Employment Rate of Haredi Men Stagnates Despite Advances in Job Market

Israeli employment figures broke new record in 2018, but for two sore spots in the labor market – ultra-Orthodox and Arab men – the year was marked by stagnation and even retreat, according to figures from the Central Bureau of Statistics that were distributed to government ministries.

Using the National Economic Council’s definition of Haredi, the CBS estimated that in the key working ages of 25 to 64, only an average 50.3 percent of ultra-Orthodox men were in the labor force last year, down from 51.2 percent in 2017. The figure varied a lot by quarter, dropping to below 50 percent in the third before picking up slight in the fourth.

Haredi men – in contrast to women – have shunned paid employment in favor of devoting their lives to religious study. But the government is worried that their low rate of unemployment is creating a drag on the economy and consigning the ultra-Orthodox to high rates of poverty.

Depending on which definition for Haredi is used, the number of ultra-Orthodox men ages 25-64 in Israel ranges between 152,000 and 168,000 out of a total male population in the age group of about 1.95 million. The Haredi population is expected to rise in the coming years due to the community’s high birthrate, adding urgency to the need to beef up the labor force participation rate.

Using the CBS’ own, narrower definition of Haredi, the labor force participation rate was just 47 percent for men in the age group, putting it far below the government’s target of 63 percent by the year 2020. A third definition, which is based on self-identification, found the rate for Haredi men was 50.9 percent in 2018. It was also down from 2017.

In employment target set by the government in 2010 calls for a 63 percent rate for both Haredi men and women, versus a 76.5 percent rate for all Israelis. For Arab males, the goal was a 78 percent labor force participation rate and for Arab women 41 percent.

Some of the targets have already been met or have even been exceeded. The general participation rate was achieved four years ago and is now 77.5 percent for age 24-65. That is partly due to the economy’s ability to generate jobs so that the unemployment rate has been falling even as more and more Israelis enter the workforce.

Among Haredi women, the progress has been even more impressive, last year, the labor force participation rate – a figure that includes both people who are employed and those actively seeking jobs – reach 73 percent and spiked to 78.8 percent in the fourth quarter.. That compares with 60 percent in 2011 and 63 percent target.

Among Arab men, the 78 percent target for 2020 was achieved already in 2017, but last year it fell to 76 percent. Among Arab women, the rate varied between 36 percent and 40 percent by quarter in 2018, below the goal set by the government.

In fact, the 2020 targets have already been superseded. Although the government’s Employment 2030 committee never officially submitted its recommendations to Labor and Social Affairs Minister Haim Katz, ministries have been using the new targets unofficially.

Not only are they more ambitious, they set for the first time quality targets for employment for Arabs and ultra-Orthodox, including wage targets. The quality target is important because while employment has been growing, the jobs that are being created tend to be low-skilled and low-paying.

Pointing to the lack of progress on male Haredi employment in 2015-17, Gilad Malach and Lee Cahaner, who edit the Haredi Society Yearbook, point to the policies of Prime Minister Benjamin Netanyahu’s government after the 2015 election.

The government undid some of the incentives that had been in place to encourage employment. Among other things, it increased spending on Haredi educational institutions and child allowance and renewed income-support programs for adult Haredi students (avrechim). The government fell in December after it failed to find a formula that would pass the Knesset on drafting Haredim, which many economist say is a segue to boosting Haredi employment.