Good Signs: Workforce Participation Surges to Record 80.7%
According to the Bank of Israel, in 2016, Israel's labor force participation rate among the primary working ages (25–64) reached 80.7 %, an increase of nearly 4.5percentage points since 2003.
Older adults played a substantial role in this increase. Since 2004, the retirement age was gradually increased. This encouraged older population groups to remain in the labor market, leading to a significant raise in their participation rate.
Increase in the retirement age not only increased the income of the older adults themselves, but it also contributed significantly to economic growth in the past decade.
Two other sectors may have effected this improvement and for a completely different reason: Arab women and Jewish Ultra-Orthodox men. These two cross sections of Israel's society have long been relative non-factors vis-à-vis their contribution to the Israeli economy. But that now is changing.
Photo by Avi Ohayon, GPO
According to a Taub Center report, between 2002 and 2015, work force participation of Arab Women, aged 25-54, went from 21% to 40%, nearly doubling. The numbers for Ultra-orthodox men also made impressive headway during this same period, rising from 28% participation to 44%.
Due to the higher natural birth rate of these two sectors, this development is crucial to the future of the Israeli economy. The alternative would ultimately be lower employment rates and higher debt levels. But the trends noted in the Taub report offers hope for potential continued long-term growth and prosperity.