It has led to many workers in advanced economies feeling less inclined to seek the wage increases that they might once have sought – they feel that they have less market power and that keeping a job is more important than seeking a large pay increase. A similar dynamic is probably playing out in the pricing decisions of many businesses.
That recession started late in 2000 as a result of four adverse shocks to our economy: the collapse of the high-tech boom and the Nasdaq bubble that had enabled so many Israeli high-tech startups to flourish; the global recession that started in 2001; the tailing off of the immigration from the former Soviet Union to Israel; and the second intifada.