The Labor Market in Israel/Palestine, 2004: Discrimination and Exploitation

A group of 14 trade unionists from seven European countries visited Israel/Palestine from April 25 through May 1, 2004. Their aim was to investigate the labor situation of the migrant workers and the Palestinians, both those in Israel and those from the Occupied Territories. Their visit was organized by the Workers Advice Centre (WAC) - Ma’an. Challenge presents the abridged version of a working paper which the delegates have adopted as a basis for their final report.

THE LABOR market in Israel/ Palestine is plagued by unemployment and instability. As of April 2004, three years of violent conflict and global economic slowdown have plunged the country into recession and kept it there.

The Israeli government has reacted to recession by adopting a draconian program of fiscal restraint. In the years 2002-3, there were drastic cuts in the social safety net, affecting the unemployed, the handicapped, the elderly, the schools, and the social and municipal services. The government has also undertaken to privatize the public sector. It seeks to weaken organized labor, nullify legally-binding collective labor agreements and bypass the labor courts.

Here we shall focus on the labor force in the construction industry, where we find the three groups that suffer most from discrimination in Israel: the Arabs from within the country, the Palestinians from the Territories, and the migrant workers. Of the 212,000 employed in construction, a very small proportion is organized. Only this group enjoys the legal wage and social benefits.

The recent history of Israel's construction industry

During the Gulf War of 1991 and again, on the pretext of security, in March 1993, Israel clamped closure on the Occupied Territories. The result was a sudden shortage of labor in construction and agriculture. The government's solution was to import migrants. This was done without adequate planning or supervision. By 2001 their number had reached 300,000 – that is, 12.5% of the labor force (more than twice the average for the industrial West).

During the recession of 2002, a consensus formed in economic circles that the importing of migrant workers creates a reservoir of labor which, because it is cheap and unorganized, competes unfairly with local workers. The heads of the Finance Ministry expressed the dilemma thus: At a time when Israel has 300,000 migrant workers, 250,000 of its citizens are unemployed.

Accordingly, the government began to lower the allotment of permits for importing construction workers. In September 2002, it forbade the bringing of more. Since about half the migrants had gone "underground", becoming illegal (for reasons we shall see), the government created a Migration Police, charged expressly with the task of deporting 50,000 annually. For the last year and a half this force has oppressed, persecuted, arrested and expelled. While deporting with its left hand, however, the government continues importing with its right, circumventing its own decisions: a revolving-door policy.

At the end of 2002, despite the ongoing Intifada, the government asked the contractors to accept Palestinian workers, both as a substitute for the migrants and as a means of alleviating misery in the Occupied Territories. Nothing was done, however, to guarantee the implementation of this promise. The government granted permits, indeed, to 15,000 Palestinian workers – all older than 35 – but it then erected barriers on the pretext of security. The workers encounter enormous difficulties in reaching their jobs, even on "normal" days.¹ On days of hermetic closure, they cannot reach them at all. The construction firms have concluded that this source of labor cannot be relied on.

As a result of these bleak developments, Israeli Arabs (who had been shunted out of construction in the 1990's) could again find jobs. This trend has become visible in the last two years. Yet these workers, for the most part, lack organization, social benefits, and adequate safety procedures. WAC, for its part, has carried out a campaign called A Job to Win, gaining 600 jobs with proper pay and under proper conditions, but its group is still a minority. (See below.)

The building contractors and the personnel companies have very strong lobbies. These push for a change in policy, so that they can again import migrants without restraint and under the old conditions.

Unless there is ironclad legislation protecting organized labor, we fear a relapse from the recent, qualified progress that has been made.

Let us now turn, in greater detail, to each of the principal groups among construction workers.

Arab Workers in Israel: Institutionalized Discrimination

The Arab citizens of Israel (about 20% of its population) live for the most part in separate cities and villages, where they have no industry of their own. Arab unemployment is 1.5 times that of the nation as a whole; 98% of the Israeli localities with above-average unemployment are Arab.

The Adva Center, an Israeli research institution, has shown that within Israel, the average gross salary in Jewish cities and towns is nearly twice that in Arab communities. The average monthly income in the Jewish sector is NIS 9,363 (ca. 1700 EURO), while that in the Arab sector is NIS 5,252. The average wage in Arab communities is lower by 30% than that of the chronically lagging Jewish development towns.²

This situation should be viewed against the background of the Israeli policy towards its Arab citizens since 1948. In his valuable research on the Arab economy in Israel, Dr. Aziz Haidar concluded that the Arab community has lost most of its land reserves because of systematic expropriation, while unable to gain permits for industrial development. Within three decades, these two factors have transformed a peasant society into one of workers commuting to Jewish industrial areas. ³

According to Israel's Law of Equal Opportunities, Arab citizens are supposed to have equal footing in the job market. In reality, security reasons are used, often without reasonable grounds, to bar them from the better jobs. According to Dr. Haidar, the Arab workers, although citizens, "bear strong similarities to migrant workers." Arabs occupy the lowest positions in all branches of the labor market; their working conditions are far worse than those of their Jewish counterparts; and they are much more vulnerable to economic fluctuations. Their patterns of employment and unemployment are similar to those of foreign workers.⁴

When we remember that only 17% of Arab women participate in Israel's labor force (compared to 53.8% of Jewish women), when we remember too how limited are the positions open to Arab men, we can understand why construction has become the major industrial branch for Arab workers. According to estimates by WAC, the labor market in construction today (those working and seeking work) includes about 50,000 Arab Israelis. Because two other branches that hired Arabs in the past, namely textiles and community services, have been very hard hit during the last few years, the construction sector alone survives as the essential source of jobs.⁵

The fluctuations in this sector have had a great impact, therefore, on the decline of the Arab economy. Until 1996, the construction industry absorbed all the Arab workers in Israel who wanted jobs, as well as large numbers of migrants from Romania, Turkey, Bulgaria and China. That, however, was the high point. Then the number of projects began to decline.

According to Professor Zvi Eckstein of Tel Aviv University, between 1996 and 2001 some 35,000 Israeli workers, most of them Arabs, lost their jobs in construction.⁶

The contracting firms, in this same period, increased the importation of unorganized migrants with the approval of the government ministries. Thus in 1996, the total number of construction workers was 247,000. Of these, 150,000 were Israelis, including Arabs; 28,000 Palestinians from the Territories; 69,000 migrants.⁷

By 2002, the total number of workers had dropped to 211,700. Of these, 120,700 were Israelis; 11,000 Palestinians (including those without valid work permits); and 80,000 were migrants.⁸

Between 1996 and 2002, then, the number of Israeli workers in construction dropped by 38,000, while the number of migrants rose by 11,000. Those who lost their jobs were organized workers, mostly Arab, while those who received jobs cost the employers less and were utterly lacking in representation and bargaining power.

In 2002, Attorney Yehiel Katz prepared a report on the construction workers' pension fund, which the Finance Ministry had appointed him to supervise. His report showed a decline in the number of members during this period from about 25,000 to 5000.⁹

He also enumerated withdrawals of money by workers who had been fired. This report is important. When members leave a pension fund, this amounts to recognition that the loss of work is not temporary.

Against this background, WAC has opened the doors of major construction companies to Arab workers. Since January 2002, WAC has placed 600 of them in fifteen companies. We have based these placements on the Construction Workers' Collective Agreement from 1999, which ensures fair wages, benefits and conditions. The ACBI, meanwhile, continues its lobbying efforts to bring in migrants under the old terms.

The Palestinian Workers: Closure and Collective Punishment

Israel occupied the West Bank and Gaza Strip in 1967. On October 8, 1970, the Israeli cabinet decided to let Palestinians work in Israel. By making them depend on Israel for jobs, it was thought, they would be less likely to resist an ongoing Occupation.

The Territories became not only a source of manual labor, but also, until the late eighties (when high-tech took the lead in Israel's economy), its biggest export market after the United States. No Palestinian industry could compete with imports from Israel, so none arose. There is no Palestinian industrial base.

By 1993, 120,000 Palestinians were commuting to Israel for work. Their earnings made up a major part of the income in the West Bank and Gaza. In that year, however, Israel imposed the closure, in effect firing all those breadwinners with a single stroke of the pen. Closure has been in effect, with varying severity, ever since.

Closure is collective punishment. Israel deliberately uses it as such, opening or closing the faucet for its political purposes. Tens of thousands of innocent people are punished because of the acts of a few. Collective punishment is illegal according to the Geneva Convention, Article 33, to which Israel is a signatory.

In September 1993 the first of the Oslo Accords was signed. They proved to be unbalanced. While Israel enjoyed years of strong economic growth (1993-2000), the Territories grew only in poverty. The Paris Protocol, signed by Israel and the PLO in April 1994, did not allow for an independent economic entity.¹⁰ "The Palestinian Authority had no choice but to accept the model set forth in the Protocol, because Israel made acceptance a condition for Israel's continuing to allow Palestinians to work in Israel."¹¹

Meanwhile, the workforce grew. Dr. Onn Winkler, in a paper on "Trends in the Palestinian Economy Before and After the Oslo Agreement"¹², states that following the Gulf Crisis of 1990-91, hundreds of thousands of Palestinian workers were forced to leave their jobs in the Gulf States. They returned to the Occupied Territories, and the population rose accordingly. In 1992, the Palestinian labor force amounted to 350,000. By 1999 it had risen to more than 630,000.

During the Oslo years, in the areas under the control of the PA, there was a considerable expansion of the public sector. This did not, however, create an independent basis for industry, such as could supply work for the increasing number of job seekers. The dependence on Israel continued.

The outbreak of the second Intifada led to a further deterioration in the Territories. Israel used harsher means of economic oppression in its attempt to break the spirit of the people. A report by the UN Special Commission for Palestine (UNSCO) pointed out the dangers: "The Palestinian economy is mired in a deep crisis …Particularly hard hit are the West Bank cities and towns, which the Israeli military has placed under lengthy curfews in response to a wave of terror attacks earlier this year. …Poverty levels continue to increase at alarming rates, reaching 70 percent in the Gaza Strip."¹³

Now Israel is making closure hermetic by erecting the separation wall. Its attitude toward the Palestinians amounts to saying: "We made you dependent on us, we prevented the rise of industry in your territories, we used you for thirty years, and now we wash our hands of you."

Migrant Labor in the Construction Industry

Israel has turned a blind eye to the exploitation of migrant workers. By its own law, these workers are entitled to equality with Israelis in their working conditions. Yet Israel's government ignores its obligation to enforce the employment laws. The International Federation for Human Rights (FIDH) and the Euro-Mediterranean Human Rights Network (EMHRN) have recently issued a report entitled, Migrant Workers in Israel - A Contemporary Form of Slavery. It includes this passage: "Since the 1960s, the number of migrant workers throughout the world has increased dramatically and this form of labour is widely used. The situation in Israel is unique though, since migrant workers are deliberately used to replace Palestinian workers and also because of the role that this policy plays in the Israeli-Palestinian conflict."¹⁴

1. It is cheap. According to Professor Eckstein, a migrant worker doing basic construction costs his employer, on average, $5.00 per hour, while a local worker costs $7.00. In the course of a year that amounts to a saving of $4800 per worker.¹⁵

3. The economic situation in the countries that send the workers is such that their governments, eager for foreign currency, often turn a blind eye to the exploitation of their citizens.

In 2002, the Israeli economy came to the point of collapse. One reason was imbalance: Israelis by the tens of thousands had been shunted out of their jobs, becoming dependent on welfare. Leading economists warned repeatedly about the irrational structure of the market. At last the government started to act.

In September 2002, in what it styled a war on illegal foreign labor, the government formed the "Migration Police Force". Its goal is to deport as many as 50,000 illegal migrant workers per year. But who are these "illegals"? Most are people who arrived in Israel legally to work, after paying thousands of dollars to mediators for the privilege. Bound to the employer, living in foul conditions, his pay reduced or postponed, the migrant is likely to go "underground," becoming illegal. More than half of the once-legal migrants have done precisely this. These are the people whom the Migration Police arrest and deport.

In this way, a "revolving door" has been created – new "legal" workers in, old "illegals" out. The latter have frequently established families here. When deportation occurs, the families are often divided.

This situation continues because there are powerful lobbies at work, consisting of personnel ("manpower") companies, contractors and farmers' associations. These lobbies have enormous leverage in government departments.¹⁶

The violation of migrants' rights in Israel has many aspects. Here we shall indicate two:

In permitting the importation of workers, Israeli governments have been concerned that they should not become a demographic threat to the Jewish character of the state. A careful distinction is made therefore, so that the employer, not the state, bears responsibility for the arrival, sojourn and departure of each worker. The worker, as mentioned, is legally bound to the employer. In 2002 the Government at last allowed migrant workers to change their employers. A worker wanting to do this must find a new employer who is authorized to hire a migrant, and the process must be approved by the Interior Ministry. This is a positive step, but it has had only partial implementation.¹⁷

The Report of the US State Department on Human Rights for 2003 has harshly criticised Israel: "Labor laws determining minimum wage, guaranteed pay and annual leave apply to all workers in Israel, but enforcement measures are mainly directed against migrant workers and not against the employers who may openly breach the law."¹⁸ Israel's State Comptroller wrote in a report for the year 2002 that employers who delayed the payment of wages, confiscated workers' passports and employed unauthorized workers continued receiving permits to hire more migrants.¹⁹

In the UN International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families, we read the following: "With respect to social security, migrant workers and members of their families shall enjoy in the State of employment the same treatment granted to nationals in so far as they fulfil the requirements provided for by the applicable legislation of that State and the applicable bilateral and multilateral treaties."²⁰

A report of the Adva Center from June 2003 takes up Convention No. 48 of the International Labor Organization, which Israel did sign in 1963. It "obliges the State to concern itself with the pension rights of migrant workers, as it does towards its own employed citizens."²¹

On paper, the egalitarian approach has been reinforced by a decision of the Israeli government itself, taken in May 1993, when the massive importation of labor was just beginning. (Yediot Aharonot May 17, 1993) It stated several conditions for employing a migrant worker:

1. The contractor will pay the migrant workers according to law, and according to the collective agreements applying to the construction industry.

2. For every migrant worker he hires, the contractor must hire two non-professional Israeli workers.

According to this decision, every contractor had to sign a written commitment to the Employment Service, obliging him to abide by these conditions.²²

But this commitment, as well as the government's decision from 1993, remained on paper only. In a sharply critical report, Yehiel Katz describes how the contractors emptied the decision of all content.²³ Katz also accuses the heads of the construction workers' pension fund, writing that they violated international conventions, in the early 1990's, by making common cause with the contractors to lower the cost of labor.

Conclusion

The majority of workers in Israel's construction branch, including Palestinians, migrants and Israeli citizens (mostly Arabs), are still today subject to extreme forms of exploitation. The Israeli authorities lag behind legislation elsewhere in several ways: they refrain from ratifying recent labor conventions; they do not enforce their own labor laws; they exploit the excuse of "security considerations" in a disproportional manner; they apply the law selectively; and they close their eyes to the criminality of the contractors and the personnel companies. There is an urgent need for action on the local level, as well as the international, to bring about full equality among workers without regard to citizenship, nationality or race.

In the course of the Delegation's visit, the following demands were discussed as the most effective tools for bringing change:

1. Israel should ratify the UN Convention on the Protection of the Rights of All Migrant Workers and Members of their Families, which went into effect in July 2003.

2. Israel should end the policy of closure, which amounts to collective punishment against Palestinians.

3. Israel should end all formed of bonded labor. There must be legislation against the practice of exacting fees from the worker as a condition for working in Israel.

4. There must be action, both in legislation and practical enforcement, to establish equal wages and social benefits for equal work.

After the visit, the members of the Delegation decided to work on an expanded version of the present document. In a matter of weeks, this should be completed for use in local and international labor organizations. n

3 Dr. Aziz Haidar "The Arab Population in the Israeli Economy" 1990. International Center for Peace in the Middle East, p.130 (Return to text)

5 During the past decade, the textile industry in Israel lost 20,000 jobs as a result of the transfer of production to cheaper countries, including Jordan and Egypt. In addition, many local government councils, which employ people in community services, have been unable to pay salaries for months. (Return to text)

6 Interviewed in the documentary film "A Job to Win" Video 48, Jan. 2003. (Return to text)

7 "Overseas Foreign Workers in Israel – Policy aims and labor market outcomes" – A paper prepared by Dr. Shmuel Amir and the Israeli Ministry of Labor for a meeting of The European Centre for Social Welfare Policy and Research, 1999. (Return to text)

9 "The Insurance and Pension Fund of Workers in Construction and Public Works", Report No. 9 of the Authorized Manager of the Pension Fund (Hebrew) (Return to text)

13 "New Economic Figures for West Bank and Gaza Show Rapid Deterioration Leading to Human Catastrophe," UN Information Center, August 30, 2002 (Return to text)

16 See, for example, the case of Turkish workers who came to Israel as part of a bilateral agreement between Turkey and Israel: "Tanks for Workers" (Return to text)

17 In the case of the Turkish personnel company mentioned in "Tanks for Workers" (see note above), the workers are not permitted to change employers. (Return to text)

18 US State Department, Report on Human Rights Practices 2003 (Return to text)

19 Annual Report of the State Comptroller 53B for 2002 and for Fiscal Year 2001 (Hebrew) (Return to text)

21 Dr. Adrianna Kemp and Dr. Rivka Reichmann, "Foreign workers in Israel," Information on Equality (maida al shivion), Volume 13 (Hebrew) (Return to text)

23 "The Insurance and Pension Fund of Workers in Construction and Public Works", Report No. 9 of the Authorized Manager of the Pension Fund (Hebrew) (Return to text)

The Labor Market in Israel, 2004:

Discrimination and Exploitation in the Construction Industry

The recent history of Israel's construction industry

Arab Workers in Israel: Institutionalized Discrimination

The Palestinian Workers: Closure and Collective Punishment

Migrant Labor in the Construction Industry

Conclusion