Coronavirus could accelerate automation in Israel’s labor market – are we prepared?

The way we work has changed drastically over the past several months, since the world was hit with the novel coronavirus. These changes have, among other things, highlighted and perhaps even accelerated a process that was already underway – automation in the labor market and the need to adapt workers’ skills accordingly.

The need for critical workers like supermarket cashiers to physically go to work during the pandemic called attention to jobs that currently require physical human presence, but do not necessarily need to in the future. At the same time, the crisis led employers to find ways for work that was never done remotely in the past to be accomplished online, increasing the importance of skills deemed relevant for the future labor market, like computer literacy, more quickly than might have transpired under normal circumstances.

Thus, the virus, through both “push” and “pull” factors, has launched us headlong towards the trends that were already expected to shape the work-place in the coming decades, increasing the urgency to assess the preparedness of Israeli workers for the demands of the future labor market.

A recent Taub Center study maps the Israeli labor market prior to the coronavirus outbreak based on the frequency with which workers use skills considered essential for the future labor market and the share of jobs/employees at risk. It finds that the share of positions at high risk of automation in Israel is similar to the OECD average — standing at about 15%. An encouraging finding is that the share of positions at low risk of automation in Israel is about 31% — higher than the OECD average.

However, within Israel, certain groups are at higher risk of losing their jobs to automation than others. For most population groups, workers ages 16-24 are found to be at a higher risk than older age groups – a phenomenon that exists not only in Israel, but also in other developed countries.

The population group at highest risk, across all age groups, is Arab Israeli men. This is likely related to the fact that more than half of Arab Israeli men work in manufacturing, construction, and machine operation – all fields with a high risk of automation. This is more than double the share of Jewish men working in the same fields.

In addition to construction and manufacturing, the industries in Israel at the highest risk of automation include the transportation and storage industry and the food and lodging industry. In contrast, lower risk levels are found in industries such as art, entertainment and recreation, information and communications, and the field of education.

A more detailed list of occupations reveals that those jobs requiring an interaction with machines and clerical jobs are characterized by a higher risk of automation, while occupations requiring creative thinking, judgment, complex problem solving, social intelligence, and higher education are characterized by lower levels of risk.

A characteristic of workers in occupations rated at low risk of automation is that they tend to use computers more in their current work than those at high risk – 86% of workers in low-risk occupations use a computer at work compared to 48% of workers in high-risk occupations.

There is also a difference in computer use across population groups in Israel; both Haredim (ultra-Orthodox) and Arab Israelis use computers at work less than non-Haredi Jews. This highlights the importance of improving and expanding computer literacy in these populations.

We can already see the impact having skills deemed relevant to the future labor market has had on workers during the pandemic. Many workers have been forced during this time to shift their work into a computerized setting either completely or partially by moving to virtual meetings, online sales, and even online teaching. At the same time, businesses and workers without the ability or appropriate skills to adapt have been left behind.

For example, retail businesses with online sales capabilities have continued to function during the crisis, while those without them struggled to survive.

Therefore, although it has long been paramount for Israel to invest in training programs aimed at enhancing human capital, particularly for those with low skills, the coronavirus crisis has intensified this need. The current situation, in which there are many workers who have lost their jobs or are on unpaid leave, presents a natural opportunity for the Israeli government to invest in improving the types of workers’ skills that will be in demand in the future labor market. Such an investment could pave the way to future growth and help the economy overcome the setbacks caused by the pandemic.