Remarks by Research Department Director Michel Strawczynski at the Eli Hurvitz Conference

Following are remarks by Research Department Director Michel Strawczynski on December 15, 2020, as part of the labor market session at the Israel Democracy Institute’s Eli Hurvitz Conference:

 

·         The lockdown imposed on the economy due to the second wave led to an increase in broad unemployment; since a partial opening for some industries was allowed, a decline can be seen in the number of those temporarily absent from work (on unpaid leave).

·         An analysis of the lockdowns over time indicates that each time a lockdown is imposed there is a sharp increase in the number of those temporarily absent, with a decline in the figures when the economy is reopened. In contrast, among the unemployed and those not participating as a result of the coronavirus crisis, there is an increase over time.

·         The composition of broad unemployment by quintiles indicates that among the unemployed and those not participating as a result of the coronavirus, the main adverse impact is among low income earners; in contrast, those temporarily absent from work (unpaid leave) are mainly high wage earners.

 

An analysis of the labor market presented by Prof. Michel Strawczynski as part of the Eli Hurvitz Conference indicates that the fluctuations in the broad unemployment rate are in line with the lockdowns imposed by the government to deal with the morbidity and infection rate due to the spread of the coronavirus. While during the first lockdown in April, the broad unemployment rate reached approximately 35 percent of the labor force, during the second lockdown the broad unemployment rate was 23 percent at its peak, and since the opening it declined to 15 percent (data updated through mid-November).

 

When looking at the composition of broad unemployment, what stands out is that the temporarily absent respond directly to the closures, while in the two other groups there is a trend of increase relative to the period before coronavirus. Thus, among nonparticipants, whose share was near zero in the first lockdown, their share reached 2.5 percent of the labor force. In terms of the unemployed, their share increased from about 3 percent before the coronavirus to about 5 percent in November – with a longer term increase that renewed due to the imposing of the second lockdown (Figure 1).