​Smmary:

  • The labor market in 2008 generated more employment, suffered less unemployment, and paid higher nominal wages; however, it also reflected the reversal in the business cycle during the year.  
  • In the first half of the year, the labor market approached full employment, reflecting the concurrence of rapid employment growth and a falling unemployment rate. The participation rate leveled off after a protracted upturn and nominal wage per employee post increased perceptibly.  
  • Indications of slowdown came into clear sight in the second half of the year. Employment stopped growing and began to contract, unemployment increased (especially among the high-skilled), and nominal wage per employee post declined in most industries. The labor market seems to have responded to recession more rapidly this time than in the past.  
  • In contrast to previous years, the growth of employment in the business sector was driven by several industries that are intensive in low-skilled labor—lowtechnology trade and services—and these industries made a salient contribution to the decrease in the unemployment rate. The combination of stronger demand for low-skilled labor and greater laxity in law enforcement caused the employment of non-Israelis to grow swiftly.  
  • The effect of the global crisis was felt initially in high-tech industries. The growth of employment slowed in high-tech services and stopped in hightech manufacturing, and the increase in nominal wage in high-tech industries slowed relative to the past and relative to other industries.  
  • In 2007, the Government set employment and poverty targets as part of its socioeconomic agenda. An important goal of the “Agenda Forum” was to boost the employment rate among sectors of the population that are prone to especially low rates. The employment target will be harder to attain during the impending recession than in 2007–2008.  
  • With the economy tumbling into recession, labor-market policy should strive to minimize the blow to labor demand and invest in human capital, toughen enforcement in regard to the employment of non-Israelis, and ease the qualifying terms for unemployment compensation. 


The Labor Market - Full File