The Marker: 160 thousand workers “disappeared” from the Israeli labor market

The May 2026 labor force participation rate is 61.6%, according to data presented this week by Treasury Chief Economist Shmuel Abramzon.

It should be noted that the labor market participation rate takes into account not only those who are employed or self-employed, but also those who are actively looking for work or are on unpaid leave.

The 2.3% decline means that 160,000 Israelis who were working or looking for work in September 2023 are now not working or looking for work.

Declines in labor force participation rates have been recorded in almost all sectors – ultra-Orthodox men, ultra-Orthodox women, non-ultra-Orthodox men, non-ultra-Orthodox women, men in the Arab sector. The only exception is the increase in the labor market participation rate among women in the Arab sector, which amounted to 1.5%.

According to The Marker, the Ministry of Finance is currently conducting research and data analysis to establish the cause of this phenomenon, which threatens the stability of the economy in the long term.

Possible and partial reasons include the reservist service – many reservists do not look for work between conscription cycles – and benefits for the ultra-Orthodox sector, which have reduced the motivation of men to look for work. However, these two factors cannot explain the whole picture.

At the same time, at the moment the market does not show signs of an acute shortage of workers (that is, rapid growth in wages) or a massive transition to government benefits.