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MAS Discusses The Future of Palestinian Labour inside the Israeli Market In its Fourth Roundtable Session 2022

01 aug 2022

Ramallah, Wednesday 27 July 2022: The Palestine Economic Policy Research Institute (MAS) convened a Roundtable session titled “The Future of Palestinian Labour inside the Israeli Market In light of Economic and Political Facts” with the participation of specialists and experts from all relevant sectors. At the beginning of the session, researchers Waleed Habbas, from the Palestinian Centre for Israeli Studies (Madar) and Ismat Quzmar from MAS, presented the main pillars of the Background paper prepared on the topic, while the main commentators on the paper were Mr. Abdul Karim Mardawi, Acting Director of the External Employment Department - MoL, Mr. Murad Al-Khatib, a businessman and member of the Israeli Contractors Union,  and Dr. Laila Farsakh, lecturer at Massachusetts University, USA. Nearly 50 experts and representatives of Palestinian and international organizations, attended the session either in person or virtually.

MAS’s Director General, Mr. Raja Khalidi, opened the session, stressing the importance of discussing this topic and this paper which comes in the context of the Institute’s constant follow-up of important and recent economic and social issues and challenges on the agenda of Palestinian decision-makers. These roundtable sessions aim to discuss and analyze issues of special importance to Palestinian citizens to come up with practical recommendations for policymakers, that reflect positively on the economy and the Palestinian people, he said.

In this regard, Khalidi highlighted the shocking numbers showing a huge influx of Palestinian labor into Israeli labour markets, and their growing contribution to the gross national income (GNI), in parallel to increased control of the Palestinian labour force by the occupation’s administrations, and the consequences of these facts on Palestinian development endeavors to break away from the path of dependency on the occupation by building an independent economy. He questioned:  "If the public Palestinian position accepts this Israeli policy, aiming to absorb hundreds of thousands of Palestinian workers, then there is a need to reconsider all disengagement-related policies or at least the concept of an independent national economy.  He also extended gratitude to Heinrich Böll Foundation (Palestine and Jordan) for supporting this session, which is the fourth in a series of roundtables held in partnership with the foundation since 2019 to spotlight the major developments in the file of Palestinian labour in Israel.

MAS’s Background Paper

During their presentation of the paper, the researchers showed that there was a steady increase in the total number and proportion of Palestinian workers in Israel. According to the Palestinian Central Bureau of Statistics (PCBS), the number of workers in Israel increased from 78,000 by the end of 2010 to 173,400 in Q1 2022 in addition to 31,000 working in Israeli settlements. The last five years have witnessed the largest and fastest increase in these numbers, an increase that the Palestinian economy has not seen in the last two decades. Today’s levels even exceed the 1999 total number when about 140,000 Palestinian workers (from the West Bank and the Gaza Strip) were working in Israeli markets accounting for 22.9% of total workers at that time. Labour income in Israel accounted for 6% of Palestinian GNI in 2011. PCBS’s quarterly data for Q1 show that workers’ compensations in Israel amounted to USD 945.9m (16% of GNI).

From an economic perspective, this increase is logically correlated with the high unemployment rates in Palestine and the large and growing difference between Palestinian and Israeli wages. However, from a broader perspective, despite the increasing demand within Israel for cheaper structural and service labour, this growth comes in the context of overt attempts to impose economic peace proposals. Such proposals are one of the fundamentals of Israeli policies towards Palestinians under occupation, namely: to manage the population and to thwart national liberation in conjunction with settlement expansion on the ground.  This is evident in the discrepancies between the West Bank and the Gaza Strip, in terms of the much higher unemployment rates in the Gaza Strip, and the wide wage gap between the two regions. Yet Israel allows only a limited number of Gazan workers to enter Israel.  Thus, the key and decisive factor in determining the size of labour in Israel is Israeli colonial policies of domination and exploitation, not free market forces.

However, in recent years Israel have not only increased the work permit quotas granted to Palestinians but have also introduced quotas in new sectors that had no quotas before, such as the high-tech, health (intended for nurses or doctors to distinguish them from cleaners in the health sector who fall into the service sector), hotels and restaurants (previously included in the service sector quota).  Beginning in 2021, it allowed Gazan workers to enter Israel to work on an initial quota of around 20,000 workers distributed among the construction, agriculture, and services sectors (Israel banned workers from the Gaza Strip from entering Israel starting in 2006).  These decisions have eventually included changes to the permit system and payment mechanisms for workers.

Changes and developments imposed by Israel pertaining to Palestinian workers since 2016

On December 18, 2016, the Netanyahu government issued Government Resolution No. 2174 titled “Increasing the Employment of Palestinian Workers in Israel from the Judea and Samaria Area, Improving the Manner of Issuing Work Permits and Ensuring Fair Working Conditions for Palestinian Workers”.  Dozens of government decisions were issued during the last decade or so regarding Palestinian workers in addition to the ongoing deliberations in Knesset committees and within the various state agencies.  However, this decision appears to be a foundational stage in Israel’s attempt to pursue a new policy regarding Palestinian workers, which can be summarized in three steps, as is clear from the title of the resolution itself:

  1. Increasing the volume of Palestinian workers, especially in the construction sector, and starting to allocate quotas to Gazan workers starting from 2022.
  2. “Improving” (actually “transforming”) the way permits are issued in which brokers play a significant role in exploiting workers, and deducting part of their wages.
  3. Changing working conditions by developing a system of payment of workers’ wages so that cash payment mechanisms are gradually replaced by bank payment mechanisms by transfers between Israeli and Palestinian banks.

Is Israel paving the way for the return of the unified labour market?

Since Oslo, the proportion of workers in Israel had steadily increased to reach 18.4% in Palestine and 24.5% in the West Bank by 2022.  In light of the data presented in the paper, which demonstrate Israel’s intentions to expand its exploitation of the Palestinian labour force and to improve and enhance the efficiency of the regulatory framework for colonial domination and exploitation, the question arises and indeed becomes urgent, as to whether Israel is paving the way for the re-establishment of the single labour market (albeit through various, more rigorous, disciplined and sophisticated mechanisms).  On the ground, this trend emerges as part of the larger creeping process of annexation of the West Bank, as labour market developments are not isolated from a broader context of Israeli policy and practical actions aimed at deepening and perpetuating the state of Palestinian economic dependence, whether through subcontracting or commodity exchange.

The steady increase in worker numbers in Israel has been accompanied by what can be arguably termed a skewed phenomenon in the Palestinian labour market, where the latter suffers from high unemployment concurrent with the scarcity of workers. The issue has come to the fore following related statements by Palestinian Prime Minister and the Palestinian Private Sector Coordination Council.  This is because the high unemployment rates are concentrated among university graduates, especially female graduates.  For those groups, working in Israel is not a viable option.  As for the unskilled labour, the fact that a large part of the workforce moved to work in Israel, motivated by the wage gap, has led to a skilled labour shortage in the domestic market and a rise in wages in certain sectors.  These facts were verified by the results of a series of interviews and focus groups conducted by MAS over the past two years, with a wide segment of employers, private sector representatives, MoL, and trade unions.

Finally, the paper concludes with a number of conclusions, the most serious of these is the new Israeli approach to imposing new economic realities on the ground that reinforce the colonial political and security realities, only offering the prospect of more settlement and control over the resources of all the Palestinian people in an economic annexation that may precede the legal and political annexation.

Speakers’ Interpositions

First, Mr. Abdel Karim Mardawi touched upon other aspects of Palestinian labor in the Israeli market. First, Mardawi elaborated on the different types of permits, which include work permits, commercial permits, entry permits to agricultural lands, and others. In terms of transferring the workers’ savings from Israeli banks, he pointed  out to a new arrangement that will be effective starting April 2023, according to which these savings will be transferred directly by a company into workers’ bank accounts without the MoL or lawyer’s intermediary. Regarding Gazan workers, Mardawi indicated that those workers are not entitled to any kind of protection or labor rights, even that they are deprived of reclaiming their wage deductions and work entitlements. In the end, Mardawi stressed the continuous Israeli approach geared toward exploiting Palestinian workers by denying them their rights.

For her part, Dr. Laila Farsakh stated that the current situation of Palestinian labor is the result of the stagnant political and economic situation in Palestine during the Oslo years. Over these years, the Palestinian economy did not grow at a pace that would allow providing job opportunities for the Palestinian labor base, neither in terms of the growing numbers of workers nor in terms of the level of income, which would guarantee a real disengagement from the Israeli labor market. The increasing number of workers attracted to the Israeli market in the past few years can be ascribed to the economic crisis that followed the Coronavirus pandemic in early 2020. But in the longer term, jobs in the Israeli market are more attractive because of the large wage difference, and the growth that the Israeli economy is still witnessing in highly productive sectors.

Discussion with the Participants

All participants agreed on the systematic political exploitation of Palestinian labor in the Israeli market. Before economic interests, the occupation’s authorities use the recruitment of Palestinian workers as an additional policy tool to manage the conflict and the Palestinian population in particular. As Dr. Belal Falah commented; understanding this phenomenon and forming a Palestinian response in this field requires an analysis of the Israeli methodology and its objectives, in parallel with a discussion of the concerted Palestinian political strategy in the face of the Israeli project before addressing the economic policies, whether in the face of this phenomenon or any other. In his turn, Dr. Samir Abdullah pointed out that the Israeli authority’s policy of dependency and undermining any possible alternatives is not new in the long history of colonial control policies. Accordingly, he stressed the need for probing and studying the Palestinian labor issue from political and economic perspectives in future studies. Abdullah also stated that revisiting the issue of establishing a Social Security Fund should be a top priority on the Palestinian authorities’ agenda, given its role in protecting workers’ rights

Exploring the main causes of Palestinian labor attractiveness to the Israeli labor market,  Dr. Mahmoud Al Jaafari considered the wage difference as the main cause, whether among employed or unemployed workers in the Palestinian market. However, in return for a higher average wage in the Israeli market, workers face dreary working conditions of long transportation times, security measures, and the lack of safety measures in workplaces which add heavy economic burdens on workers, Al Jaafari stated. This is one of the aspects that are understudied.

Mr. Azmi Abdel Rahman, on the other hand, talked about the need to monitor the direct economic effects of the growing numbers of Palestinian workers heading to the Israeli market, specifically in the Palestinian productive sectors, headed by agriculture, and the industrial sector. The agricultural sector faces a significant shortage in the number of available manpower, which is due to the low wages available in the Palestinian market compared with other alternatives, he explained. He also called for a swift intervention by various governmental and non-governmental bodies and institutions to support the productive sectors facing a labour shortage. This entails the participation of trade unions in implementing all labor laws that guarantee acceptable wages and working conditions.

Whereas, Mr. Samir Hulileh presented several key axes that need to be addressed, which are related to the economic growth of the productive sectors in Palestine as well as the protection of Palestinian labor in the Israeli market. First, it is necessary to review the agreements regulating the economic relations between the Palestinian economy and Israel, especially the Paris Protocol. This encompasses many aspects, foremost of which is the PNA’s role in regulating the movement of Palestinian workers, as well as the legal framework regulating work contracts, workers’ wages, various deductions, ... etc. Secondly, Mr. Hulileh stressed the importance of fostering comprehensive and serious debate on the process of economic employment of workers’ compensations in the context of economic growth and development in Palestine, which also includes proposing governmental and semi-governmental programs to train Palestinian workers who head to work in the Israeli market.