Like every country in the world, Israel too has been impacted by the global economic crisis. In this quick report, I'll guide you through the news and events to give you a better picture of the situation.
After the fall of big US financial institutions and the subsequent tumble of international stock markets, Israeli media outlets were filled with shocking headlines and sound bites about the crash of the global economy and how everything would be different from now on. However, many Israelis' only investment in the stock market – local or foreign – is via their pension plan and not something they would follow on a daily basis.
As a result, there was initially a lot of confusion on the street. The media was yelling ‘Fire!' but people weren't seeing any smoke.
Ironically, attention to the media aside, many Israelis have felt the first effects of the global crisis only in a positive way- at the gas pump, where prices having dropped over 20% recently.
The Israeli government and Bank of Israel (BoI) initially hoped to not get involved in fixing the economy but as the situation has worsened, both have begun to intervene with the former preparing an economic aid package and the latter dropping interest rates to their lowest level in Israeli history.
The Israeli industries that are expecting to feel the crisis most are the ones whose business is in exports such as hitech, diamonds and pharmaceuticals. As a result of the uncertainty, these companies have decided to become more cautious by tightening budgets, hiring less (35% to 45% less, according to Ha'aretz) and even laying off 5-10% of their workers.
So yes, there really are fewer job openings listed now than there were 6 weeks ago.
Historically, the marketing departments are the first to go but in this era of outsourcing, programmers, customer support and other professions are deemed more expendable as well. In particular, there are already many forecasts of doom about the Israeli hitech sector because of its sensitivity to global trends with the Jerusalem Post publishing a forecast of up to 7000 hitech layoffs to come.
Finally, there's another factor that is adding to the number of Israeli unemployed. Philanthropists who give to the Ultra-Orthodox or haredi community have been hard hit by the crisis and have significantly lowered their donations. As a result, many haredim are now stopping their full-time Torah studies and joining the work force as job seekers.
Drop in perks and salaries – expect bonuses, perks and even salaries to be reduced in 2009. This will impact both current employees and compensation packages offered to new workers. Just a few hours after this article was initially published, the Jerusalem Post reported that industrial companies across Israel have canceled planned pay raises, one-time bonuses, employee outings and other benefits while also limiting usage of company cars.
Increases in responsibility – Israeli employers are notorious for using their employees for all sorts of tasks outside of their job description. This will only get worse in the coming months as employers lay off their 5-10% and try to squeeze more from the employees kept on.
Less foreign labor – expect stricter regulations for industries with heavy dependence on foreign laborers such as agriculture, construction and home nursing care. More than ever, the government will want Israelis to be filling those jobs.
More students – if the Internet bubble bust of 2001-2002 can be used for comparison, expect more people to put off entering the job market, for example by doing another year at school.
Increased aliya – with the Israeli economy currently more stable than the American one, people who were afraid to leave cushy jobs for life in Israel are now less hesitant after being laid off. Not all of these people will go right into the job market, some will take government subsidies to go learn Hebrew in ulpan first.
Lower prices – deflation has been immediate in many stores due to the drop in gas prices. Since most Israelis have yet to feel the crunch directly, they are enjoying this unexpected benefit right now.
After the Internet bubble bust 6 years ago, rarely would a day go by without at least one hitech company going bankrupt in Israel. We're nowhere near that situation. Fewer people are being hired but people are still being hired. Stay optimistic and network more than before to find out where those hidden jobs are.
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