Israel’s labor market remains tight, with the number of job seekers almost matching the number of vacancies, but behind the overall numbers lies an unusual trend. In jobs for university and college graduates requiring high skill levels there is currently a surplus of jobseekers over available jobs, while in low and medium-skill jobs, especially in industry and construction, there is a severe shortage of workers.
This has a direct effect on pay. In the construction industry, workers’ pay has risen by 9.1% in the past year. Meanwhile, the upgrading of the skills of haredi and Arab women and their greater integration into the workforce has created a “hole” in occupations requiring lower skill levels.
The information is from the “Labor Market Pulse” report published by the Employment Service, which provides a detailed breakdown of the labor market in Israel, particularly from the point of view of jobseekers looking for openings in their professions. In graduate occupations, the Employment Service reports 0.7 vacancies per jobseeker, meaning that ten graduates are competing for every seven available jobs. This is in sharp contrast with the situation in 2022, during the post-pandemic growth period, when there were over thirteen available jobs for every ten graduate jobseekers.
In lower skilled jobs, the trend is the reverse. The outstanding example is in industry and construction. In 2022, there were 1.91 vacant jobs in these sectors for every jobseeker, but by 2025 the number of jobs rose to 2.91. In other words, for every ten jobseekers there are more than 29 jobs available. Similar if less extreme trends are to be found in jobs for machine operators, product assemblers, and even non-skilled workers.
The Employment Service says that, among graduates, the most prominent rise in the number of jobseekers in absolute terms is in high tech, a field that in the past was hungry for workers and in which now, following general and perhaps also technological changes, demand has waned. Nevertheless, the Employment Service says, “In general, it is still easier for highly skilled jobseekers to reenter the job market than for jobseekers with low to medium skills. The difficulty for highly skilled jobseekers has, however, grown in the past few years.” Those who do succeed in finding new jobs in high tech of course enjoy salaries among the highest in the economy.
The Employment Service explained to “Globes” that there had been a substantial rise in the quality of employment of Arab and haredi women. This and other constraints leave a shortage in low-skill professions. On the face of it, haredi men could fill some of these vacancies, but in practice there is a disparity between the kinds of jobs available and the those that haredi men seek.
The solution that many employers find is technology, for example in the construction industry, which is closed to cheap Palestinian labor, and of course artificial intelligence, which is penetrating the job market more and more, is accelerating all these processes.
Israel behind in educating for job market
The trend is not unique to Israel. Studies by the Bank of Israel and the Taub Center for Social Policy Studies in Israel have pointed in the past to the phenomenon of overeducation, and the mismatch between fields of study at institutes of higher education and eventual fields of employment.
According to an OECD report published a month ago, the most successful predictors of people’s pay levels are their parents’ education and, more importantly, skill levels in the labor market (numeracy, literacy, and problem-solving ability).
In Israel, it emerges, higher education advances numeracy skills less than the average in OECD countries. A more severe problem, however, lies in “lower” education – completing high school or post high school technical education – where Israel has the worst record of all the OECD countries. In other words, a “bagrut” matriculation certificate has low value compared with equivalent qualifications in other countries.
In absolute terms as well, the skill levels of Israeli workers are relatively low. The OECD accordingly recommends focusing on the development of general skills relevant to the labor market, and strengthening cooperation between the education system, employers, and employment services.
Adv. Inbal Mashash, director of the Israel Employment Service, said, “Despite the war, the Israeli labor market has demonstrated resilience and strength. Nevertheless, looking at it more deeply, there are employment challenges that demand dynamic solutions suitable to the changing labor market. Beyond the change in the mix of jobseekers and the shortage of workers in some professions in construction and industry, we need to take into account the impact of technological, global, and demographic changes. Understanding this, the Employment Service constantly updates and revises the tools that it provides to jobseekers and employers. This is a substantial, national need.”
Published by Globes, Israel business news – en.globes.co.il – on January 18, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.
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