Expanded unemployment returns to normal, but employment still lags

Israel’s broad unemployment rate fell sharply from 6.8% in April, or 306,100 people, to 4.1% in May, equal to 164,500 people. That brought the figure back to January’s low level of 4.1%, after it had jumped to 16.6% in March, or 747,000 people, a level comparable to the coronavirus lockdowns.

The broad measure includes both traditional unemployed people actively looking for work and workers on unpaid leave who have stopped searching, making it the better indicator during crises. Because labor data are collected throughout the month, April’s reading was an average that also reflected the start of the month, when the war was still continuing.

The classic unemployment rate edged up only slightly, from 2.8% in April, 123,900 people, to 2.9% in May, 128,100 people. The article says these were negligible changes, since the rate remains extremely low and reflects only frictional unemployment, the minimum level needed for workers to move between jobs.

Employment, excluding workers on unpaid leave, rose from 58.2% in April to 59.5% in May, after falling to 51.9% at the height of the war in March. Still, it has not returned to the pre-October 7 normal above 61%, or even to the war-time normal of 60% to 61%. The article says employment, not unemployment, best reflects economic activity, and its slow recovery shows the impact of heavy reserve call-ups and the crisis in tourism.

Job vacancies rose 2.7% in May to 137,500, but had still not returned to the nearly 150,000 level seen before the war in Operation Iron Swords. Even so, the current level, close to 140,000, remains very high and points to a shortage of workers caused by large-scale reserve duty. Vacancies as a share of all jobs rose from 4.11% in April to 4.2% in May.