The Absorption in the Labor Market of Immigrants from the CIS - the Short Run

This paper examines the patterns of absorption in employment in the short-run of immigrants from the CIS who have arrived in Israel since early 1990. We address the question of whether the pattern of short-run absorption is consistent with its goals in the long term, or whether it diverges from them. Our analysis of the absorption of these immigrants up to 1992 indicates that considerable difficulties were encountered, and that the economy in fact moved away from its long-term objectives regarding absorption. In contrast to previous influxes, only a small proportion of the immigrants were absorbed in their original occupations. In particular, among those in human-capital-intensive occupations relatively few found employment in their own fields. A high rate of occupational shift represents an economic waste of human-capital resources on the one hand, and, on the other, contributes to dissatisfaction among immigrants. Immigrants' employment difficulties were reflected in a slowdown of immigration, and in a fall in the proportion of academics among new arrivals. This high occupational mobility can be explained in part by the size of the influx relative to the existing population, and in part by the fact that in relation to the absorption process, the economy is still in the short term, in which growth has occurred mainly in nontradables - particularly the building industry - whose occupational structure is very different from that of the immigrants. Furthermore, in the short term the immigrants' human capital has not yet adapted to meet the requirements of the Israeli economy. In 1992 there were some indications of a trend towards growth in tradables; however, this was not yet reflected in employment. If jobs matching the professional profile of the immigrants are to be created, the tradables sectors of the economy - industry in general, and high-tech in particular - will have to grow.