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 per cent.
It compared with a fourth-quarter rate of 5.4 per cent 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 per cent.
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 labour market,” said Yoel Finkel, Israel’s associate statistician. “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 labour 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,” Mr. Finkel said, referring to the Paris-based Organization 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 per cent 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 labour market because the previous unemployment rates showed Israel at full employment,” Mr. Katz said.
“Now ... there is some slack in the labour 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 worsen Israel’s position relative to other countries, but still leave it in a relatively favourably positioned compared with many other advanced economies,” it said.
In 2011, the average unemployment rate in OECD countries averaged 7.9 per cent and is projected to fall to 7.4 per cent this year. For Europe, which is struggling under the weight of a widening debt crisis, the numbers are well above 9 per cent.
Previous data have also shown that Israel, with a population of less than 7.9 million, had a smaller-than-usual labour force with a participation rate of around 58 per cent. 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 work force.
Data from the new survey also showed that the labour participation rate of those over 15 years of age was 63 per cent in March, very close to the OECD average.