·     The Bank of Israel
Research Department, together with the Central Bureau of Statistics, is holding
a conference today on “Skills of Employees in Israel”

·     Research conducted both
at the Bank of Israel Research Department and outside the Department will be
presented at the conference, a lecture will be delivered by Prof. Eric Hanushek
of Stanford University, and a panel discussion is to be held with managers from
the business sector and policy makers from the public sector discussing policy


The Bank of Israel Research Department conference, held as a joint
initiative with the Central Bureau of Statistics, is taking place today in
Jerusalem.  The conference deals with the
skills of workers and with ways to improve them, and examines the effect of
skills on employment, wages, inequality and economic growth.


The Governor of the Bank of Israel opened the conference and presented
Israel’s primary weaknesses in workers’ skills and scholastic achievements in
the education system as reflected in standardized international tests, despite
the fact that the number of Israeli workers’ years of schooling is not low
compared to the other advanced economies. 
The Governor focused on the link between workers’ skills and
productivity in the economy, and emphasized that scholastic achievements in
Israel are particularly low among students from low socioeconomic


The Governor noted the link between the low level of expenditure per
pupil in Israel and scholastic achievement and workers’ skills, particularly
among workers from economically weaker population groups, and emphasized that
it is important that the expansion of resources allocated to education and
worker training be accompanied by professional research to examine the
effectiveness of the various programs.


“Maximizing the potential human capital of the entire population in
Israel is the key to increasing productivity and growth in the long term in a
way that will include all citizens.  We
must act to increase the level of cognitive skills among Israeli workers so
that they will be able to integrate into a changing labor market.  These skills are low by international
comparison, despite the relative wealth of workers with higher education.


“In order to achieve these objectives, it is necessary to increase
effective investment in the education system, with an emphasis on expanding
affirmative action in all aspects of the system and all schooling levels.  In particular, it is necessary to provide
broad technological education at all schooling levels, and investment in the
professional training of the adult population must be expanded to provide them
with the required skills.


“In order to efficiently gain the most out of public expenditure on
education, it is important that education and professional training programs be
accompanied by an array of research to measure their effectiveness, similar to
practice around the world.”


Chief Statistician, Prof. Danny Pfefferman, conveyed greetings to the
conference, and emphasized the importance of the skills survey conducted by the
Central Bureau of Statistics in conjunction with the OECD to measure cognitive
skills in Israel in gaining a better understanding of the issues connected with
the development and distribution of skills, and devising a more informed
economic policy based on this information. 
“A year ago, we launched the skills survey at a festive event at the
Knesset.  Today, a year later, we are
happy to see that there is an increasing number of studies being conducted
based on this survey, and that government and research bodies have discovered
the potential of this survey.  The survey
was conducted in three waves, and we are now working to turn it into a regular
survey and to monitor its data over time in order to improve skills in the
population and conduct international comparisons.  In order to build the survey, we had to build
a complex computer system including complex sampling software, and bolster
population groups.  I congratulate the
Governor, Dr. Karnit Flug, on the astute use of the data gathered, and on promoting
awareness of the survey’s findings.”


Michal Tzuk, the Supervisor of Employment at the Ministry of Labor,
Social Affairs, and Social Services, presented issues concerning the training
of workers for the labor market of the future, and the activity of government
ministries intended to improve workers’ abilities to cope with the changing
economic environment in Israel and around the world.  She presented the characteristics of the
labor force in Israel, and emphasized the need to strengthen workers’ skills
and adapt them to current and future demand for employment.


Sophie Artzav and Haim Portnoy of the Central Bureau of Statistics
presented the skills survey, the measuring methods used in conducting it, and
the main findings concerning Israel. 
They then presented a statistical analysis of the link in Israel between
reading books and skills.  The findings
are that reading a greater number of books is consistent with higher literacy
and numeracy skills, even after adjusting for the effects of variables such as
education, parental education, age and sector.


A study by Leah Ahdut of the Ruppin Academic Center and Van Leer
Jerusalem Institute and Noam Zussman and Inbal Ma’ayan of the Bank of Israel
examined the return on schooling at universities compared with colleges in
terms of wages and skills in the labor market, based on the skills survey and
administrative data files.  The study
found that skills are an important factor in explaining the wage variance of
graduates of the institutes of higher learning, and that after controlling for
psychometric scores there is no difference in return, in terms of skills,
between the graduates of the different types of institutions of higher
education.  But it was found that the
return, in terms of wages, of university graduates is about 10 percent higher
than that of college graduates, after controlling for skills.


Moshe Hazan of Tel Aviv University, and Shay Tsur of the Bank of Israel
presented​ a study on economic growth and labor productivity in Israel—the
function of workers’ skills.  In this
study, they found that when comparing human capital in Israel with other
advanced economies based on skills, Israel’s disadvantage is much larger than
if the measurement is based on years of schooling.  This gap in human capital explains more than
half of the gap in labor productivity between Israel and the other advanced
economies—both directly and because lower human capital is also a cause of
reduced investment in physical capital.


Yuval Mazar of the Bank of Israel examined the difference in the
cognitive skills of educated workers in the private and public sectors and the link
between them and the return on skills, in OECD countries.  He found that the return on skills in terms
of wages as measured in the PIAAC survey is higher among educated workers in
the private sector than in the public sector. 
This return is reflected among educated men with a tendency of highly
skilled workers to work in the private sector.


Michal Alfasi-Henley of the Ministry of Labor, Social Affairs and Social
Services. Presented an analysis of achievements on skills tests and the
characteristics of employment by health, based on an examination of the PIAAC
survey’s findings in Israel.  The study
found that poor health has a strong negative effect on skills and on
employment, and that the negative effect on employment is robust  to controls of other characteristics of the
worker such as education, age, gender and nationality.


The morning session was concluded with a study by Elad de-Malach and
Noam Zussman of the Bank of Israel and Analia Shlosser of Tel Aviv University,
who examined the effect of professional vs. theoretical education in the Arab
sector on high school dropout rates, entitlement to a matriculation
certificate, acceptance to academic studies, employment and wages.  The study found that opening up the
possibility of professional schooling did not improve any of the result
variables among boys.  Among girls, it
did contribute to reduced dropout rates, but not to increased matriculation,
improved employment rates or improved wages once the girls grew into adults.


At the afternoon session, Prof. Eric Hanushek of Stanford University
will present an analysis of the link between the quality of education, workers’
skills and economic growth.  He will
emphasize the main role that education and workers’ skills play in the economic
growth of countries, and that the proper policy, including additional resources
and the astute use of those resources can contribute much to a robust and
inclusive increase of GDP and productivity in various countries.  Prof. Hanushek will emphasize the strong
yield on investment in education, leading to the need to avoid negatively
impacting education budgets even during periods of budgetary restraint.


The conference will conclude with a panel that will begin with a short lecture
by the Director General of the Ministry of Finance, Mr. Shai Babad.  The panel, moderated by the Head of the
Macroeconomics and Policy Division in the Research Department, Dr. Adi Brender,
will feature Michal Dan-Harel, CEO of Manpower Israel; Mr. Boaz Hirsh, Director
General of the Employment Service; and Mr. Haim Russo, an industrialist and
member of the Council of the Innovation Authority, and will discuss the main
questions concerning the development of workers’ skills in Israel.