Trends in Israel’s Labor Market

The labor market in Israel is moving from a traditional economy, based on manufacturing and production, to one of information technology and modern services.

How prepared are the country and its workers?

Israelis should move into jobs that will still exist in ten years.

As the new, modern labor market develops, some jobs are at greater risk than others of automation – meaning that human workers are likely to be replaced by machines or computers. To prepare for the future job market, workers should be encouraged to move from jobs that are at high risk of automation to jobs in industries at lower risk.

Is your job at risk? Watch a short video explaining which types of jobs are at higher or lower risk of automation.

The trend of moving from high to low risk jobs is already happening.

Overall, the percentage of workers in jobs at high risk of automation has gone down in recent years, but this has happened to a lesser extent among Arab Israelis and immigrants than among the native Jewish population.

Let’s look at various population groups separately.

Women are moving from high to low risk jobs more than men.

Two simultaneous phenomena are contributing to this trend. On the one hand, recent years have brought a greater presence of female workers in academic professional jobs – jobs that require high skill levels and are at low risk of being replaced by automation. At the same time, there has been a drop in clerical workers (positions often occupied by women) as many clerical tasks have begun the process of automation. We see evidence of this process in bank branch closures, outsourcing of secretarial services, and computerization of office administration tasks.

More Arab Israelis are also moving into industries at lower risk.

The percentage of Arab Israeli workers in production and manufacturing industries – which are considered at high risk of automation – has decreased. At the same time, there has been a fairly strong increase in the percentage of Arab Israeli workers in sales and service industries, where jobs are at lower risk.

Many immigrants are employed as unskilled workers – in jobs at high risk of being replaced by automation.

With the challenges of poor language skills and academic education that doesn’t match Israel’s labor market, many immigrants are employed as unskilled workers in industries like cleaning and security. However, faster changes in the types of jobs in which female immigrants are employed indicate that immigrant women may have a better chance than their male counterparts at moving into jobs that pay more and are at lower risk of automation.

The industry you work in isn’t the only thing that matters in Israel’s modern labor market – education is important too.

Workers’ level of education has a greater impact on wages than it did in the past. To put it simply, more years of formal education improves average hourly wages. The hourly wage difference between those with 18 years of education (equivalent to a second academic degree) and those with 12 (equivalent to a high school diploma or matriculation certificate) was about 35% among men and about 40% among women in 2014, which is larger than the difference in 2003.

Wage gaps have increased.

Wage gaps have increased, due to a polarization of sorts within the labor market: an increase in the percentage of workers earning either low or high wages rather than wages in the middle. More low-skilled workers, who relied on the welfare system in the past, are entering the labor market and earning relatively low wages. At the same time, more young, highly-educated workers are entering the workforce and receiving relatively high wages. These simultaneous trends make wage gaps more pronounced than in the past.

Taub Center for Social Policy Studies in Israel

Research that makes a difference

There’s much more to learn about Israel’s labor market and about health, economics, education, employment and social welfare in Israel at taubcenter.org.il.

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