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Yehuda Yaakov

Rebounding Labor Market, Post-October 7th

President Herzog at IDI conference (Oded Karni)

How can Israel bounce back socioeconomically from the myriad ramifications of October 7th? That question topped recent deliberations by about 200 representatives of the country’s government, civil society and private sector elite at the Israel Democracy Institute’s annual Jerusalem conference.

A former minister of social welfare, President Isaac Herzog set the scene by putting the issue in its broader context during his opening comments:

“The economic challenges, of course, are not isolated,” the president said. “Indeed, they are interwoven with the societal challenges: the fear of an expanding cycle of poverty; budget cuts and their impact on various communities in our society; the underprivileged, who are always the first to be harmed by a crisis; the area of mental health, particularly, as well as healthcare in general; welfare, education, infrastructure. And the list goes on.”

President Herzog’s remarks conveyed an unmistakable message: while participants may have come to focus primarily on economic developments post-October 7th, that would be a grave mistake. The future of Israel lies with efforts to achieve a society based on equal footing, a reality that existed before the war and that will continue long after its end.

Nowhere is this truer than in the labor market. The head of the Histadrut (the General Federation of Labor in Israel) emphasized that despite Hamas’ onslaught, the country – including the food industry – continued to work under fire. A senior Finance Ministry official added that government-affiliated operational bodies (as opposed to policy-making offices), like hospitals, functioned especially well. On the flip side, a representative of the Manufacturers Association countered that “for the first time in our history, food factories were closed and did not reopen.”

The labor market issue is far more complicated, of course, than just the question of whether work continued during the period immediately following October 7th. This was illustrated by the head of a leading NGO dedicated to employment, who shared with the forum a conversation he had with the CEO of a prominent factory in Sderot, a Negev town frequently targeted by Hamas. She told him that while government financial support definitely helps, it cannot compensate for the departure of 50% of her employees and the subsequent 80% decline in productivity.

The director of employment for the western Negev regional municipality delved even deeper:

“When the state tries to determine how to measure revival in the region, it is not enough just to look at the parameters of (displaced residents) returning home and returning to work. The government needs to understand that the trauma residents experienced, directly and indirectly, affects how individuals function and how employers function. We would like to see the workplace as a promoter of resilience.”

An advisor to the government body overseeing the rebuilding of the Hamas-targeted southern region essentially backed this premise by emphasizing the importance of ’employment resilience’ as an integral part of the recovery of the individual, family and community.

“Our investments are focused, above all, on the rehabilitation of employment capabilities and upgrading productivity among the region’s workers and businesses,” she said. “These investments are nothing compared with the cost of the alternative: a crisis of jobs, unemployment and welfare.”

The conference also provided an opportunity to reference the employment situation among Israel’s Arab community – a pre-October 7th challenge that the government has been tackling, especially since 2016 via two five-year plans that in total comprise a budget of about 40 billion shekels. Speakers from civil society and the private sector echoed a similar message in this context: alongside diversity and inclusion which fortify resilience in emergency situations, Israel needs to continue upgrading Arab integration in the work force to higher levels (and wages), including in high-tech.

Discussion of the connection between the labor market and climate change was perhaps the event’s most forward-looking aspect. Chair of the Israeli Climate Forum, affiliated with the President’s office, put the issue front and center:

“The government is advancing a correct and worthy move of closing pollutant factories in Haifa, but are we thinking about what will happen to the workers in these places?” he asked.  “We don’t want to harm the most underprivileged, those who will have to pay the price for the justified move from pollutant to greener industry. The state will have to create mechanisms to ensure that people can easily enter the labor market of those important green fields, which are so necessary.”

Israel hasn’t forgotten what happened on October 7th. At the same time, the country also remains focused on promoting a better socio-economic future for all its citizens.

About the Author
A 35-year Israeli diplomacy veteran, Ambassador Yehuda Yaakov has directed the Foreign Ministry's Social Impact Policy unit since launching it in 2019; previously, he served as Consul General in Boston after receiving the Director General's Award as part of the "Iran Team." Yaakov has also served as board member of an NGO promoting Israeli-Ethiopian excellence. Raised in a NYC housing project, he began his career reporting about social justice issues. Active on LinkedIn and "X" (@YehudaYa).
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