April 30, 2012 / 3:28 PM / 7 years ago

Israel's jobless rate leaps as the counting changes

JERUSALEM (Reuters) - Israel’s move to bring its economic statistics in line with leading Western countries has led to a far bleaker picture of its jobs market, undermining claims that the country is riding through the global crisis with relative ease.

The Central Bureau of Statistics on Monday unveiled a new employment survey - a reworking of past surveys - that showed a first-quarter jobless rate of 6.7 percent.

It compared with fourth-quarter rate of 5.4 percent using the old system, a number that was touted at the time as being the lowest level in three decades.

According to the new survey, the jobless rate in the last three months of 2011 should have been 6.8 percent.

Officials were quick to say that there has not actually been a spike in joblessness.

“There wasn’t a change in the economy. The numbers just reflect better coverage of the labor market,” Yoel Finkel, Israel’s associate statistician, told Reuters. “There has been a change in the level but not the trend. It’s still one of the lowest in the world.”

The bureau made nearly 40 changes in surveying the labor market, from adding soldiers to including 100 more cities and towns and conducting the survey monthly rather than quarterly.

“These numbers are more comparable to the OECD,” Finkel said, referring to the Paris-based Organisation for Economic Co-operation and Development, the rich nations’ economic think tank.

Israeli media reported that the new data took the central bank by surprise while private economists were also perplexed by the difference in count.

HSBC economist Jonathan Katz said that by adding the military alone, the jobless rate should have gone down since 100 percent of soldiers are considered employed.

“For the past few years, everyone was scratching their heads as to why wages were not going up and why there were no inflation pressures from the labor market because the previous unemployment rates showed Israel at full employment,” Katz said.

“Now ... there is some slack in the labor force,” he said. “It now makes more sense — but I don’t know what they were measuring before.”


The Bank of Israel said that even with the jump in joblessness, the country was doing comparatively well.

“The unemployment rates calculated according to the new method worsens Israel’s position relative to other countries, but still leave it in a relatively favorably positioned compared with many other advanced economies,” it said.

In 2011, the average unemployment rate in OECD countries averaged 7.9 percent and is projected to fall to 7.4 percent this year. For Europe, which is struggling under the weight of a widening debt crisis, the numbers are well above 9 percent.

Previous data has also shown that Israel, with a population of less than 7.9 million, had a smaller than usual labor force with a participation rate of around 58 percent. Officials have bemoaned the fact that most ultra-Orthodox men and Arab women do not work and are seeking to bring these large groups into the workforce.

Data from the new survey also showed that the labor participation rate of those over 15 years of age was 63 percent in March, very close to the OECD average.

Additional reporting by Maayan Lubell. Editing by Jeremy Gaunt.

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