Employment and Wages – 2007
Author: Yaakov Kop Policy Research

The labor market has taken an upturn in the past three years (2005-2007) after having contracted due to the general recession in Israel in 2000-2003. The recovery is reflected in the upward turn of relevant main indicators.

Thus, the civilian labor force participation rate rose from 54 percent at the beginning of the decade to 56.7 percent in the third quarter of 2007; employment rose from 2.2 million to 2.8 million; and the unemployment rate, after peaking at almost 11 percent in the second half of 2003, declined steadily to 7.3 percent in the third quarter of 2007 – the lowest rate since 1997. The national average wage, which declined during the recession years, also rebounded to NIS 7,813 per month (August 2007). Although the rapid economic growth that powered these trends began in the second half of 2003, labor markets tend to respond with a lag to economic recovery; thus, the improvement in the labor market was not felt until 2005. The outlook for the years to come is one of continued growth in employment and improvement in other economic indicators, provided that global and domestic economic growth continues.

This chapter takes a closer look at developments in the labor market and discusses aspects of Israel’s employment policy.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2007.

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