Looking forward: How we move ahead a year after the coronavirus crisis struck Israel

In these early months of 2021, Israel has been both evaluating the scope of the losses experienced during this unprecedented period of Covid-19 and taking initial steps towards recovery.

Given that the social and economic repercussions of the Covid-19 pandemic are still unfolding, one of the first available indicators is its impact on mortality. To what extent did the pandemic increase mortality in Israel?

During the first two months of 2020, mortality rates in Israel were at their lowest ever – fewer than 11 deaths per 100,000 people per week. This obviously changed with the onset of the pandemic. After accounting for both population growth and how much mortality would have been expected to fall in the absence of Covid-19, we estimated that the number of deaths in Israel increased by about 10% between March and December of 2020. In the Fall, at the height of the pandemic in 2020, Israel’s overall mortality rate rose to a level last observed in the 1990s, when life expectancy was four years lower than it is today.

Nonetheless, this excess mortality from the coronavirus was lower than it could have been. This is largely due to Israel’s relatively young population and patterns of coronavirus infection among Israelis. In 2020, confirmed Covid infections were disproportionately high in the 20-55-year-old age group, among whom mortality from the virus was low.

All in all, the changes in mortality during 2020 reduced life expectancy at birth by a little more than 2 months, and life expectancy at age 65 by about three months. These reductions were likely greater in Haredi (ultra-Orthodox) and Arab populations, since rates of Covid-19 infections and hospitalizations were disproportionately concentrated there.

Looking forward to the rest of 2021 and beyond, now is the time to anticipate and prepare for some of the less immediate, but no less significant, challenges that are likely to face the country in the wake of the pandemic.

One of the major questions is how to get economic growth back on track. Taking into account Israel’s population growth, GDP per capita decreased in 2020 by 4.3% and returned to its 2016 level. Given the rapid immunization process, a growth of 6.3% in GDP is expected in 2021 and 5.8% in 2022—growth that nearly closes the gap and brings GDP per capita close to its expected growth rate without the coronavirus.

With that, the fact that government spending in 2020 increased to about 35% of GDP while revenue fell to about 23%, created a deficit of almost 12%. Subsequently, the national debt increased to 72% of GDP and is expected to grow further, setting Israel back more than a decade. It is important to reign in the deficit in the short-term and the national debt in the longer-term. It seems that to do so there will be no choice but to raise taxes, but in order to avoid increasing inequality between Israel’s population groups, it would be ideal to avoid raising indirect taxes, which are regressive by nature.

With regard to the labor market, the unemployment rate—per the expanded definition during the crisis—stood at 16% at the end of 2020. Although unemployment is expected to fall significantly, it will still remain high relative to its levels over the last decade, and is concentrated among low-wage earners, young people, those with low education levels, and in industries such as food service and tourism.

Prolonged absence from the labor market affects workers’ skills and reduces their wages upon their return to work. Therefore, the inequality that has diminished in recent years may increase again if these more vulnerable populations cannot be reintegrated back into the labor market. This makes it all the more necessary to increase access to vocational training programs, particularly for vulnerable populations.

For those unable to reintegrate into the labor market and others in need, the welfare system has been successful in providing a safety net for many citizens and reduced the incidence of poverty by about half in 2020. As the crisis ends, however, there is a danger that the system will return to the pre-crisis situation and even regress given expected demands for budget cuts.

In the realm of education, the pandemic has shown that online teaching can be a more integral part of the education system, but it also unveiled existing gaps in the education system. In order to preserve the advances that were made during the crisis, like distributing computers to some of the population and reducing the number of students per class, differential budgeting will need to be adopted throughout every level of the education system.

The instability and loss of school days from the last year could lead to developmental delays in early childhood in particular. Steps that can be taken to reduce the damage include providing support and assistance to parents, adding hours to and improving the quality of early childhood education frameworks, and preparing primary schools to offset the developmental lags of the coronavirus cohorts when they reach school.

Just as with education, it is important to look beyond the immediate effects of the pandemic when planning for Israel’s healthcare system. For example, the crisis was accompanied by a significant increase in requests for mental health treatment, an element of the system that was already characterized by long waiting times. In addition, the public’s reluctance to seek medical treatment during periods of high Covid-19 infection impacted the number of diagnostic tests for serious diseases, which may affect treatment of these diseases in the coming years.

Looking at the bigger picture, though mortality increased in 2020 as mentioned above, it was not as high as it could have been, and the Covid-19 pandemic will not affect the overall rate of population growth. Furthermore, there are signs of optimism and a desire to move on from the pandemic and get on with regular life – immigration into the country is expected to increase and while some experts predict a relative decline in birth rates, others think the crisis might actually lead to a baby boom as young people, despite the difficult year we have just experienced, choose to “celebrate life.”