Israeli Labor Market Shows Recovery but Remains Below Pre-War Levels

Recent data from the Israeli Employment Service reveal that while the labor market is recovering from the effects of the recent conflict, it has not yet returned to pre-war conditions. As of the end of June, the number of job seekers stood at approximately 169,000, marking a 57% decrease from the peak during Operation "Roaring Lion." However, this figure remains about 8% higher than in June 2023, before the war began. Adjusted for seasonal factors, the number of job seekers slightly increased from 177,000 in May to 179,000 in June, indicating that the recovery process is still incomplete.

Employment Service CEO Einav Mashash explained that although there is a significant drop in job seekers, the current labor market composition differs from the pre-war period. The agency is focusing on professional training and skill enhancement, including artificial intelligence competencies, to assist job seekers. The most notable decline was among unemployment benefit claimants, which dropped by 8% in one month to about 127,000, a 63% decrease from the operation's peak. In contrast, claims for income support fell modestly by 2% to 35,800, one of the lowest levels recorded.

Recovery was particularly strong among younger workers under 34, whose job-seeking numbers fell by about 10%, compared to smaller declines among older age groups. This is attributed to younger workers being more prevalent in sectors heavily affected by operational restrictions, such as retail and services, which reopened more quickly. Professionally, the sharpest decreases in job seekers were among gardeners, waiters, childcare workers, and fitness staff, while high-tech roles that allow remote work saw only minor reductions.

Socioeconomic analysis showed an increase in job seekers from stronger socioeconomic clusters and a decrease from weaker ones, continuing a trend observed before the conflict. Despite official optimism, the Employment Service warns of a likely temporary rise in job seekers during July and August due to seasonal layoffs, especially among women. They also noted that some June registrants may have already returned to work but remained registered to claim furlough benefits from the conflict period, suggesting the actual number of unemployed could be lower than reported.