By Amit Acco, Partner |
In recent years, and particularly lately, a clear trend has emerged in the Israeli labor market: an expansion in the number of foreign workers in the trade and service sectors, with an increasing emphasis on direct hiring—meaning that the Israeli employer personally recruits the worker in their home country and brings them to Israel.
This model of direct employment has proven effective: it enables rapid recruitment, ensures the arrival of skilled and professional labor, and creates a strong emotional and professional bond between the worker and employer. This connection leads to a high level of commitment, reduces employee turnover, and diminishes the phenomenon of “worker poaching” between employers. When the employer invests in fair employment conditions, suitable housing, and adequate health insurance, they benefit from an employee willing to stay long-term, while the employee gains job security.
The Ministry of Interior has also clarified that foreign workers brought through direct employment are not permitted to change employers unless their rights have been violated, such as in cases of unpaid wages, inadequate housing, or lack of proper health insurance. This approach maintains a balance between protecting workers and ensuring employment stability in the sector.
Increasing the Worker Quota – Responding to a Severe Shortage
Recently, a decision was approved to significantly increase the quota of foreign workers in the trade and service sectors—from 12,800 to 25,000 workers. This decision was made in response to a severe labor shortage that worsened following the cessation of work permits for Palestinian workers.
The division between types of recruitment is clear:
75% private recruitment – 18,750 workers (compared to only 9,600 before the expansion). These workers come from countries such as Sri Lanka, India, Thailand, and Moldova.
25% bilateral agreements – 6,250 workers (compared to 3,200 previously). These are workers brought under official agreements between the State of Israel and other countries, although no such agreement has yet been finalized for the trade and services sector.
The expansion was also driven by heavy pressure from trade chains, especially food retailers, who warned that the labor shortage threatens their ability to expand geographically, open branches in peripheral areas, and meet demand—especially during peak periods such as the Jewish High Holidays.
For the First Time: Permits for Foreign Workers in the Cleaning Sector
In addition to expanding the existing quota, permits for foreign workers in the cleaning sector were approved for the first time. Many companies in this field have struggled to find suitable Israeli workers. This addition is expected to significantly ease the process of locating qualified labor for the industry.
For example, a large cleaning company that previously employed about 80 Israeli workers recently received permits to hire 20 foreign workers whom it is currently recruiting in India under direct employment. The Kan-Tor & Acco office assisted the company in obtaining the permits and in the rapid process of bringing the workers to Israel, which substantially alleviated operational challenges and ensured the company’s continued regular activity.
Unprecedented Demand for Workers
The data illustrate the depth of the gap between supply and demand: following the publication of a call for foreign workers recruitment last June, 45,000 requests were submitted by about 1,500 employers—a number several times greater than the quota that was then available. Already in March, with the allocation of the first tranche of the quota (6,400 workers), hundreds of positions remained unfilled.
Opposition and Supporting Arguments
The Ministry of Finance and the Ministry of Justice opposed the quota increase. The Finance Ministry argued that there is no actual labor shortage and warned that increasing the number of foreign workers could harm productivity and encourage the employment of low-skilled, low-wage workers instead of investing in local employees. Additionally, concerns were raised about negative externalities such as rising rental prices due to housing foreign workers and increased strain on transportation infrastructure.
The Ministry of Justice preferred that worker recruitment be conducted solely through bilateral agreements, out of concern for issues related to human trafficking.
Conversely, the Ministry of Economy argued that many jobs are not even advertised because it is known that there are no local candidates to fill them, and that unemployment data in the sector do not reflect the actual situation. Regarding externalities, it was emphasized that foreign workers usually live close to their workplaces, and that increasing the quota will enable companies to invest in technology to improve productivity rather than constantly dealing with labor shortages.
The Role of Kan-Tor & Acco in Assisting Employers
The Kan-Tor & Acco office supports employers throughout the entire process of recruiting and directly hiring foreign workers—from identifying suitable labor in the country of origin to the workers’ arrival in Israel and their integration at the workplace. The office cooperates with reputable and regulated recruitment agencies abroad and ensures that all procedures comply with the laws and regulations in both Israel and the country of origin. This guarantees employers an efficient, swift, and transparent process that reduces legal and operational risks.
Moreover, the office provides personalized advice on adapting contracts and individual agreements for employees, comprehensive handling of work permits and approvals, and solutions to logistical issues such as housing, health insurance, and welfare conditions. The goal is not only to meet regulatory requirements but also to build a stable and long-term relationship between employer and employee, ensuring workers’ rights and fostering a fair working environment that encourages commitment and loyalty.
Summary – An Opportunity for Stability and Growth
The quota expansion and emphasis on direct hiring reflect a deep conceptual shift: moving away from reliance on temporary and uncommitted labor towards investing in a direct relationship between employer and worker for the benefit of both.
Direct employment allows for long-term stability, creates a fair and supportive work environment, and helps vital sectors in the economy meet current challenges. Despite ongoing debates among government ministries, it is clear that the trend—more foreign workers in industry and services, especially through direct hiring—is here to stay.
