As many Western nations grapple with massive debt, rising unemployment and sluggish growth – Israel's economy is flourishing. Unemployment hit a record low of 5.8% in April, for the first time in decades. The jobless rate fell by 0.1%, and currently stands at 179,200.
Unemployment levels had originally been expected to fall below the 6% threshold only in late 2011 or early 2011, according to Bank of Israel and Ministry of Finance forecasts. If this trend continues, the number of people out of work can be expected to fall to an unprecedented low of 5%, representing 158,000 people.
The Israeli economy has reached a state of "natural employment levels," approaching full workforce employment, a state in which unemployment numbers represent those in between jobs. The last time unemployment was at an historic low was in September 2008, as the world was heading into global financial meltdown.
April saw 3,100 people join the workforce. After unemployment levels peaked during the second quarter of 2009, standing at 7%, unemployment figures dropped by 1.9%, which represents 52,700 people.
Prime Minister Benjamin Netanyahu welcomed the release of the impressive data Thursday. "This is a product of the economic policies that I have been pursuing along with the finance minister and the governor of The Bank of Israel," he said. Finance Minister Yuval Steinitz said, "The record 5% to 6% target employment I had set has now been met within two years. These numbers attest to successful government policies and to a robust economy. Our actions have become apparent with facts on the ground."
The rapid drop in unemployment, coupled with the sharp price increases in food - especially in dairy products - underscores a rise in standard of living. The Bank of Israel is expected to respond by raising interest rates through an accelerated mechanism. The hike will most likely be a quarter of a percentage point, to a level of 3.5%.