Will Israeli workers go back to the office?

As Israel transitions into its post-Covid-19 return to daily life, one of the first questions employers have faced is if and how to bring their workers back into a physical office. In sectors from high tech to non-profits, many workplaces are at least considering, if not already implementing, a hybrid model of work, combining both in-person and remote elements. Around the world, remote working is also increasing and new companies are emerging that operate completely online.

But how prepared are Israelis to work remotely, and which Israelis have the characteristics and skills to do so successfully? Taub Center researchers Shavit Madhala and Prof. Benjamin Bental used data from the PIAAC survey (Survey of Adult Skills of the OECD) to evaluate the degree to which Israeli workers have this ability, a subject that has become all the more important as Israel emerges from a year of repeated economic shutdowns.

Israel had a relatively low level of working from home before the pandemic. In 2019, for example, about 5.3% of workers in Europe worked mostly from home while, in Israel, only 4.4% of workers did so. Nonetheless, the prevalence of remote work in Israel has been increasing over the last decade and soared during the COVID crisis.

During the first lockdown in Israel, according to an employer survey in selected industries (which make up about a third of all employees in the labor force), about 21% of workers worked from home. The rate was especially high in high tech (49%) and the finance and insurance industries (41%). While this rate went down substantially in the finance industry, it remained relatively high in high tech even after restrictions relaxed. Furthermore, Israeli businesses used the time during the COVID crisis to improve their technological capabilities, such as providing remote access to the companies’ internal systems, which allowed for greater accessibility for employees working remotely.

How likely is remote work to continue once restrictions on gatherings are removed? The Taub Center researchers found that the average ability of an Israeli worker to work from home is relatively high and exceeds the OECD average, yet this ability is strongly related to certain job task traits. The Taub Center study found that these fall into three categories: tasks requiring physical and manual skills; those requiring social interaction (face-to-face work); and digital work. The first two categories involve skills that are difficult to carry out from home while the third improves the ability to work from home. Using these categories, the researchers were able to analyze how Israelis’ ability to work remotely differs across occupations and population groups.

In general, workers in prestigious occupations, which are characterized by high hourly wages, have the highest potential of working from home, though this does not hold up across the board and there are exceptions at both the high-wage and low-wage ends of the spectrum. For example, managers, who have very high hourly wages, are less able to work from home than are academics, engineers and technicians. On the other hand, those working in clerical jobs, which have relatively low hourly wages, have among the highest potential to work from home. In general, industries with high potential for working from home include information and communications, finance and insurance, and professional, scientific and technical activities.

Jobs that are less adaptable to remote work include those that require interpersonal interactions and physical labor, such as those in the fitness industry, the food industry, construction, and retail.

The ability for remote work also differs across different segments of Israel’s population, based on the tendency of these sub-populations to work in jobs with characteristics that lend themselves to remote work. For instance, women in Israel have a greater potential to work from home than do men, specifically women with children under the age of 6, due to their tendency to choose professions with characteristics that allow them to work from home. In a breakdown by age, older adults (56-65-year-olds) have a greater ability to work from home than young workers (16-25-year-olds) since they generally perform tasks that are not physically demanding and require less social interaction.

It is noteworthy that Arab Israelis have a significantly lower ability to work from home than their non-Haredi Jewish peers and even than their Haredi ones. This is due to the physical nature of jobs typically performed by Arab men and service jobs requiring face-to-face contact in which many Arab women are employed. A compounding factor is the lack of digital education and insufficient infrastructures in the Arab sector, which are highly reflected in the low use of digital technology at work. Correcting these deficiencies is likely to enhance the ability of Arab Israelis to access prestigious jobs in the labor market.

Even with these differences across population groups, the factors most responsible for explaining workers’ ability to work for home are their occupation and industry. Together, occupation and industry account for about 70% of the explained difference in Israelis’ ability to work remotely. This has broad implications for the degree to which remote work can be adopted in Israel because the industries with the highest ability to work from home – information and communication and financial services – employ only about 6% and 3% of the Israeli workforce, respectively, while industries that employ about a third of the workers in the economy – retail trade, education, health and welfare services – are characterized by a low portion of workers who can work from home.

The researchers’ findings point to the fact that expanding options for remote work in Israel is not only dependent on the social norms regarding work, many of which have shifted during the COVID pandemic, but also on the skills and characteristics of Israeli workers.

Whether or not remote work is desirable is still up for debate. Skeptics worry about its effect on office dynamics and productivity, while advocates tout the advantages of flexibility and argue that remote work options could improve the employment rates or quality of employment among population groups traditionally marginalized in Israel’s labor market. For the time being, many Israelis returning to “work as usual” are participating in a sort of live experiment on the future role of remote work in the labor market, the results of which remain to be seen.