Third report in a series
March 2023
Arnon Barak and Sami Miaari
Abstract
- Between 2006-2021, there was a rise in the rate of Arabs among those actively self-employed in Israel, from about 15% to about 18%. This rate continued to grow even after the outbreak of the COVID crises, slightly offsetting the sharp impact on employment among Arabs which arose from the crisis.
- The present rate of Arabs out of the total of self-employed people is greater than their share of all employees in the economy (13%), but is still smaller than their share in the population.
- In addition, being self-employed is less common in Arab society: only about 4.8% of the total of Arab employees in 2019 were self-employed, as opposed to a rate twice as high in Jewish society.
- An inspection of sectors reveals that the greatest increase of Arabs’ share was in sectors in which the total number of self-employed had the slowest growth: transportation, industry, and hospitality and food; i.e. the increased share of Arabs was supported by a decrease in non-Arabs’ self-employed activity in those sectors.
- In contrast, self-employed Arabs’ share remained almost unchanged in the IT services sector, the information and communications sector, which in recent years has been significantly increasing its product share, and the professional, scientific and technical services sector.
- The geographical distribution of self-employed Arabs is similar to the distribution of the Arab population in Israel. Therefore, self –employed Arabs constitute a majority among the total self-employed in the northern region, whereas in the Tel Aviv region the share of self-employed Arabs comes to only 1.3% (of the total self-employed in the Tel Aviv region).
- The percentage of survival of independent Arab businesses born in 2006 is lower than that of their Jewish counterparts. The gap already opened in the second year of operation, and 15 years after the business’s founding (2021) only 22.8% of self-employed Arabs survived, compared with 26.8% of self-employed Jews.
- There is a strong connection between the survival percentages of self-employed people and the economic sector in which they operate. For example, in the health, welfare and nursing services sector, the survival percentages of Jews and Arabs after 15 years are higher than 40%, while in the hospitality and food sector the survival percentages come to only about 10%,
- However, the gaps in survival percentages between Arabs and Jews are not uniform over the various sectors. The survival percentages of Arabs are especially high in the professional, scientific and technical services sector, but significantly lower compared to Jews in the agriculture sector.
- The gap in survival percentages between Arabs and Jews is greatest in the Tel Aviv region, while the northern region is the only one in which the survival percentages of Arabs do not fall below those of Jews.
- No support was found for the fact that the gap in survival percentages between Arabs and Jews reflects a tendency among self-employed Arabs to practice in riskier sectors or regions.
