Israel entered the 2020s with a strong and resilient labour market, marked by rising employment, falling unemployment and sustained wage growth despite repeated security shocks. Following both the Covid-19 pandemic and the 2023–24 war, key labour-market indicators recovered relatively quickly towards pre-shock trends. However, significant and persistent employment and earnings gaps remain, particularly among Arab Israelis and Ultra-Orthodox Jews, who continue to lag behind non-Orthodox Jews. As the Ultra-Orthodox share of the working-age population grows, closing these gaps becomes increasingly important.
Strengthening labour-market integration, improving human capital and sustaining policies that increase incentives to work will therefore be crucial for Israel’s future.
