Labor market remains tight despite post-war normalization

ISRAEL - In Brief 17 Dec 2025 by Sani Ziv
Labor market remains tight despite post-war normalization Labor-market indicators continue to point to a tight labor market that may sustain wage pressures and slow the pace of interest-rate cuts, even after the ceasefire. Two new releases this week suggest that labor demand remains strong, while labor supply is only gradually increasing. Job vacancies, a key gauge of labor demand, continued to edge higher in November, reaching 151.3 thousand (seasonally adjusted), with the vacancy rate holding at a high 4.6%. Demand remains concentrated in services—particularly sales, food services, and personal services—while hiring in high-tech has softened, with declines in openings for software developers and engineers. The chart below shows labor-market developments over time. The left axis presents the unemployment rate (green bars), the share of workers who did not work due to war-related disruptions (yellow bars), and the share of employed reservists (orange line), all expressed as a percentage of the labor force. The right axis shows the labor force participation rate (blue line). Together, the chart illustrates the gradual fading of war-related labor disruptions and a recovery in labor supply, while unemployment remains low, pointing to continued tightness in the labor market. Labor market indicators: unemployment, reserve duty, and participation rate Source: Bank of Israel; Central Bureau of Statistics. On the supply side, the unemployment rate edged up slightly to 3.1% in November from 3.0% in October (seasonally adjusted). Despite this slight uptick, the unemployment rate remains extremely low, pointing to a persistent labor shortage. The labor force participation rate ro...

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