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Israel faces rising unemployment rate and small business closures amid Gaza war

The empty Mahane Yehuda market in Jerusalem amid heavy fighting between Israel and Gaza. October 8, 2023. (Photo: Noam Revkin Fenton/Flash90)

In the aftermath of the surprise invasion and brutal attack by Hamas on Oct. 7 and the subsequent war in Gaza, where Israel is battling the terror group and working to bring back its hostages, the entrepreneur powerhouse is facing an increase in unemployment and small business closures.

According to the Israel Central Bureau of Statistics (CBS), unemployment due to temporary loss of work reached almost 10% in October, affecting some 428,000 Israelis.

When Hamas attacked Israel’s southern border towns, almost 400,000 Israelis were called up to reserve duty with about 80,000 subsequently placed on unpaid leave.

In October, the nation's employment rate went from 61.1% to 56.5%, showing a direct negative impact on the workforce because of the war.

Earlier reports from CBS show the construction industry as being the most severely affected, with over 62% of businesses on the brink of closure.

High-tech and financial services sectors faired much better, with only 41% experiencing a loss of revenue.

According to individual reports, 51% of businesses across the nation have experienced a decrease in income compared to pre-war times, with the southern and northern districts reporting the highest negative economic impact.

In the south, the loss of revenue was slightly higher (66%) compared to 64% in the north. The construction and food & beverage industries specifically have suffered losses, with over 70% of businesses reporting a loss of income.

Small businesses have also taken significant hits since the Israel-Hamas conflict began, with a 57% decrease in income for businesses with 10 or fewer salaried positions, compared to only a 14% decrease for large businesses that employ up to 250 people.

The data also shows that 42% of small businesses are on the verge of closure compared to 15% of larger businesses.

The nation is expected to experience an economic decline in the fourth quarter, as well as a lower-than-anticipated growth rate.

As the impact of the war continues, Israeli policymakers and stakeholders will focus their attention on rebuilding and supporting the businesses affected by the conflict. The government will offer grants and state-backed loans to assist small and mid-size businesses, as well as a special fund to cover employee salaries.

Programs like the "Day After Fund," run by Israel Firstfruits Center for Economic Advancement, are already in place to assist believers in Israel, including Messianic Jews, Arab Christians and Gentiles, with immediate emergency bridge loans and long-term business recovery planning.

The All Israel News Staff is a team of journalists in Israel.

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