Industry, Trade and Labor Minister Shalom Simhon
Photo: Eli Mandelbaum
Benny Pepperman, head of the Administration for Research and Economy
Report: Only 59.1% will work in 2030
Ministry study reveals that labor force participation rate in the economy is set drop by 6% within 20 years as haredi, Arab sectors will double
An especially bleak outlook published on Monday by the Ministry of Industry, Trade and Labor revealed that if the rate of participation of haredim, minorities and adults in the labor force remains at its current level – the labor force participation rate in Israel's
economy is set drop by 6% within 20 years.
The report, taken from a study on the demographic structure of Israeli society over the next 20 years and its consequences on the labor force found that there are two demographic trends which are expected to occur over the next two decades which will negatively influence the labor force participation rate and the burden placed on the labor force.
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The first, a drop in the population belonging to the labor force – after a continuous increase over the last 30 years, and the second, a rise in the number of people belonging to the sector of the population characterized by low labor force participation rates.
Data revealed that after 30 years during which there was an ongoing increase in the sector of the population belonging to the labor force, the next few decades will exhibit a sharp turn which will lead to a significant drop in that sector of the population.
The share of 15-64 year olds which has risen steadily since 1980 from 58.2% to 62.3% (at the end of 2010), is set to drop to 59.4% in 2020 and 59.1% in 2030.
The study further revealed that the haredi and Arab population, which both have low levels of labor force participation, are expected to rise significantly over the next two decades.
The haredi sector in the population will grow from 11% to 18% while the secular sector is set to decrease from 33% to 28% and then to 27%. In fact, the study shows that the haredi and Bedouin populations are set to double.
Benny Pepperman, head of the Administration for Research and Economy said in response to the data that "the current research teaches us that in the next two decades the haredi and Arab segment of the population will grow, and most likely, their participation in the labor force will grow as well over the next decade.
"Therefore, we believe that the labor force participation rate will continue to grow in spite of the relative increase of the Arab and haredi population."
Industry, Trade and Labor Minister Shalom Simhon said: "The ITL Ministry is working to increase the labor force participation levels within the haredi sector and the minorities sector and has placed the matter at the top of its priorities.
"If the sectors' current employment rates will not change dramatically within the next two decades, then Israel's general employment rate will plunge, which will hurt the national product and the standard of living of the population in general. You cannot ignore demographic trends."
