By Amit Acco
Until recently, most Israeli manufacturers, retailers and food businesses had no realistic way to hire non-expert foreign employees. Foreign workers were concentrated in construction, agriculture, caregiving and a few other defined sectors. Industry and commerce relied mainly on Israeli workers and, in many cases, on Palestinian employees.
That changed after October 2023. Since 2024, the government has opened routes for foreign workers in industry and in parts of commerce and services. For many HR managers this is unfamiliar ground, with its own permits, quotas, costs and compliance duties.
This article explains how the tracks work, how they differ, what they cost, and where we think they are heading.
Why Israel Opened Industry and Commerce to Foreign Workers
After 7 October 2023, Israel suspended entry permits for roughly 150,000 Palestinian workers from the West Bank and Gaza. At the same time, the large-scale call-up of reservists took many Israeli employees away from their jobs, often for long and repeated periods.
Construction and agriculture were hit first and received attention first. Factories, supermarkets, food producers and restaurants soon faced the same problem: production lines and shifts that could not be staffed.
In response, the government adopted a series of decisions through 2024 and 2025. These decisions opened or expanded quotas for foreign workers in sectors that had been largely closed to non-expert foreign labor. Quota sizes and conditions have changed more than once, so employers should always check the decision currently in force.
Foreign Workers in Industry vs. Commerce and Services: Two Different Tracks
There are two main paths, and the first question is which one applies to your business.
The Industry Track
This track is for manufacturing plants recognized as industrial by the Ministry of Economy and Industry. The roles are usually production-line, operational and technical positions. The permit is generally tied to the specific plant. Additional criteria may apply, such as the plant’s location, for example in the periphery, or its export or essential status.
The Commerce and Services Track
This is a newer and narrower opening covering retail and food businesses. Eligibility depends on the employer’s sub-sector and the specific roles. Limits on the ratio of foreign workers to Israeli workers may apply.
In practice, the tracks differ in who determines eligibility, which roles are allowed, how quotas are allocated, and which ratio caps apply. A factory and a supermarket chain may both need workers urgently, but they will go through different processes.
Hiring Foreign Workers Step by Step: From Job Posting to the Worker’s Arrival
The exact steps vary by track and are updated from time to time. The general sequence looks like this:
- Confirm eligibility. Check whether your plant or business falls within the industry track or the commerce and services track, and whether quota is still available.
- Run the labor-market test. Post the position with the Israeli Employment Service and obtain confirmation that no suitable Israeli candidates were found.
- Apply for an employer permit. Submit the application to the Population and Immigration Authority (PIBA) with the required fees and documents, such as company registration and tax compliance. Some tracks also require a bank guarantee.
- Recruit. Recruitment is done either through a bilateral government-to-government agreement or through a licensed private agency where the track allows it.
- Visa and arrival. The worker receives a B/1 work visa at the Israeli consulate and travels to Israel.
- Onboarding. Sign the employment contract, arrange health insurance and housing, and register the worker.
Bilateral (G2G) Agreements
Israel recruits many foreign workers through government-to-government agreements. These agreements are designed to make recruitment transparent and to prevent workers from paying illegal brokerage fees. Israel has bilateral arrangements with several countries, including India, Sri Lanka, Uzbekistan, Moldova, Thailand and the Philippines.
Not every agreement covers industry or commerce, and the arrangements change over time. G2G pipelines are also often slower than employers expect. Before you plan around a particular source country, check which agreements currently apply to your track.
Salary Levels, Employer Costs and Mandatory Benefits for Foreign Workers
Foreign workers are entitled to at least the Israeli statutory minimum wage. The minimum wage was raised in April 2025 to about ₪6,250 per month for full-time work. It is updated periodically, so check the current rate. Some tracks or employers may set pay above minimum wage.
On top of base salary, workers have the same rights as Israeli employees. These include overtime pay, weekly rest and statutory vacation, as well as pension contributions and convalescence pay. The employer must also arrange private health insurance and provide suitable housing, with any deductions limited to permitted caps.
Employers also bear additional costs. These include the annual foreign-worker levy, which is calculated as a percentage of salary at rates that vary by sector and period, as well as permit fees and recruitment costs. These figures change often. Build your budget on current official rates, not on older estimates.
Compliance After Arrival and Common Pitfalls
Approval of the permit is where the employer’s obligations begin, not where they end. The following checklist covers the main areas to review.
Contract and insurance. Provide a written employment contract in a language the worker understands, and make sure valid health insurance coverage is in place from the first day.
Housing and payroll. Accommodation must meet the required standards. Pay slips should be detailed, deductions must be lawful, and pension and any required deposit must be handled correctly.
Levy, reporting and renewals. Pay the foreign-worker levy on time, notify PIBA when a worker leaves or stops working, and track permit and visa expiry dates.
Safety. Provide safety training adapted to the worker’s language.
Where Employers Run Into Trouble
The most common problems we see start before the worker arrives. Processing times are long, and quotas can run out before an application is approved. Once foreign workers are approved, housing shortages near the plant or store can become a serious obstacle.
Retention is another challenge, as some workers leave for other employers or sectors. Employers also get into difficulty when they hire through manpower contractors without checking their licenses and legal standing, or when they are unprepared for audits by labor-law enforcement authorities.
Finally, recruiters who charge workers illegal fees create trafficking and reputational risk for the employer, even where the employer was not directly involved.
Our View: The Future of These Programs and the Israeli Labor Market
Our view is that the future of these tracks depends largely on security and on policy decisions.
If the security situation stabilizes, reservists return to work and some Palestinian workers are allowed back, quotas may be tightened. The government has long aimed to cap the total number of foreign workers. The Bank of Israel and the OECD have warned that relying on low-wage foreign labor can hold back productivity.
If shortages continue, these openings may become a permanent part of the labor market. Some employers have already built their operations around foreign workers.
Either way, we expect three trends: more investment in automation, more efforts to integrate Haredi and Arab Israelis into the workforce, and ongoing debate over how foreign labor affects wages for low-skilled Israeli workers. Employers should treat foreign workers as one part of their staffing strategy, not the whole of it.
Kan-Tor & Acco advises manufacturers, retailers and food businesses on eligibility, permit applications, recruitment routes and ongoing compliance. If you are considering hiring foreign workers, we invite you to book an eligibility consultation so we can assess whether your business qualifies and plan the process with you.
This article is general information and not legal advice.
