OECD Reviews of Labour Market and Social Policies: Israel
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Tackling the root causes of such deep inequality would greatly enhance the dynamism of the Israeli economy. Greater investment to help workers improve their skills is urgently needed. Welfare-to-work programmes need to be restructured and extended, including by reducing child benefits paid to families who are able to work but do not and by sharply increasing the Earned Income Tax Credit to tackle in-work poverty more effectively. And access to means-tested income supports for the neediest should be improved. Israel has failed to enforce many aspects of its labour legislation, contributing to poor employment conditions for many resident, cross-border and foreign low-income workers. Rules to overcome discrimination against all workers need to be enforced, and the illegal hiring and employment of temporary foreign workers need to be stamped out.
Progress has been made in many of these areas. New legislation and initiatives have been introduced. The challenge is how to make reform work in practice. The consequences of not doing so would be devastating.
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Drawing Lessons from a Country Built on Immigration
Israel, a country founded on immigration, received unprecedented numbers of permanent immigrants in the 1990s, making it a laboratory for studying processes of labour market integration of immigrants. It has been largely successful in achieving the labour market integration of these immigrants: employment rates have reached or surpassed those of natives and prior immigrants, although gaps in wages persist. Some groups have, however, not been integrated. While permanent immigration rates have fallen in the past decade to levels below those of most OECD countries, Israel continues to invest heavily in immigrant absorption and offers a range of specific policies for facilitating integration, both for the highly skilled and the least educated immigrants.
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