer, eager to embrace a post-pandemic reality.

And yet, not all is back to normal. At the Aroma café, food was being served on paper plates, salads in plastic containers, with disposable cutlery. At Matilda, just one waitress was taking orders and bringing out food.

Israelis, some wearing protective face masks, and some not, as Israel lifts the restrictions on wearing a mask outdoors. April 20, 2021 (Miriam Alster/FLASH90)

That is because these establishments, which were forced to shut down or shift to takeout-only during the lockdowns and had put their workers on unpaid leave or fire them, are now finding it hard to get them back.

Before the coronavirus struck Matilda employed a team of 10-12 hourly wage workers, mostly age 18-24. But today the staff is down to just four, said 48-year-old Alon Kedem, the owner of the 22-year-old restaurant considered a neighborhood landmark.

Once open seven days a week from 7 a.m. to 11 p.m. for breakfast, lunch and dinner, the restaurant has curtailed its hours and slimmed down its menu for lack of manpower, Kedem said.

Alon Kedem, right, the owner of the 22-year-old restaurant in North Tel Aviv, Matilda (Shoshanna Solomon/Times of Israel)

“I don’t find workers,” Kedem said. When lockdowns were imposed, he shut down the restaurant and sent his employees home, and started serving coffee and croissants for breakfast at his takeout pizza stall nearby. Now, with the restaurant reopened, the lack of staff is hindering his business growth.

One of his workers on unpaid leave refused to come back to work. Others found jobs, such as food delivery, that pay better and have flexible hours rather than shifts, Kedem said.

The pandemic caused havoc for many eateries, he said. “I am here 22 years and I don’t intend to give up just because of one coronavirus year,” he said. “But if I had just started my business, I’d definitely rethink my way forward. It would be easier for me to let go and look in other directions if my work weren’t so closely associated with home for me.”

Israelis, some wearing protective face masks and some not, as Israel lifts the restrictions on wearing a mask outdoors. April 21, 2021. (Miriam Alster/FLASH90)

The measures imposed to curb the virus shrank Israel’s economy by 2.5% in 2020, its greatest contraction to date. Unemployment last year shot up to its highest level in at least 50 years, an average of 15.7% compared to a record low of 3.8% in 2019.

The trade, leisure and hospitality sectors were among those most significantly affected by the lockdowns, and they are largely staffed by young workers, who found themselves discharged from their jobs overnight. The luckier ones were put on furlough, which made them eligible for unemployment benefits nearly equal to what they were making.

Those benefits were extended until the end of June in a bid to provide an economic safety net for both workers and employers during the pandemic.

This furlough policy however, is backfiring, some say, with many young workers preferring to stay unemployed rather than go back to a job that pays not much more than what they get from the government.

Some Israelis wear protective face masks, in Tel Aviv, on April 07, 2021. (Miriam Alster/FLASH90)

On Sunday, the Employment Service Bureau warned that according to its figures, workers age 34 and under were choosing not to go back to work even as demand for manpower in sectors they typically work in, such as the hospitality sector, which includes restaurants and hotels, saw a surge in the first quarter of the year.

From December to March demand for kitchen staff rose 36%, the data showed; demand for waiters and barmen rose 208%, and demand for cooks 218%.

The extension of unemployment benefits until the end of June has transformed them from a “safety net” into a “barrier” preventing workers from returning to the labor force, Rami Garor, the head of Israel’s Employment Service Bureau, said in a statement.

Data released by the Central Bureau of Statistics shows that the number of businesses with job vacancies in Israel rose to 30% in March from 21% in February and a low of 8% in March and April last year, as the pandemic took hold. Pre-pandemic, in January 2020, the number of businesses with vacancies totaled 25% of all businesses. A survey of businesses showed that 58% of food and hospitality businesses said they employed 50% fewer workers than in the pre-pandemic period.

In March 2021 there were just 94,000 workers employed in the food and hospitality sector, compared to an average of 215,000 in 2019, the Statistics Bureau showed.

Shai Berman, the CEO of the Israel Restaurants and Bars Association (Udi Golan)

“We are missing some 40,000 to 50,000 workers,” said Shai Berman, CEO of the Israel Restaurants and Bars Association.

Before the coronavirus hit, the restaurant industry, including cafés and bars, employed some 200,000 people. During the crisis, the number dropped to 30,000-60,000, he said, and is now up to some 100,000.

The furlough program and the unemployment benefits extended to all workers are the main reason for this, he said. Many people “prefer to continue to live off the government and not get back to work,” he posited.

Another reason is that some workers found jobs in other sectors, such delivery services, construction or nursing care, that continued to operate during the lockdowns. Some cooks, for example, set up home businesses.

“There is huge demand for workers in the sector,” Berman said. “Clients want to come back,” but they struggle to get reservations, because venues are still restricted in the number of customers they can host with indoor seating and because of the lack of staff. “Capacity has to be curbed because owners don’t want customers to get bad service and delay in their food.”

Nimrod, a 31-year-old owner of bars in Herzliya and Kfar Saba whom The Times of Israel interviewed in April last year as the lockdowns hit, had to shut his seven generally packed bars and put almost all of his workers on furlough. He has now reopened five of them (two, in hotels, remain closed as there are no tourists) and he has opened a new bar in Herzliya. “Work is going great,” he said, with customers often not finding a place to sit when they come as the quest for fun is at such a high.

Israelis sit in bars at the Mahane Yehuda Market in Jerusalem, on March 12 2021. (Olivier Fitoussi/Flash90)

He too has difficulty finding staff, and this makes it hard to continue to offer good service. On social media Nimrod sees he is not alone. “I see everyone is looking. Not for work, but for workers.”

Nimrod said he is not sure why workers aren’t coming back. “Many are in a different place in life. A year has gone by, after all.” he said. But if they simply prefer to stay home and collect unemployment benefits, he said, “I really can’t understand that.”

Salaries have gone up: waiters are getting a minimum of NIS 40 per hour ($12) and up to NIS 100 or even NIS 120, said the Restaurant Association’s Berman.

Matilda’s Kedem said he cannot afford to offer those higher rates, but is prepared to raise his wages to NIS 50 an hour, from NIS 35-NIS 40 he was paying pre-pandemic.

Getting workers back is critical for businesses already weakened by the pandemic to survive, said Berman. Restaurants need at least an 80% capacity to be economically viable, he said, but this is not happening because the shortage of workers is causing them to cut back their opening hours.

“We are not maximizing our work potential,” he said.

Israelis sit restaurant bars in Jerusalem, on September17, 2020. (Olivier Fitoussi/Flash90)

There were 14,000 restaurants, bars, cafés and food stalls operating in Israel before the pandemic struck. This figure is now down to 10,000, and even more will shut if not enough is done to get people back to work, Berman warned.

“During the pandemic we were bleeding massively, and even now are in a bad shape,” he said. “Even just a small shift in the wrong direction can cause us to fall.”

At the end of March unemployment in Israel was at 11.8%, down from 16.7% in February, according to the Statistics Bureau.

People who have not returned to work before their unemployment benefits come to an end may find themselves chronically unemployed since many businesses have shuttered and may not reopen, warned Yaniv Bar, a research economist at Bank Leumi Le-Israel Ltd., in a phone interview. “Their skills may be now redundant,” he said, and they will need to undergo retraining to enter other sectors where employment is available.

On that front the government seems to be doing very little. The funding for training programs is “painfully low,” Bar said, and even the money that has been allocated has not been put to use, he said. “There has been close to zero allocation in practice.”

According to Finance Ministry data, the government has allocated some NIS 1.47 billion for training, out of the NIS 200 billion budget set out to deal with the coronavirus crisis. Of that, just NIS 156 million has been actually been spent.

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