Israel’s jobless rate surges to 16.5% as virus puts 500,000 out of work

Employment Service says new applications slowing after ebbing of initial wave of layoffs in travel, service industries, but more expected as pandemic affects other industries

Closed shops and restaurants in Tel Aviv on March 15, 2020 (Miriam Alster/FLASH90)
Closed shops and restaurants in Tel Aviv on March 15, 2020 (Miriam Alster/FLASH90)

The unemployment rate in Israel has skyrocketed to 16.5 percent, with over 500,000 people losing their jobs since the start of March, the Employment Service said Sunday.

The unemployment rate was 3.6% in the fourth quarter of last year, according to the Bank of Israel.

Many Israeli businesses have been forced to put their staffs on unpaid leave or lay people off as regulations closing borders and restricting movement have obliterated tourism and service industries, leading to thousands of people per day applying for unemployment benefits.

The head of the Employment Service said Friday that the number of unemployed people in Israel could reach one million if the coronavirus pandemic-prompted layoffs continue.

Head of Employment Service Rami Garor interviewed on March 20, 2020 (Screen grab/Ynet)

“If it continues at this rate, we will probably reach one million unemployed, a quarter of the workers in the economy,” Rami Garor told the Ynet news site. “It seems that 20% of those who are currently on unpaid leave will be unemployed at the end of the crisis.”

According to the announcement by the Employment Service on Sunday, the number of new applications for unemployment benefits has slowed in recent days.

However it was emphasized that this was possibly because the first big wave of job losses — in the travel, retail and restaurant businesses — had peaked, but that numbers were expected to rise as other industries begin to lay people off.

“There may be more big waves of new registrants,” the statement warned.

Garor said Friday that his staff was working to ensure applications were processed in time for people to get payments ahead of the upcoming Passover holiday.

The cost of unemployment benefits in April is expected to be NIS 2 billion ($523 million), up from the current cost of between NIS 800 million and NIS 900 million ($221 million-$250 million) per month.

Before the crisis, the National Insurance Institute supported some 80,000 people on average. It’s unclear if the average payment per person will change.

The Finance Ministry estimated last week that the total damage to Israel’s economy caused by the coronavirus pandemic will amount to NIS 45 billion ($12 billion) and wipe out any projected growth for the year. The estimate came before the Health Ministry announced new and more drastic measures, and it was not clear what time frame of the crisis lasting it was predicated on.

An Israeli wearing a face mask walks in the city center of Jerusalem on March 17, 2020. (Olivier Fitoussi/Flash90)

The ministry expects a drop of NIS 5 billion ($1.3 billion) in tax income this month and has forecast a drop in annual tax receipts of as much as NIS 50 billion ($13 billion) from its pre-crisis projected income of NIS 330 billion ($86.6 billion), according to the Calcalist business daily, citing a Finance Ministry source.

A man walks past a closed Castro store in the empty Mamila Mall in Jerusalem on March 16, 2020 (Olivier Fitoussi/Flash90)

Major employers released most of their staffs last week, including El Al, which put 5,500 workers — over 80% of its staff — on unpaid leave, and Castro, Israel’s largest closing chain, which put 6,000 on unpaid leave. The Tel Aviv Stock Exchange has joined other global markets in plummeting since the start of the crisis.

Israel has taken far-reaching measures to contain the virus and on Friday the cabinet authorized further stringent workplace restrictions, tightening the limit to just 30% of workers in both public and private sectors in a bid to slow the spread of the coronavirus.

The widened restrictions came after the Health Ministry voiced support for a total lockdown of the country. Treasury officials, by contrast, have been strongly opposed to a full shutdown.

Israel has confirmed 945 cases of the virus as of Sunday morning.

An 88-year-old man died in Jerusalem’s Shaare Zedek hospital on Friday night from the coronavirus, Israel’s first fatality in the global pandemic, while several other patients were in critical condition.

Luke Tress contributed to this report.

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