Israel's Jobless Rate Declines, But Tech Sector Sees Modest Unemployment Rise

The number of registered job seekers in Israel decreased slightly in August to 172,500, a drop of about 1,000 from July. Excluding the impact of "summer layoffs," the figures indicate a continued return to normalcy and a gradual approach to pre-war labor market conditions. The proportion of registered job seekers with academic professions has been steadily increasing, reaching 20.5% in August, up from 20.3% in July, 19.7% in June, and 18.6% in May. This trend highlights a labor market consolidating around a structure with stronger job seekers. Specifically, the number of software developers and application analysts seeking work rose to approximately 8,900 in August, a 6.4% increase since June.

Before the "Swords of Iron" war, the average number of unemployment benefit claimants was 95,000. In August, this figure reached about 132,800, which includes the effect of summer layoffs. In recent months, the average number of unemployment claimants has been around 122,000. The Employment Service notes that alongside military operations, a moderate rise in unemployment is primarily attributed to an increase in tech sector job seekers facing layoffs over the past year.

Alongside the slight decrease in unemployment, there was a modest rise in demand for workers. In July, the number of available job openings stood at approximately 152,400, an increase of about 2,600 from the previous month. After seasonal adjustments, the number of vacancies was around 148,000. The supply-demand ratio in July was about 0.81 (seasonally adjusted), meaning roughly four job openings for every five job seekers, a ratio close to pre-war levels, suggesting a stabilizing labor market. The primary demand for jobs is concentrated in construction, industry, sales, and services, sectors that were significantly impacted during the war and are now showing recovery, though this demand does not necessarily align with the professions of job seekers, who are increasingly academic.

The Employment Service concludes that while August data reflects a positive trend of stabilization and a return to routine, a complete picture free from summer influences will only be clear after the holiday season. The phenomenon of "summer layoffs" involves employees in the education system being dismissed during vacation periods and rehired after the summer break or holidays, particularly in education and sports. This August, summer layoffs affected the gender and sector distribution of registered job seekers. The number of women increased from about 96,200 in July to 97,900 in August (about 56.8% of all registered and 58.5% of new entrants). Concurrently, there was a 7.9% increase in Haredi job seekers (from about 15,000 to 16,100). The Arab sector saw a 4.3% decrease, while non-Haredi Jews remained unchanged, consistent with seasonal trends and summer layoffs. The number of income support recipients, indicative of long-term unemployment, continued to decline to about 33,800 in August from 35,500 in July. This is a long-term trend for the 35-54 age group, with income support recipients falling from 40.8% in 2019 to 18.9% due to regulatory changes, reduced barriers to employment, and shifts in the labor market.

Inbal Meshish, Director General of the Employment Service, stated, "The labor market is tight and continues to show resilience, but we are also witnessing profound changes in the needs of job seekers and the nature of employment. The rise in the proportion of academics and professionals among job seekers is part of a new reality that requires us to prepare today for the world of work tomorrow. Our role is to connect people with opportunities and ensure that Israeli human capital can continue to grow, develop, and lead the economy forward."