·         Employment recovered rapidly following the COVID-19 vaccination campaign that was conducted in the first quarter of 2021.  Among the non-Haredi Jewish population over age 35, the employment rate returned to almost its precrisis level, including in most of the older age groups (those aged 55+), despite concerns over the long-term implications of the COVID-19 crisis on the employment of older people.  This may also reflect the contribution of furlough arrangements that maintained the attachment between employees and employers.

·         Among men over age 62 and women over age 67, the employment rate has not yet recovered fully as of the end of the second quarter of 2021.  This is mainly the case among those with low education levels.  During the crisis, there was a sharper decline in the employment rates (in percent) of these groups than of those younger than them, particularly those with low education levels and those working in “higher-contact industries”.

·         In previous crises, older employees returned to work more slowly than younger workers, and also had a tendency to retire early.  As such, there is uncertainty regarding the continued recovery of employment rates among the older age groups (women aged 67+ and men aged 62+) which have not yet returned to their precrisis levels.  This is true particularly in view of the renewed spread of COVID-19 morbidity following the reviewed period.


The greater longevity and the increase in budgetary expenditures that comes with it, as well as the desire to ensure a proper income for those reaching retirement age place employment before and after retirement age at the center of employment policy focus both in Israel and abroad.  A study conducted by Edith Sand, Tamar Ramot-Nyska, and Adi Gelman of the Bank of Israel Research Department reviews the development of employment levels by age, gender, education, occupation, and economic industry breakdowns prior to the COVID-19 crisis, during it, and between March and June 2021, following the vaccination campaign.


The gaps in employment rates by age are prominent in the precrisis employment data (Figure 1).  The higher the age level, the lower the employment rates.  The gap in employment rates are most prominent among men and women between the ages before eligibility for old-age pension (67 and 62 respectively) and the ages following eligibility.  While the COVID-19 crisis had an impact on the employment rates of all age groups, the analysis indicates a particularly severe impact on the employment rates of those aged 67–71, for whom the health risk was greater.  The changing employment dynamic during the crisis period, presented in Figure 1, was similar between men and women and between the various age groups.  The three lockdown periods were typified by sharp declines in the employment rates—particularly in March and April 2020, and to a lesser extent in the other lockdowns in September 2020 and in February 2021.  Between the lockdowns, and particularly in July-August 2020, employment recovered in all age groups, drawing close to its 2019 average level, but remaining below it.  Focusing on the older age groups, toward the end of the reviewed period, in May-June 2021, there were still significant gaps in the employment rates of women aged 67–71 and men aged 62–71, particularly to the detriment of those with low education levels and those employed in “higher-contact industries”.


It is too early to specify the population groups whose employment rates will have difficulty recovering in the long term, because the health crisis has not yet passed.  The elderly apparently have a more difficult time returning to employment than younger employees following periods of unemployment, particularly when the demand for labor is low.  There are a number of reasons for this: (1) Labor productivity (potential) is low among the unemployed around retirement age due to erosion of their skills; (2) The employment horizon is shorter, which raises the costs of recruiting and training these workers relative to their future benefit; and (3) discrimination based on age.  At the same time, internalizing the low demand for employment may deter older unemployed people from searching for work in the first place, negatively impacting their supply of labor.  However, this analysis shows that these effects are apparently focused, at least in Israel during the current crisis, mainly on the age groups that are very close to retirement age or are beyond it, particularly among men.


Since there are many advantages to employment at older ages, beyond the increased income, such as its contribution to social interaction and to maintaining physical and emotional health, it is important to strengthen policy that helps elderly people who have been left unemployed and are interested in returning to work.  Among the policy tools, it is preferable to increase the supply of vocational training programs that are appropriate for the elderly population, and to assist in the job search and placement processes.


  ​To the full press release with figures

To the full research (in Hebrew)​​​