During the Israel-Hamas War, the number of young people in the Arab sector who are not working or studying shot up from 22.3% to 34.5%, according to a new study released Monday.
The study was carried out by Alfanar, a nonprofit organization aimed at social and economic empowerment of the Arab sector. It examined various aspects of Arab employment and found wage gaps, low employment, and lower productivity.
The Arab sector could be a major growth engine for Israel’s economy, Alfanar said in its report, adding that previous research indicated that failing to integrate Arab Israelis costs the economy NIS 30 billion to NIS 40b. every year.
The government has invested resources in improving the Arab sector’s economic situation over the last decade, but the resulting changes are not enough, the report said.
“The Arab sector still suffers from over-representation in industries with low wages and employment instability,” it said. “In many areas, the gaps between Jews and Arabs are only growing.”
Wage gaps
One area where progress can be seen, but large gaps still remain, is in wage gaps between Jews and Arabs, the study showed.
While the average wage for Arab men has increased from NIS 9,328 to NIS 11,486, the wage gap between Arab men and Jewish men has grown from 66% to 70%.
The same trend can be seen for Arab women, whose average wage increased slightly – from NIS 6,362 to NIS 7,626 – but whose wage gap compared with Jewish women has grown from 54% to 66%.
Another such area is the employment of Arab women, the study showed. While employment of Arab women grew from 30.5% to 45.6% between 2013 and 2023, there was still a 39-percentage-point gap between Arab and Jewish women in employment, with Jewish women’s employment at 84.6%.
Low-paying fields
The study also found that Arab workers are concentrated in low-paying fields, such as construction, education, and health services, while the number of Arab employees in higher-paying industries, such as hi-tech and public administration, remain low.
Arab employees have significantly lower job security than Jews, the report said, adding that six times as many Arab men are employed without a contract than Jewish men.
Nearly 50% (47.1%) of Arab men said they would have a low chance of finding another job at the same pay rate if they were to lose their current one.
Just 1.4% of Arab women were in managerial positions, compared with 5.3% of Jewish women, and 5.4% of Arab men were in these positions, compared with 11.3% of non-Arab men, according to the study.
Drop in employment
The report also highlighted a drop in employment among young people in the Arab sector. The employment of those aged 18-24 dropped from 60.7% to 57% in the last decade, and among those aged 25-29, employment dropped from 77.3% to 74.4% in the last five years.
Just 1% of young people said they cared if their employer was Jewish or Arab when picking a workplace, the report said.
The study “shows the enormous challenges that the Arab sector still faces in the labor market,” Alfanar CEO Hussam Abu Baker said. “Alongside the positive changes that have taken place over the last decade, in spite of some improvement in employment rates, primarily for women, the sectoral gaps in wages and job stability are far from narrowing.”
Dr. Nasreen Haddad Haj-Yahya, who conducted the study, said improving integration would require appropriate government action that “combines investment in Arab education, professional training, making higher education accessible, improving employment infrastructure, and developing employment and industry in and near Arab areas.”
The study was based on employment data from Israel and around the world, as well as data from the Central Bureau of Statistics.