Transcript A Comparative Analysis of the Welfare State in OECD Countries

GLOBES conference,
Tel Aviv, 12-13 December 2010
Key Labour Market and Social Policy Challenges
facing Israel: an OECD perspective
John P. Martin
Director for Employment, Labour and Social Affairs, OECD
(www.oecd.org/els/)
Israel has weathered the global recession
rather well
OECD harmonised unemployment rates in selected OECD countries, December 2007 to October 2010*
%
October 2010
December 2007
22
20
18
16
14
12
10
8
6
4
2
0
* June 2010 for Greece; August 2010 for the United Kingdom; September 2010 for Denmark, and Norway; and 2010 Q3 for Israel (OECD harmonised
unemployment rate data are not available on a monthly basis for this country).
Source: OECD Main Economic Indicators.
The key labour market & social policy
challenge is too-high poverty
Denmark
6.1
Hungary
6.4
Netherlands
Arabs
OECD
average
Haredim
Others (Non-Arab, Non-Haredi)
7.2
Sweden
8.4
70
Canada
11.4
Italy
11.4
2005
60
2007
Korea
2006
Japan
Poverty rate (%)
15.0
15.7
Russian Federation
17.0
Turkey
17.0
United States
17.3
Israel
19.9
Mexico
21.0
0
5
10
15
Poverty rates
20
25
O
E
C
D
2007
50
OECD
average
40
1997
1997
30
20
1997
2007
10
20
30
40
50
Employment rate (%)
Poverty rate thresholds set at 50% of median (equivalent) household income data refer to the late
2000s from the OECD Income Distribution questionnaire, and OECD (2010) ,Labour Market and
Social Policy reviews: Israel
60
70
Israel is a divided society, and demographic
trends warrant inclusive policy action quickly
 The proportion of children entering primary school
belonging to the poor minority groups will increase
from just below 50% at present to 75% in 2030.
 Employment is the best route out of poverty
 Policy should change now to increase employment
among Arabs and Haredim….
 Mobilizing these resources is key to enhancing
economic growth and social cohesion
 Public policy and investment towards minority
groups has to become more effective
Low-paid work is relatively widespread
in Israel
Sweden
Italy
OECD-22 15.9%
Portugal
Finland
Denmark
Belgium
Australia
Ireland
France
Japan
New Zealand
Czech Rep.
Greece
Spain
Germany
Netherlands
Poland
Canada
United States
United Kingdom
ISRAEL
Hungary
Korea
0
10
20
30
Prevalence of low-paid work: per cent of employees with earnings of less than two-thirds of the
national median. Source: OECD (2010) ,Labour Market and Social Policy reviews: Israel
An effective policy response includes better
enforcement of labour laws...
 Israel has a general problem of failing to enforce its
labour laws.
 Especially detrimental to the more vulnerable workers
(low-paid, foreign, employed through temporary work
agencies or sub-contracted).
Ineffective enforcement of labour laws does
not get the policy attention it deserves
 Labour inspectorate
underfunded and
understaffed
 Sanctions for
employers who fail to
respect labour laws are
derisory
Policy has to become more effective: a New
Deal for Arabs?
 Government should lead by example by stamping
out discriminatory practices:
 Recent initiative to invest 800mn NIS in
infrastructure in 13 Arab localities is a step, but
it’s too small to overcome large infrastructural or
educational deficiencies.
 More investment in Arab schools to redress
disadvantage
 Take enforcing public sector employment quotas
seriously: currently at 7% rather than the avowed
objective of 12%.
Israel needs more effective employmentoriented social policies...
 Very disappointing “Wisconsin” fell through.
 OECD evidence shows that well-designed and
implemented mutual obligation policies can work:
 Clients have to look for work/engage in training or be subject
to a benefit sanction
 Policy has to provide an effective package of employment
services, vocational training and childcare supports. Spend a
bit more on cost-effective ALMPs
 Counsellors in Israeli PES have far too high a caseload (350
unemployed compared with an OECD norm of 100).
To some extent you get the poverty rates
you are willing to pay for.
 Increase EITC payments
for low-paid workers to
give a real incentive to
take work
France
Sweden
Denmark
Germany
Italy
 This could be partly
financed by reducing child
allowances.
United Kingdom
Japan
Canada
OECD
19.3%
United States
Israel
Turkey
Mexico
0
5
10
15
20
25
30
Public social expenditure as % of GDP. Data concern 2007: OECD Social Expenditure database, .
Foreign workers in Israel make up a greater
proportion of the labour force than in most
OECD countries
Foreign workers (FWs) seem to displace Israeli workers.
25
2007/08
20
15
10
5
0
Foreign workers as % of the Labour Force: OECD Review.Source: OECD (2010), Labour Market and Social
Policy reviews: Israel
The system of foreign labour
management needs improving
 Impose labour market test and prevailing wage and
working conditions on employers recruiting from abroad.
 Only recruit workers for jobs which Israelis refuse or
cannot fill
 High agency fees ineffective in encouraging
employers to hire locally, exploitative and negatively
affect employment conditions
 Consider unlimited stay for employment for jobs
where demand is structural/permanent
 Favour cross-border workers over foreign workers
...and improve the labour system for foreign
workers (continued).
 Improve transparency and address illegal brokerage
fees
 Use short-term permits for seasonal work in
agriculture
 Eliminate middlemen and labour brokers
 Develop bilateral agreements for recruitment
 Reinforce inspectorate, including with interpreters.
 Strengthen sanctions for employers and bar
violators from future recruitment
Further reading
www.oecd.org/els/israel2010