The unemployment rate in Israel dropped to a 30-year low of only 5 percent in October, the Central Bureau of Statistics reported Monday.
The bureau's data indicates that the number of Israelis without work is currently 155,000 - a drop of 1.3% since December 2010. This means that no fewer than 40,300 out of work-able people found gainful employment. These numbers fly in the face of forecasts by top economists, including the Bank of Israel and the OECD, who predicted that unemployment would rise by 1% to 1.5% and reach 6.5% by the end of this year.
The unexpected drop in unemployment can be attributed to accelerated economic growth, increased efficiency and a rise in the quality of life.
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The report puts Israel on a higher standing than most Western countries. The U.S. currently has a rate of 8.6% unemployment, and the eurozone nations come in at an average of 10.3%.
The last time a 5% unemployment rate was recorded in Israel was during the early 1980s. Israel's current unemployment hovers close to a level of "natural unemployment," the rate of unemployment that occurs during citizens' natural transitions from one job to another. Unlike their counterparts in Europe and the U.S., the unemployed in Israel have been finding new jobs across the spectrum, with many of the positions being full-time.
"We are very proud of the drop in unemployment. This historic number is thanks to successful government policies we put in place to prevent a recession. As such, it is imperative that we keep working to maintain the low unemployment rate in the future. In light of the current crisis in Europe, we will need to continue cultivating investment and growth in the market while exercising a responsible fiscal policy," Finance Minister Yuval Steinitz (Likud) said.
Steinitz's optimism was dampened by Bank of Israel forecasts predicting a renewed rise in unemployment and an economic slowdown. Despite a growth rate of 4.8% in 2011, it projected that the economy would only grow at a rate of 2.8% in 2012, down from their prediction last month of 3.2%.
The Finance Ministry will take the Bank of Israel's economic forecast into account in its future policies.
The anticipated dip in growth comes from a decrease in demand for exports caused by the global economic crisis, which has slashed quality of life around the world. The economic troubles plaguing Europe have weighed especially heavy on the Bank of Israel's outlook -- as it grapples with bailouts for failed economies such as Greece and other nations on the brink of collapse, its economists have been advising extra caution.
According to Bank of Israel Governor Stanley Fischer, current statistics are in line with the expected continued slowdown across the eurozone in 2012. Export growth is expected to drop from 3.9% in 2011 to 1.2% in 2012, and an even sharper plummet is predicted for import growth, from 8.8% all the way down to 1.4%.
Concerning the housing market, the Bank of Israel has noted a drop in prices for new apartments. According to a Bank of Israel spokesperson, the drop comes from "continued growth in building projects, the delayed reaction to a rise in interest rates, the Bank's adjustments to mortgages and steps taken by the Finance Ministry in real estate taxation. All of these factors contributed, and their influence will continue to be felt in the future."
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