Migrant Workers: License to Exploit

MAY 1, 2005, a day when the workers of the world met to mark their achievements and aspirations, has entered Israeli history as a day of another defeat for labor, both migrant and local. On this day, new legislation went into effect, based on the so-called Endorn Report (entitled The Mode of Employing Foreign Workers in Israel and Conditions for Issuing Permits). The plan’s main concept, prescribed by the Finance Ministry under Binyamin Netanyahu, is as follows: In the past, each employer had to get permits from the government in order to bring in migrants. From now on, permits will be issued not to employers, rather to a limited number (33, for starters) of Placement Companies – we shall call them the Agencies. The Endorn Committee worked out the procedures, which have now been passed into law.

Under the new system, the Agencies will pay the workers. The employers will apply to the Agencies, which will charge them a price for each worker. The migrants will no longer be chained to their employers, and they will be able to shift from Agency to Agency within the industrial sector for which they were brought here. All this sounds like a plus for both efficiency and workers' rights. Is it?

Behind the former system, as well as the new, stands the desire to preserve the Jewish character of the State. Israel has always been careful not to take responsibility, as a nation, for migrant workers. “If the State were officially responsible, the workers who are here, or their families, could claim the status of residents and later of citizens.” (See box on Chaining. )

Until March 1993 most manual laborers were Palestinians from the Territories. They went home at night, so there was no “danger” that a "foreign" population would take root. But in 1993 Israel closed its gates to Palestinians and began importing workers to replace them – from East Asia, Eastern Europe and Africa. Its method for avoiding responsibility was to place it on the employer, who was supposed to ensure that they left the country on schedule. Yet this approach boomeranged. The bosses engaged in illegal practices (like confiscating passports) and violated protective laws on a massive scale. They subjected the workers to such inhumane conditions that about half of them “went underground,” becoming illegal; they could then change employers at will and bargain for better terms. (Yoram Ayda, “The factors influencing the transition of foreign workers to illegal employment,” Ministry of Industry and Commerce, November 2004. [Hebrew])

Meanwhile, the trafficking had proved so profitable to so many bosses that workers were imported to replace Israelis as well. In construction alone, according to the Bank of Israel, about 30,000 lost their jobs, mostly Arab citizens. By 2001 the number of migrant workers, legal and not, amounted to 300,000. Thus 11% of the labor force sent most of their earnings out of the economy. At the same time there were nearly 300,000 officially jobless Israelis. The labor market was in chaos.

In the year 2002, the State tried to regain control by imposing quotas on the import of migrants. It sent the Immigration Police on a brutal campaign to deport those who had gone illegal. The police collaborated with the employers to deny the workers their pay and their rights. (Source)

And now, after about 100,000 illegal workers have been deported or have left under threat, the State enacts the Endorn Plan. In order to understand its real purpose, we should note that the Agencies will pay an annual tax of 11, 300 NIS ($2600) per worker (instead of the 4000 NIS that the employers paid under the old system).1 For years the State had watched from the side while others made the big bucks; now it wants a larger cut. Since the Agencies will be relatively few in number, the State should have an easier time collecting – while continuing to avoid responsibility.

The nominal purpose of the new law is “to aspire for a labor market that is based on Israeli labor and which guarantees fair working conditions for every worker.” Endorn Report, p. 3, quoted in www.kavlaoved.org.il/word/endorn.rtf

The reform is to end the present anarchy in the import of migrant workers, to raise the cost of employing them so that they don’t have a competitive advantage over Israeli job-seekers, to guarantee fair conditions for them, and to enable them to move between employers. We shall see that the Endorn recommendations, especially those concerning overtime, give the lie to this statement of aims.

The Endorn Committee recognized the problems caused by chaining the migrant worker to his employer, but its reforms merely substitute one set of chains for another, more complex and sophisticated. The migrants are now obligated to work through one of the authorized Placement Agencies. They can indeed shift from one to another, but only at the end of each three-month period. It will be a risk to shift because if no new Agency accepts the worker, after one month he will be subject to deportation.

Of the 33 chosen Agencies, several (according to Hanna Zohar, Chairperson of The Workers Hotline) were previously involved in violations of workers’ rights (Haaretz May 4, 2005). “It is not clear how issuing permits to agencies, whose sole purpose is to profit through migrant worker employment, will prevent the same abusive behavior [as in the past – MF]. Under the proposed regime, both employers and agencies will profit, making it reasonable to assume that illegal exploitation will only get worse.” (Source)

The Endorn Committee voiced its hope that the agencies would compete with each other, offering higher wages and better conditions. But is this likely, when the workers themselves are unorganized, dependent, usually ignorant of the language and their rights, often having gone into debt in order to pay for the privilege of working here – and when each, in accordance with the new law, has already paid the Agency that imported him a hefty mediation fee? (By law the fee is $1000, but in the past, when the law required no fee, it was often much higher.)

Or is it more likely that the Agencies will coordinate with each other in order to make the most of the situation? In fact there is no need to coordinate. The price of a migrant worker is common knowledge in Israel, and it will remain so.

In construction, the Agencies will have to put up a yearly bond per worker of 5714 NIS, and they will also have to pay an annual tax per worker of 11,300 NIS. It is likely that the State, with much money to gain, will turn a blind eye to abuses. (It did in the past.) "By virtue of charging a fee, the state of Israel becomes a prime beneficiary of the exploitation gap, rather than preventing it. …The large sums to be paid also encourage the government to increase the number of permits and to import more workers, in opposition to the interests of the local labor market." (Ibid.) The new legislation does not address these possibilities. Nor does it grapple with the likelihood of bribery, rampant in the past. It proceeds, in short, on the unwarranted assumption that the Agencies and bosses will change their stripes.

In recommending that import permits be granted only to 33 Agencies rather than hundreds of employers, the Endorn Committee voiced a hope for better supervision and better enforcement of labor laws. Yet the new legislation does not provide more supervisors on the ground or more efficient controls by the Labor Ministry, which the State Comptroller has severely criticized in this regard. (State Comptroller of Israel, Annual Report 54B for the Year 2003.)

The Endorn recommendations have encountered sharp criticism from rights organizations such as the Hotline for Migrant Workers, Workers Hotline, and the Association for Civil Rights in Israel. They object that there is nothing to prevent agencies from "concealing information, threatening loss of legal status, neglecting to renew work permits, confiscating passports, or using homes in countries of origin as collateral (where Israeli authorities can’t supervise) – as is commonly practiced today. … Another risk inherent in this system is that workers who stand up for their rights will be deported and replaced by new workers. This 'revolving door' is especially attractive, since agencies will profit to the tune of thousands of dollars charged to new workers." Indeed, "the report says nothing about the minimal period of time a placement agency can employ workers, a significant factor for workers who offer their property as collateral, and take out loans to pay for the promised job in Israel.” (Source)

“The only track for improvement open to migrant workers will be…illegal employment. This is because illegal employment will be preferable not only from the point of view of the exploited legally employed workers, but also from the point of view of employers who will be able to offer workers higher wages, while still paying less than if hiring them through a placement agency.” (Ibid.)

The easy exploitability of the migrant workers has one root, as said, in the State’s refusal to take responsibility, which derives, in turn, from its desire to remain Jewish. But the State also seeks to attract investment, so there is also another root: its desire to keep all labor cheap. In this light, the Endorn "reform" may be viewed as part of a general erosion of the worker's status since the mid-1990's. This is reflected, for example, in the weakening of protective labor laws. These are meant to defend workers from the forces of the market, reducing somewhat the imbalance between them and their bosses. Neither bosses nor workers may alter them. Although the labor courts and the Supreme Court have reiterated many times that the rights of migrant workers are equal to those of any in Israel, these same courts have been accomplices in the general deterioration.

The first step toward decline occurred in 2003, when the legislature corrected the National Insurance law, which had previously applied to all workers, local and migrant, legal and illegal. The Knesset denied all National Insurance benefits to workers living here illegally. The High Court intervened to lessen the damage, but by the same stroke it agreed to the principle of restricting the application of protective laws. (Bagatz 1911/03, The Association for Civil Rights versus the Minister of Finance [unpublished].)

There was also a change concerning the hours that migrant workers put in. The bosses take the view that because these workers left their countries to make money, it’s OK to keep them on the job far beyond the hours permitted by law. There is a tendency to neglect the aim of Israel’s “Law Concerning Hours of Work and Rest,” which forbids keeping workers overtime, in order to protect the worker’s welfare. With migrant workers in all industrial sectors, there is a widespread practice of exploiting them for extra hours, often without pay. Given the absence of State supervision, this phenomenon has become widespread. When workers complain to the labor court, the burden of proof is on them and most fail to make their case.

This kind of exploitation is at its worst in the sector of care-provision for people who need help in performing everyday tasks. Here the migrant workers are bound to a peculiar framework. This form of employment developed as part of an overall policy, which began in the 1980’s, to privatize welfare and health services. Until then every person needing such care was entitled to treatment in State institutions. As the welfare state was dismantled, the number of institutions declined. No major protest arose, because the State had provided such meager funding that conditions in these places were execrable.

Today the State has ditched virtually all responsibility for this group, shunting it onto the families. The usual claim is that all prefer that the person be at home. There is also the claim that Israelis are unwilling to provide these services. Therefore, the State puts no ceiling on the import of workers in this sector. Most of them come from the Philippines.

On hearing the abuses I am about to name, some readers may think that the problem is not severe, because the migrant ends up earning much more than what he could make at home. Yet the threat goes deeper. Through the corrosion of these workers’ rights, the State endangers the rights of all workers. The corrosion creates discrimination in the labor market, enabling the bosses to harm one group directly, while opening a channel for the harming of other groups in the future.

In contrast with agriculture and construction, in the field of care-provision the migrant workers do not replace Palestinians. Nevertheless, their number constantly increases. From 1995 until 2002, it went from 4300 to more than 39,000, and this year it is expected to reach 50,000. 2 (In 1995, the number of elderly people receiving long-term-care benefits was 60,000. Today it is 113,000, of whom 30% are considered totally dependent. Source)

When a person needs help in performing everyday tasks, the State grants financial aid on the basis of what an Israeli care-provider would earn by putting in between 10 and 16 hours per week (depending on the degree of need). If the employer can prove that he or she needs round-the-clock attendance, the State grants the same amount of money, but it permits him to use the grant to pay a migrant. In this case, the worker receives (at most) a salary equal to the monthly minimum wage (3335 NIS or about $767), which is reckoned for 186 hours of labor per month – although he must be available during all 744 hours of the month. Since the government grant does not reach this monthly minimum, the person-in-need must make up the difference. Thus the State condones the exploitation of one weak group and the milking of another. Israel prefers to pay the social price of employing migrants in this sector, in order to reduce the financial price of solving the problems of those in need. ³

Already in the year 2000, the Supreme Court adopted a concept that granted, indirectly, legal standing to the exploitation of care-providers. In a precedent-making decision it determined that in order to lessen damage to insurance companies, which are obligated to compensate clients who have become dependent on others for everyday tasks, the rate of compensation should be figured on the basis of how much it costs to employ a migrant, unless there is a significant advantage in hiring an Israeli. (Supreme Court of Israel, 3375/99 Axelrad versus Tsur-Shamir, p. 457. [Hebrew])

THE COURT also decided that for the purpose of reckoning the amount of compensation, only actual time spent in caring for the person should be taken into account. The remaining time spent in the person’s company, when the worker is able to carry on other activities such as reading or watching TV, is not to be considered as work hours, rather as the care-provider’s private time. In this way, although the worker must be present 24 hours per day, he or she is paid for 8 hours at best.

Despite this decision, many continued to believe that if the care-provider sues, the court would have to order his ward to compensate him for the full time he had placed at his disposal. At a meeting of the Knesset Committee on Foreign Workers in June 2002, for example, Michael Atlan, representing the Ministry of Labor and Welfare, made the following statement: “If you employ a worker around the clock, you violate the law, and you also have to pay. So don’t be surprised afterwards if people bring lawsuits … Clearly, one cannot claim that the labor laws don’t apply to foreign workers. That stands in contradiction to every notion of the policy toward foreign workers… Overtime hours are not included in the reckoning of the minimum wage, so one cannot employ a worker 24 hours and pay him for only 8.” He continued: “To be on hand 24 hours a day and not make a cent! Clearly, any court of law will say that it’s not in order.” 4

In 2004, however, the National Labor Court determined that it is in order. Justice Elisheva Barak ruled explicitly that care-providers, whose actual hours of work are hard to determine, fit the legal category of “workers whose work conditions and circumstances do not make it possible for the employer to supervise their hours of labor and rest.” ( The Law Concerning Hours of Work and Rest, Article [6] 30. [Hebrew]) They are therefore exceptions, and the regular law should not be applied to them. In her decision, Barak said, “It’s clear that this sort of work is the sort… for which it is impossible to supervise the hours of work. There is no way to relate to the hours that the worker works in practice.” Barak also decided, nonetheless, that the care-taker, in the case before her, was entitled to a 30% supplement to the minimum wage. (National Labor Court, Case 1113/02, Todoranjan versus Maayan [unpublished].)

Apart from lowering the status of migrant workers, Elisheva Barak’s decision also harms the locals, because it makes it less worthwhile to hire them. No Israeli will be willing to work in 24-hour symbiosis without recompense. If an Israeli were to bring the same lawsuit, it is doubtful that the court would decide as it did. The fact is, in the days of the institutions, many Israelis were employed in care-provision – but in shifts and not on a one-to-one basis. If they could get decent pay, they would probably be working in this field today.

Although for the moment this court decision harms “only” the care-providers, it creates a precedent for other fields too. The last word has not been spoken here. There is a petition on the issue before the High Court.

Meanwhile, the erosion of protective laws continues. The Endorn recommendations, mentioned in the first part of this article, undermine the Law Concerning Hours of Work and Rest, which limits labor to a maximum of 186 hours per month. The committee adopted the view that one should capitalize on the willingness of migrants to work overtime. In Article Seven of the report we read: “Given the lack of a family in Israel, and given their desire to save as much money as possible and transfer it to their home country, foreign workers are willing to work within a much larger time-frame… Under these circumstances, the Committee believes that there are grounds to establish the minimum-wage obligation to the foreign worker according to a time-frame of 236 hours per month.” (Endorn Report, p. 43, Article 7, Note 11. [Hebrew])

On its face this looks like a positive step, which will improve the status of the migrant workers, for it will enable them to receive a higher minimum wage. Once again, whether by naiveté or craft, the Endorn Committee behaves as if it lived in never-never land. Given the absence of government supervisors, the migrant rarely receives the pay he should for the hours he puts in. Here the bosses get an additional bonbon: approval to work him longer. Contrary to the nominal purpose of the Endorn recommendations, this makes migrant workers more desirable than Israelis, whom the law restricts to 186 hours per month. Moreover, the measure “contradicts item 6.1.A in Convention #97 of the International Labor Organization, ratified by Israel.” (Source)

Other nations have attempted to import workers on a temporary basis, but their local unions forced them to let the newcomers gain citizenship or permanent residence. Here, however, Israeli workers in the relevant sectors (construction, agriculture, care-provision) lack representation. The Histadrut (Federation of Labor) has failed to defend them. Rather than object to the job conditions of the migrants, it excludes them from its ranks. This charge comes from Attorney Yehiel Katz, the Director of the Insurance and Pension Fund for Construction Workers, who was appointed after the Fund's collapse in order to determine the reasons for the debacle. He has accused the Histadrut of deliberately ignoring, for a decade, the exploitation of migrant workers. He contends that the Histadrut is directly responsible for the decline in the number of Israelis employed in construction. This decline resulted in the Fund’s collapse. ( Report of the Authorized Director No. 9, Insurance and Pension Fund of Construction Workers and Public Works, October 2002.)

Where its own financial interest is not at stake, the State, for its part, leaves the task of supervision to those who have violated the rights of these workers in the past. The erosion of protective laws plays directly into the hands of the bosses. Under the new arrangements that erosion will continue.

The real aim of Israel’s government, it would appear, is to make the migrant workers a permanent, exploitable, eternally rightless factor in the labor market. It wraps the exploitation in a camouflage of reforms. Yet beneath the surface, contradictions deepen.

According to the old myth of “Hebrew labor,” national identity was supposed to coincide with class identity. That did not last long. After 1967, the myth crumbled altogether before the exploitation of the Palestinians. A clear hierarchy developed: Ashkenazi Jews on top, followed by Mizrahi Jews, Israeli Arabs, and Palestinians (with men over women in each category). Socio-economic gaps widened far beyond the norms in other developed countries. Into this unhealthy brew have come the “permanently temporary” migrant workers. The lack of any counter force, such as a real labor union to represent the interests of the various groups, is more keenly felt than ever.

1. The figure of 11,300 NIS was given by Raanan Dinur, Director of the Ministry of Commerce and Industry, at a meeting of the Knesset Committee to Investigate the Problem of Foreign Workers on January 28, 2005, Protocol 49.

2. Ella Heller, “The Treatment of the Elderly in Israel,” delivered to the Knesset Committee to Investigate the Problem of Foreign Workers, July 2003 (Hebrew).

3. Ministry of Labor and Welfare, Department for Planning the Labor Force (2001), Foreign Workers in the Field of Care-Provision, pp. 17-19 (Hebrew).

4. Session of the Knesset Committee to Investigate the Problem of Foreign Workers on the topic: The Cynical Claims by Foreign Workers against Patients in Need of Personal Care, June 25, 2002

Chaining the Migrant Worker: How and Why

The old system, which the Endorn Report seeks to alter:

“Every migrant worker who arrives in this country is tied by name to a specific employer. He belongs to ‘John Doe’ from X Street, at construction site Y, and this information is inscribed in his passport. If the worker is caught at a different site from the one that is written, or with a different employer… he is considered illegal and deported.” Ella Keren, Hotline for Migrant Workers, in Challenge 81.

Safeguarding the Jewish Character of the State

“The policy of chaining worker to boss hardly exists in other countries. It is done for reasons of ideology. The state of Israel didn't want to get into the business of importing migrant workers. It was very concerned, and still is, that this would damage the national and Zionist character of the state. It was concerned that a large minority of migrant workers would arise here, as happened with the Turks in Germany. That would threaten the state's Jewish character. It did everything it could, therefore, to eliminate its involvement in all that concerns migrant workers. This is what's behind the chaining of worker to boss. The boss is the one who's responsible for the worker, and he has to ‘check him out’ like equipment and afterwards ‘check him in.’ This is part of the ‘newspeak.’ Officially, the boss is accountable for the worker throughout his stay – and why? Because if the state were officially responsible, the workers who are here, or their families, could claim the status of residents and later of citizens. For this reason Israel has refused to sign conventions with the workers' countries of origin. This is also why it's chosen to allow the import of workers from certain countries, whose inhabitants have less potential for immigrating permanently.” Yossi Dahan, Adva Center, in Challenge 81.

For the full discussion, see Challenge 81, www.challenge-mag.com/81/panel.htm

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In the guise of reform

Migrant Workers: License to Exploit