Jerusalem - Economy

Economy

Historically, Jerusalem's economy was supported almost exclusively by religious pilgrims, as it was located far from the major ports of Jaffa and Gaza. Jerusalem's religious landmarks today remain the top draw for foreign visitors, with the majority of tourists visiting the Western Wall and the Old City, but in the past half-century it has become increasingly clear that Jerusalem's providence cannot solely be sustained by its religious significance.

Although many statistics indicate economic growth in the city, since 1967 East Jerusalem has lagged behind the development of West Jerusalem. Nevertheless, the percentage of households with employed persons is higher for Arab households (76.1%) than for Jewish households (66.8%). The unemployment rate in Jerusalem (8.3%) is slightly better than the national average (9.0%), although the civilian labor force accounted for less than half of all persons fifteen years or older—lower in comparison to that of Tel Aviv (58.0%) and Haifa (52.4%). Poverty in the city has increased dramatically in recent years. According to a report by the Association for Civil Rights in Israel (ACRI), 78% of Palestinians in Jerusalem lived in poverty in 2012. This marks a steady increase from 2006 when 64% of Palestinians were in poverty. While the ACRI attributes the increase to the lack of employment opportunities, infrastructure and a worsening educational system, Ir Amim blames the legal status of Palestinians in Jerusalem. In 2006, the average monthly income for a worker in Jerusalem was NIS5,940 (US$1,410), NIS1,350 less than that for a worker in Tel Aviv.

During the British Mandate, a law was passed requiring all buildings to be constructed of Jerusalem stone in order to preserve the unique historic and aesthetic character of the city. Complementing this building code, which is still in force, is the discouragement of heavy industry in Jerusalem; only about 2.2% of Jerusalem's land is zoned for "industry and infrastructure." By comparison, the percentage of land in Tel Aviv zoned for industry and infrastructure is twice as high, and in Haifa, seven times as high. Only 8.5% of the Jerusalem District work force is employed in the manufacturing sector, which is half the national average (15.8%). Higher than average percentages are employed in education (17.9% vs. 12.7%); health and welfare (12.6% vs. 10.7%); community and social services (6.4% vs. 4.7%); hotels and restaurants (6.1% vs. 4.7%); and public administration (8.2% vs. 4.7%). Although Tel Aviv remains Israel's financial center, a growing number of high tech companies are moving to Jerusalem, providing 12,000 jobs in 2006. Northern Jerusalem's Har Hotzvim industrial park is home to some of Israel's major corporations, among them Intel, Teva Pharmaceutical Industries, Ophir Optronics and ECI Telecom. Expansion plans for the park envision one hundred businesses, a fire station, and a school, covering an area of 530,000 m2 (130 acres).

Since the establishment of the State of Israel, the national government has remained a major player in Jerusalem's economy. The government, centered in Jerusalem, generates a large number of jobs, and offers subsidies and incentives for new business initiatives and start-ups.

In 2010, Jerusalem was named the top leisure travel city in Africa and the Middle East by Travel + Leisure magazine.