Israeli Economy in Dire Straits As Jobless Rate Reaches New High

After a mild recovery in September and October, Israel’s economy is once more in a perilous state, its most alarming feature being rising unemployment.

The number of jobless reached a new high of 51,300 last month, a 6.3 percent increase over the previous month.

It was attributed mainly to the ending of the agricultural season, with a 20 percent drop in the need for farmhands.

But the unemployment trend shows no sign of reversing, and that is bad news for the absorption of the tens of thousands of Soviet Jewish immigrants expected to arrive this year, many of whom, moreover, lack vocational training for Israel’s job market.

Further aggravating matters, the number of Palestinian workers from the West Bank continues to grow. About 31,000 hold work permits, but unofficially there are many more.

Unemployment itself is a symptom of a deepening recession, which Finance Minister Shimon Peres described as “catastrophic” during an appearance he made before the Knesset’s Labor and Welfare Committee on Monday.

Peres has been accused by some of his Labor Party colleagues of deserting socialist values. “We should inject money like capitalists, to share it like socialists,” he told the Knesset members.

Some of the woes faced by Peres are a 5 percent decrease in state income last month, compared to the same month the year before, and a 20 percent inflation rate, which is rising.

Shopkeepers are complaining of a falloff of business, while economists worry that the government’s decision to raise the value-added tax from 15 to 16 percent will be used by business to raise prices even more.

Meanwhile, the country’s foreign currency reserves are dwindling, with expectations of a new devaluation of the shekel.

On Monday, the Knesset approved a supplementary budget of 4.2 million shekels ($2.2 million).