Israelis are many things, but they are not productive. A friend of mine who managed a restaurant used to admire the guts of his workers who, in front of their manager, would punch in at the beginning of the day and then immediately sit for a nice long cup of coffee. Unfortunately, the lack of production is not just anecdotal (leave your anecdotes below!).
Production within a country can be measured by dividing the Gross Domestic Product by the total number of hours worked. High production tends to indicate a high standard of living and in our lovely country production is down. Thankfully for the Jewish masochists among us, economists can quantify just how inefficient we are. Per hour worked, Israelis add 10 dollars less to their GDP compared to their OECD counterparts (The OECD is a clique of the world’s most functional countries. They periodically gather to eat scones and make fun of Russia).
Taub Center research offers two reasons to explain the low level of productivity. One of the biggest issues is a poor distribution of Israelis within the various professions. Israel, being a Jewish state, is overflowing with accountants, economists, lawyers and overbearing mothers. However, the economy needs more techies. The number of people entering those professions has far outpaced the need for those jobs. In the last 20 years, wages have stagnated while tech wages are inflated due to the lack of humanpower.
Another issue is the lack of competition in Israel. Israeli industries that must export products to survive and face competition from foreign imports tend to be more productive. Increased competition forces industries to work harder to be productive. August bring your kids to work month becomes less palatable if a Chinese company is threatening to move in on business.
How can Israel fix this? For one, kids in high school and university can be incentivized to study technical subjects. Publicizing the fact that the glut of lawyers (also a terrible band name) is keeping down salaries while high tech salaries are very high may help. To his credit, Minister of Education and former Minister of Economics Naftali Bennett seems to be sensitive to this need and has nothing to apologize for here. In addition to education, opening industries to global competition will likely make them operate more efficiently, though it could also cause short term unemployment problems if not done carefully.
(Check out the Taub Center report here. I don’t work for them and they didn’t pay me to post this though that’d be nice.)