Contrary to expectations, the corona crisis in Israel did not lead to a wave of resignations and exit from the labor market - a phenomenon that in other countries was nicknamed The Great Resignation. As of June 2022, the employment and participation rates have slightly exceeded their pre-crisis levels, and the stock of non-working quitters has not increased substantially and continuously throughout the crisis. So how do you explain the acute shortage of workers?
From the report of the chief economist at the Ministry of Finance, Shira Greenberg, it appears that the main reason for this is, of course, the increase in demand after the exit from the Corona crisis - more vacations, more entertainment and waste. Another reason: the report shows that as of the first half of 2022, there has been a notable increase in the proportion of people employed in the high-tech industry.
On the other hand, a sharp decrease was observed in the proportion of those employed in the trade sectors, and a more moderate decrease in the hospitality and food sectors, management services, entertainment arts and leisure, which have recovered significantly in recent months.
Change in the employment mix
"As of the last few months, the employment rate in Israel has returned to its pre-crisis level, but there has been a change in the employment mix: there is an increase in the share of industries with high productivity (which contribute to reducing the general productivity gap in Israel compared to the OECD countries), and a decrease in the share of industries with low productivity." explained in the report.
Another interesting thing that illustrates the strength of the phenomenon: while in high-tech the increase in demand for workers during the crisis was reflected in a significant increase in wages, in some industries that experienced a decrease there was only a moderate increase in wages compared to before the crisis, despite the increase in the number of vacancies.
The CEO of the Restaurant Association, Shai Berman, estimated this week in a conversation with "Israel Hayom" that the restaurant industry today operates at only 75% capacity, due to a lack of manpower. It can be assumed that the shortage of workers in the restaurant industry would have been less acute, if the wage increase in the industry had been more significant .
A change in employee preferences
In recent months, one of the main discussions in the world regarding the effect of the corona virus on the labor market has focused on the change in employee preferences, and in particular - on the increasing rate of employee resignations.
Thus, for example, in Great Britain and the United States there is a lot of talk about a phenomenon of significant resignations, which has been nicknamed "The Great Resignation", with possible explanations put forward for this being a change in the preference of employees regarding the allocation of their time between work and leisure; a lesser willingness to work in certain jobs that are perceived as less rewarding; and a change in the bargaining power of the workers.
Voluntary resignation trend
However, in other countries, such as Canada, Japan, and New Zealand, no unusual wave of resignations was observed.
Some argue that even in the USA the current wave of resignations is nothing more than a continuation of the trend of voluntary resignations that preceded Corona.
"An increase in resignations could have existed at the same time as stability in the employment rate, if the resigning workers had immediately moved to a new workplace. However, there was no significant increase throughout the crisis in the proportion of workers who resigned and changed jobs, despite the flexibility made possible by the severance pay arrangement.
Throughout the crisis, the proportion of employees who changed jobs in recent months (1.94%) was slightly higher than the average in 2019 (1.86%), despite the increase that occurred throughout the crisis in the number of those laid off, many of whom returned to work at a new workplace," the report explains.
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