Policy Studies

No. 36 November 1998

Summary of Policy Study

"EMPLOYMENT BUREAUS IN ISRAEL: A PROPOSAL FOR REFORM"

by Shlomi Shuv

Shuv's findings are stunning. He shows that the State Employment Bureau actually increases unemployment, prolongs periods of unemployment, and wastes several hundred million dollars of hard-earned taxpayers' money in the process. Although it enjoys the exclusive right to determine eligibility for unemployment benefits, in fact, it has no real incentive to place people in jobs. After all, its state employees get paid regardless of their success or failure.

But this should come as no great surprise. As might be expected from all of our Policy Studies, the State Employment Bureau is your standard, garden-variety government monopoly. Government monopolies fail in virtually every other area of the Israeli economy, so why would one expect this monopoly to be any different.

Shuv's reform proposals will not be met with enthusiasm from the bureaucrats. He recommends shutting down the whole apparatus of state unemployment insurance, and replacing it with private unemployment insurance. Private employment agencies would take over all tasks of job searching, professional training, and placement.

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