The labor market must fix itself for the economy to improve – opinion

In September 2021, the number of job openings in Israel reached a record 137,500, after having fallen to a low of just 37,000 at the start of the COVID-19 pandemic in April 2020, and compared to an average of 95,400. in 2019 (before the pandemic). In fact, the economy has shown positive growth, but not to the extent that it can explain such a sharp jump of 44% in the number of job vacancies.

For most of us, the intuitive conclusion is that there is a shortage of thousands of computer programmers, engineers, and technicians for the high-tech industry. But a look at the data from the Central Statistical Office reveals a significantly different picture. It is true that the number of job openings for engineers and programmers exceeded 14,000, along with another 4,000 job openings for technicians; but all these together represent only 15% of the demand for workers.

So which workers are employers looking for? The answer is amazing. In September, they needed about 14,000 vendors, about 10,000 waiters and bartenders, nearly 7,000 kitchen and cleaning workers, more than 5,000 nursing workers, and a similar number of truck and bus drivers. There are nearly 5,000 openings for construction workers and roughly the same number for security guards. All of these categories are characterized by low wages and less attractive working conditions than high-tech ones.

The continued rise in job openings outside of high-tech and engineering is particularly surprising given that in September 2021 there were nearly 340,000 unemployed people in Israel, most of whom appear to have exhausted their eligibility for unemployment or leave benefits. We are talking about hundreds of thousands of people who would rather be unemployed and have no (declared) income than work in one of the jobs that are open today.

This is not to say that there is a shortage of high-tech employees. No one denies the economic need to train workers in engineering and programming. The high-tech sector, of course, is a major growth engine for the economy, produces significant tax revenues, and is characterized by high labor productivity and attractive wages. Your contribution to the national economy is a great blessing, but it is not enough on its own.

Newspaper jobs (credit: ING IMAGE / ASAP)

Relevant policy makers must address labor shortages in commerce and services, construction and industry because labor shortages slow the economy and serve as a bottleneck for growth. This problematic situation requires an in-depth study of the demand for workers through an updated database that takes into account the needs of employers in real time and includes a geographic mapping. This challenge falls on the shoulders of the Labor Unit of the Ministry of Economy, together with the recently established Employers ‘Administration with the cooperation of employers’ representatives, the Histadrut labor federation and the government.

At the same time, the Labor Unit must draw up the categories of training courses required. A not insignificant proportion of the occupations in demand require a relatively short period of training. A precise analysis of supply versus demand would make it possible to offer those unemployed by the pandemic, courses to train as cooks, construction workers, drivers and carers, and thus create a correspondence between the courses and the needs of employers in the area in which the target population of these courses lives.

A survey conducted by the Israel Democracy Institute in July 2020 found that 66% of those who lost their jobs due to the pandemic (who are not working now but were employed before the arrival of COVID-19) would be interested. In a short vocational training funded by the government. training course, lasting from three to six months. The key question that has yet to be studied is whether they are willing to enroll in courses that prepare them for those fields that need workers. Has anyone investigated this? Who has the responsibility to find out if there is a correspondence between the needs of the economy and the courses in demand? Many questions arise from this table, which reveals that the demand for workers will not match the supply of people willing to work in the available positions. The only ray of light that emerges from the IDI surveys reveals that approximately half of the pandemic unemployed are interested in retraining. What can we do to awaken your interest in the fields that the market needs?

When markets do not reach the sweet spot on their own, the government must step in and provide incentives that will impact the market and help it close the gap between supply and demand. Given that the benefit derived from vocational training for an individual and for the entire economy exceeds that perceived by the employer, economists agree that there is an economic justification for government funding of advanced education and vocational training. In addition, a study recently published by IDI and the Labor Unit of the Ministry of Economy found that the payment of stipends to those enrolled in vocational training courses positively influences the willingness to enroll in them and that the inability to earn a living being enrolled in a course it is the main reason for dropping out.

The COVID-19 pandemic has provided the Israeli economy with a golden opportunity to offer vocational training courses to tens of thousands of people who lost their jobs as a result of the crisis and were forced to stay at home for an extended period. It would have been possible to take advantage of those months to improve skills and prepare for anticipated changes in the labor market. This opportunity was lost and valuable time was wasted; But it is still not too late to take action to improve worker skills. IDI surveys indicate that today about half of all wage earners are still interested in improving their skills in their current field or retraining for a different field, along with 40% who are interested in developing general skills in the fields of computer science and informatics. Internet, administration, languages ​​(English / Hebrew / Arabic) and the like.

GOVERNMENT INVOLVEMENT in encouraging both workers and employers to invest in developing basic skills like these is even more crucial in light of the low ranking of Israeli workers, compared to their counterparts in developed countries, regarding your basic skill set. Israel’s low ranking is evident in the PIAAC indices issued by the OECD, which examine the performance of workers in literacy, mathematics and problem solving. The low classification of Israeli workers is a significant factor in the lag in labor productivity, which is 25% lower in Israel than in developed countries. It is incumbent on the Israeli government to reduce these gaps in worker skills and respond to the needs of the economy. Naturally, improving the basic skills of workers attracts only limited attention among employers, who are generally interested in offering only courses specific to their own field.

The establishment of the Employers’ Administration offers an excellent opportunity to make a quantum leap in the vocational training system in Israel and to direct those who lost their jobs during the pandemic to sectors where there is a high demand for workers. But this is not enough. The Israeli government should also help employers introduce innovative management technologies and techniques that increase labor productivity in commerce and services, as well as in the traditional economic branches of industry and construction, some of which still pay. low salaries. It is important to remember that increasing labor productivity is the key to achieving higher earnings and reducing gaps.

The writer is an economist and director of the Center for Governance and Economics at the Israel Institute of Democracy.

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