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IDI.2018

Economy Israel needs to

Economy Israel needs to invest in the skills of the future Brosh and Aviram-Nitzan urge the government to train workers for the future job market By Steve Linde THE MANUFACTURERS ASSOCIATION President Shraga Brosh and Daphna Aviram- Nitzan, Director of the Center for Governance and the Economy at IDI, are calling on the government to change its priorities when it comes to subsidizing education for Israel’s future labor market. In an exclusive interview in Brosh’s Tel Aviv office, they also urged the younger generation to learn skills that will be relevant in the coming years, and those already in the job market to adapt to the rapidly changing requirements of Israeli society. “If you look at what has been going on in the last 10 to 15 years, you can see that the Israeli economy is well equipped with advanced technology, tech-savviness and innovation,” Brosh said. “This promises to keep us on the front line and maintain our competitive edge with our competitors abroad. This is also what allows us to export abroad, because as you know the labor costs are quite high here in Israel, and we lack other advantages such as cheap raw materials and so on. “This means we have to focus on technology. Right now we are looking to increase our productivity and create new technologies to boost our capacity and competitiveness,” he continued. “Of course, this will affect the workforce in Israel. The moment you bring smarter, better machines to your factories to increase productivity, you need to employ better-educated workers, people who understand what they are doing. You can’t do on-the-job training. You have to start the training process in high schools and technical schools. We will need more engineers and technicians. The 10 scale and orientation of our workers must change and grow, to allow us to adapt to new technologies.” Aviram-Nitzan agreed, urging the government not to be complacent. “I would like to focus on the labor market, which is currently experiencing a record low 4% unemployment rate,” she said. “This is a huge achievement for the Israeli economy, but we shouldn’t be complacent. If we look toward the not-so-distant future, according to international experts, the sharp increase in the use of technology in industry and throughout the labor market will mean that many jobs and entire occupations will become irrelevant. They say that between 30% and 50% of workers will have to change their occupation. “The most common example is drivers, but also there are many others, such as technicians in the medical profession who work in ultrasound and x-ray departments, or people who manage investment portfolios, or those in the service industry, who will probably be replaced by machines,” Aviram- Nitzan explained. “They have to be ready to learn new skills and new occupations to adapt to a new labor market. According to these experts, the technological education that about half of our students now study will be irrelevant to the labor market and to the needs of employers in the future.” Brosh said that so far, the government has welcomed their appeal to prepare for the future. “I agree 100% with Daphna that skills are going to have changed, and that’s what we are working on right now with the government,” he said. “Together, we are trying to identify what the needs and skills 70 YEARS OF INDEPENDENCE will be in the near future, even five years from now, and of course in the next 15 years. It’s not so easy to do this, but if we don’t try to prepare properly, we will face a huge human resources deficit. “Also,” he said, “it takes time for people to grow up, go to the army and learn new skills. Even if you look at the last 70 years, you will see a big movement from people who did manual labor with very low skill sets, and lower levels of job education to highly educated and skilled workers. Today it’s not good enough to have good hands; you have to have a good mind, to learn fast. That’s what has happened in recent years, and it will be much more critical in the future. My appeal to the government in this regard has been met with a good response, because in the upcoming budget, about NIS 3.5 billion has been allocated to vocational education and training (VET) over the next 10 years, in addition to what we are currently investing. This will make it possible to make the necessary changes.” Aviram-Nitzan said that while she applauds what the government is planning to spend in the coming years, she believes the government is currently not investing enough money in teaching workers new skills. “The Israeli government is not putting enough money in this area right now,” she said. “All over the world, OECD countries are allocating more than triple what Israel is investing in their current budgets. If the government wants people to stay employed in today’s market, they have to incentivize employers and the employees to go and learn new skills in order to be able to adapt to new technologies. The market will not do

MARC ISRAEL SELLEM Daphna Aviram-Nitzan, the Director of the Center for Governance and the Economy at the Israel Democracy Institute, with Shraga Brosh, the President of the Manufacturers Association of Israel this by itself. Employers don’t have enough money, or the mindset or the time for that because they don’t make long-term plans for the future. “They don’t see the whole picture because they are focused soley on the profitability of their businesses. They have to survive and grow. I believe it is the government’s responsibility to lead change in the market and shift it in the right direction, the government must encourage employees to learn new skills, it won’t happen by itself,” Aviram-Nitzan emphasized. She warned that if action is not taken, the economic gap in Israel could widen further. “Both the hi-tech sector and the rest of the economy are already suffering from a mismatch of workers, and that’s why there is such a gap between rich and poor. The hitech sector is faced with a huge obstacle, it is in need of more engineers and technicians, which the market cannot supply. In addition, other sectors also needs occupations that the market has not provided. So the government must roll up its sleeves, get involved and bridge these gaps. If we don’t deal with this now, both the Israeli economy and society will face a dramatic crisis. I fear that this gap could grow even further between those who have the technological skills and those who don’t, who will be increasingly redundent to the future job market.” Brosh urged Israelis to engage in what he called “life-long self-learning.” “Today it only takes three or four years for the latest technologies to become irrelevant. If people want to keep their jobs and remain relevant to the future job market, they have to engage in a constant process of selflearning”. “This is the education system’s responsibility,” he highlighted. “It has to teach the new generation to continue learning on a permanent basis, from the moment they finish high school until they reach retirement. This was not the case in the past. If you learned to be a carpenter or a welder, you could stay one until the end of your career. Today, every three or four years you have to move forward, and the government has to provide you with the skills to do it.” Aviram-Nitzan added: “It’s a huge challenge for the educational system to provide us with the people that the labor market will need in 20 years time. Half of the children who are starting school now will work in occupations that may not yet exist. So we need to provide our children with tools for life-long learning, selflearning and technological abilities. Most importantly, we need to teach our children to adapt to rapid and significant changes, because this will be the new reality 10 or 20 years from now. I think everyone who gets an education should think about what he or she is going to do with it when they grow up and go to work. It doesn’t have to be a technical occupation but it must be relevant to the needs of the market. “I would just like to add that If we want to maintain the stability of our Israeli democracy, it is very important that people get the right education so that they can support themselves, and live and work with dignity in a stable environment,” said Aviram-Nitzan. Asked about his advice to young Israelis, Brosh said with a smile: “Come and be part of the Israeli industry. Believe me, it’s a big challenge. You have to go to high school, study technical courses, go to the army, then try to gain experience in those areas you learned about. When you get out of the army, some people will directly begin working, and some will go on to study at higher educational institutions, universities or technical colleges. My advice is, come back to the industry you’re interested in because, as I said, technology will constantly change in the future. For the younger generation, it’s a big challenge to learn new things and adapt to new situations and standards here in Israel.” Addressing their optimism about the future of the country’s economy as it approaches its 70th anniversary, Brosh said: “First of all, as a manufacturer, I am always optimistic, otherwise I could never run a factory. Seriously though, I think we need to focus on closing the gaps between the different sectors in Israeli economy and society. We don’t like the fact that this gap is growing bigger and bigger. It’s very risky. One of the ways to close this gap is education. Education is the key to making more money, and adapting to the needs of our society. But yes, I am optimistic, and I’m sure that the next 70 years will be even better than the last 70 years.” Aviram-Nitzan added that “at IDI, we try to work with partners in civil society, the private sector and government, to drive forward-looking thinking, planning and policymaking. I continue to be optimistic about our future, despite the many challenges. I see an awakening among policymakers, employers and labor unions with regards to the need for change. The future is uncertain, but if we work together, we will be ready for whatever it brings.” 70 YEARS OF INDEPENDENCE 11

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