Israel's unemployment rate fell to 5% of the civilian labor force in October 2011, an all-time low, the Central Bureau of Statistics reported today.
The Central Bureau of Statistics also revised its unemployment figures for the preceding months, indicating a steady monthly decline of 0.1-0.2% in the unemployment rate since January. The unemployment fell from 6.2% in January to 5.6% in May and 5% in October.
The figures are surprising, given that economic activity is declining, including by labor-intensive export-oriented manufacturing. However, the unemployment rate is the economic indicator with the longest time-lag in its response to changes in activity.
Many economists attribute part of the drop in the unemployment to bad reasons: more people are leaving the jobs market, as indicated by the previous labor survey, which lowers the unemployment rate.
Psagot Investment House Ltd. macroeconomics research manager Ori Greenfeld says, "These are problematic figures. The drop in unemployment could also be due to the fall in participation in the workforce, which mathematically reduces the unemployment rate. The Central Bureau of Statistics examines how many people are seeking jobs among people who really want to work. If people give up looking for work, the unemployment rate also falls. We're already in a slowdown. We should see the unemployment rate rise later on."
All the same, Minister of Finance Yuval Steinitz did not pass up the opportunity to celebrate, saying, "We are proud of the fall in the unemployment rate to the historic level of 5% - evidence of the success of the government's anti-crisis policy. To keep this achievement of low unemployment in the future, in view of the worsening crisis in Europe, we must continue to encourage investment and growth in the economy while scrupulously maintaining responsible fiscal policy."
Published by Globes [online], Israel business news - www.globes-online.com - on December 26, 2011
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