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Employment Service warns of ‘chronic unemployment’ as layoff rate surges

Of the 108,475 people newly registered as jobless in October, 16% were fired, compared with 9% in September; as in first lockdown, young people and women once again bear the brunt

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

Self-employed Israelis protest at Rabin Square in Tel Aviv, calling for financial support from the Israeli government in the face of the coronavirus pandemic, on July 11, 2020. (Miriam Alster/Flash90)
Self-employed Israelis protest at Rabin Square in Tel Aviv, calling for financial support from the Israeli government in the face of the coronavirus pandemic, on July 11, 2020. (Miriam Alster/Flash90)

A new report by Israel’s Employment Service Bureau warns of “chronic unemployment,” as the data showed that in October a bigger percentage of workers who lost their jobs were being fired rather than just put on furlough, or unpaid leave, compared to previous months.

Even so, the majority of jobless people signing up at the Employment Service are still furloughed rather than fired, the report said, with the youngest people — those up to 35 years of age — continuing to be the worst hit, together with women.

According to the data presented on Sunday by the Employment Service to Economy Minister Amir Peretz, of the new people who signed up with the bureau as jobless in October, 16.1% said they had been fired. This compares with 9.3% of people who said they had been fired in September, and with 6.3% and 11.4% respectively in March and April, the months in which the first lockdown was imposed.

In October, just 6.8% of those who were previously unemployed returned to the workforce, compared to 22% in September,  36% in March and 5.8% in April, the report showed.

“Every wave of unemployment intensifies the difficulty of those who fail to return to work, and their risk of descending into chronic unemployment increases,” said Rami Garor, the head of Israel’s Employment Service Bureau, in a statement.

As Israel’s first lockdown was imposed in mid-March bringing the economy to an almost total standstill, the Finance Ministry came up with a plan under which businesses were allowed to put their workers on furlough — making them eligible for unemployment benefits even though they were technically still employed at their workplace.

To combat the pandemic, Israel imposed two lockdowns, one in mid-March and one that started on September 18 and that is now being gradually eased.

The majority of jobseekers who registered with the agency in September and October, during the second lockdown, said they had been furloughed — 84.3% of the jobseekers in September and 71% in October. In the first lockdown, a greater percentage of workers were furloughed — 89% in March and 80.4% in April, the bureau said.

At the start of the month of October the number of active jobseekers registered with the agency was close to 1 million – or 995,700. However, as the lockdown was eased the number declined to 940,300 at the end of October. Of these, 63.6% compared to 65.3% at the end of September.

In October, 108,475 new people registered as jobseekers, way down from 249,485 who signed up in September, the month the second lockdown started, and lower than in April, the second month of the first lockdown, when 182,734 people signed up.

Also in October, 91,386 people said they had returned to work, most of them as the second lockdown eased. In September just 35,525 people said they had returned to work.

Still more people seeking jobs than finding them

For every person who returned to work in October, there were 1.2 people signing up as new jobseekers, the data showed. This ratio represents a significant improvement on the month of September, when for every person who returned to work, there were seven new people signing up as jobless. In April, for every person who returned to work, there were 3.4 new jobseekers.

Some 25.5% of all of the jobseekers who registered in September and October returned to work in October, compared to just 5.5% of people who returned to work in April of those who registered in March and April.

“It looks like the economy is learning to recover faster from lockdown situations,” the bureau said in a statement.

The youngest members of the working population — aged 24 and below — accounted for more than a fifth of those who signed up at the bureau seeking work in October, the report said, accounting for a new record of almost 22%, up from a record 20.7% in September.

The number of jobseekers aged 25-35 also jumped in October to 30.7% of all jobseekers, compared to 29.2% in September. This means that workers aged 34 and below accounted for a high 52.6% of jobless people in October.

In this age group, just 42.2% said they had returned to work, compared with 57.9% of those aged 35 and above who said they had returned to work in October. The youngest workers are among the hardest hit, the report said, as they are most likely to work in the sectors that have been most impacted by the pandemic — stores, restaurants and bars.

In the second wave of the pandemic, women were once again among those paying the highest price. In October, 55.6% of those registering at the employment services were women. This was an improvement on September, when the second lockdown was imposed and schools shut down: then women accounted for 62.4% of the jobless.

The employment report “indicates a trend I feared,” Peretz, the economy minister, said in a statement. “We are at the start of the establishment of a culture of unemployment, and if we don’t find solutions for it soon, it will stay with us for many years.”

Peretz called on the prime minister and the finance minister to implement a more flexible furlough program that will enable more people to get back into the workforce, and “most importantly, will maintain the relationship between the employer and the employee, and prevent the expansion of layoffs of those who are furloughed.”

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