Israel Faces Rising Unemployment Among Older Workers Without Retraining
A looming crisis threatens Israel's economy and social cohesion, with projections indicating that nearly 12% of workers aged 50 and above could be unemployed by 2030. This surge in joblessness is driven by rapid technological advancements, particularly artificial intelligence, which are quickly altering required skill sets across professions. Older workers who do not undergo continuous retraining risk becoming obsolete, facing prolonged unemployment and eventual forced retirement as employers increasingly favor younger, cheaper candidates.
The Israeli government has been criticized for its inadequate response to this growing problem, failing to allocate sufficient resources to address the issue. Current vocational training programs primarily benefit registered unemployed individuals and welfare recipients, while employed older workers earning above a certain threshold receive little to no funding for essential upskilling, even when they are at high risk of job displacement.
Public investment in vocational training in Israel is significantly below the OECD average, accounting for less than 0.1% of the GDP. This underinvestment follows substantial cuts to training budgets since the early 2000s. Furthermore, existing funds, such as those allocated during the COVID-19 pandemic for retraining, have been underutilized, with only a fraction of the available money being spent.
The economic cost of inaction is substantial. Each unemployed older worker can cost the state between 80,000 to 100,000 shekels annually in unemployment benefits alone, not including supplementary income support and lost tax revenue. Over a decade, tens of thousands of older individuals out of the workforce could amount to tens of billions of shekels.
In contrast, a single comprehensive retraining program for an older worker costs approximately 15,000 to 20,000 shekels, with studies showing a significant increase in income over time. Retraining 50,000 older workers would require a one-time investment of about one billion shekels, a cost that is demonstrably lower than the long-term expenses of unemployment. Despite warnings from the State Comptroller, Bank of Israel, and the Israel Democracy Institute, a decisive governmental action is still lacking.
