The Labor Market at the Height of the COVID-19 Pandemic and Subsequently


In late 2019 and early 2020, the COVID-19 pandemic caused by the coronavirus spread worldwide. The restrictions imposed to prevent mass infection have had a far-reaching effect on the international and Israeli labor markets. In March and April 2020, 950,000 people in Israel applied to the employment service for benefits after they had been furloughed or lost their jobs. The total number of jobseekers in April 2020 was 1,151,000 – 28% of the labor force.

Study Goals

This study was commissioned by JDC Israel-Tevet with the goal of formulating a joint work plan with the labor branch of the Ministry of Labor, Social Affairs and Social Services. The goal was to examine how the pandemic had affected workers and various branches of the economy, to map the challenges and opportunities created by the crisis, and to propose programmatic directions to meet the new employment challenges.


A review of the professional literature, an examination of strategic documents from research institutes, government ministries and auxiliary units in Israel and abroad, and analysis of Israeli employment data.


Most of the workers who were furloughed or dismissed were characterized by low wages, low education, and a young age. The crisis particularly affected women, the self-employed, the ultra-Orthodox and the Arab population.

Retail sales, arts, entertainment, and the leisure, hospitality and catering industries were hit hardest. Economic branches that were hit less hard included construction, agriculture, health, social services, education, local and public authorities, high-tech, information and research, and finance and insurance industries.

In all the population groups, the percentage employed in the affected industries decreased with age. The rate of employment in the affected industries was highest in the 18-24-year age group, especially among women, most of whom are employed in the retail, hospitality and food industries.

The COVID-19 pandemic has led to new employment challenges for Arabs, the ultra-Orthodox and workers with disabilities. The barriers to their employment intensified during the crisis, as their low skill and education levels and social exclusion increased their employment risk. It is feared that many of them will be the last to be returned to their jobs or will lose them altogether. It is also feared that older workers who have been furloughed or dismissed will find it difficult to return to their pre-pandemic jobs or find other jobs.

The accelerated use of technological tools in many branches of industry and the transition to working from home in some cases present a challenge for many workers in Tevet’s target populations (Arabs, ultra-Orthodox, older adults, and individuals with disabilities), whether due to lack of teleprocessing and digital skills, or due to under-representation in branches where it is possible to work from home or limited internet access.

Along with the challenges, the crisis also offers opportunities to improve the employment status of workers affected by the crisis and help integrate them into industries with higher productivity: Accelerating the use of digital tools provides an opportunity to strengthen the technological skills of workers whose technological skills are currently low. This is relevant both for work opportunities from home and for improving human capital, especially among traditional Arab women, ultra-Orthodox men and women, and older adults.

The transition of many workers to working from home is an opportunity to integrate into employment individuals for whom it is difficult to leave their home or residential area for work or study, particularly traditional Arab women and individuals with disabilities.

Implementing an active labor market policy, with an emphasis on training and developing skills and human capital, can help workers affected by the crisis to migrate into industries with higher productivity.

The crisis is an opportunity to strengthen local leadership and community organizations that can impel processes of change in the field of employment, especially among the ultra-Orthodox and Arab populations.

Programmatic Directions

In order to rise to the new employment challenges and take advantage of the opportunities presented by the crisis, it is recommended that investment be made in training, retraining and upgrading the skills of the unemployed as well as of older and unskilled workers wherever possible.

Training and retraining are also aimed at supporting the occupational mobility of those affected by the crisis into higher productivity industries by enhancing their skills, so that they can meet the new demands of the labor market, and helping them compete better with skilled candidates.

It is recommended that flexible employment patterns, including working remotely, be strengthened as a way to increase the job supply for people who have difficulty leaving their home or residential area for the purpose of work or study.

Investment should be made in a mechanism to match workers’ skills with employers’ needs and training organizations, in order to produce a better match between jobseekers and employers and to allow mobility into high-productivity industries.

For MJB’s publications on the COVID-19 pandemic in English, press here.

For MJB’s publications on the COVID-19 pandemic in Hebrew, press here.