By Amit Acco, Partner |
This article explores a significant transformation in Israel’s labor market policy—specifically, the recent expansion of sectors permitted to employ foreign workers. While Israel has long relied on foreign labor in agriculture, construction, and caregiving, 2023 marked a turning point as the government responded to regional conflict and acute labor shortages by opening the doors to foreign workers in the industrial and service sectors as well.
This shift reflects both an economic necessity and a structural change in workforce strategy. In what follows, we will examine the underlying reasons for this policy evolution, and analyze the differences in how each sector manages the recruitment and employment of foreign workers. These differences include the identity of the employer – whether governmental, private, or through bilateral arrangements – the regulatory framework, levels of salary and benefits, and the administrative process involved in bringing workers to Israel.
The article is intended for human resources managers, foreign recruitment agencies, and potential employers in Israel who are either already engaged in the employment of foreign workers or are considering doing so in the near future. It aims to provide practical insight into the evolving regulatory landscape and help stakeholders understand how the process varies across sectors. We will examine key differences in recruitment channels, identity of the employer (government-sponsored (G to G) vs. Private )B to B), regulatory oversight, required working conditions and salary levels, as well as the specific administrative processes involved in each field. Whether in agriculture or manufacturing, caregiving or hospitality, the rules and expectations differ—and this article offers a comprehensive guide to navigating them effectively.
Israeli Labor Market for Foreign Employees – General Overview
The Israeli labor market, known for its resilience and innovation, continues to face persistent challenges in meeting workforce demands across a variety of sectors. While Israel boasts a highly skilled and educated workforce, demographic limitations and structural gaps have created a growing dependency on foreign employees to fill essential roles that are not being met locally. This phenomenon is not unique to Israel, but in recent years it has become more pronounced due to the dual pressures of rapid economic development and a shrinking pool of available workers in certain fields.
One of the key sectors heavily reliant on foreign labor is construction. For decades, Israel has experienced a continuous boom in infrastructure and housing development, a trend that has only intensified in light of the country’s growing population and the urgent need to expand housing availability. However, the physically demanding nature of construction work, combined with a lack of interest from the local workforce, has led to a significant shortfall of workers. To bridge this gap, Israel has signed bilateral agreements with countries such as China, Moldova, and Ukraine, enabling thousands of foreign construction workers to enter the country under structured employment programs.
The caregiving sector is another critical area with a high demand for foreign labor. With an aging population and a growing number of elderly individuals requiring long-term care, the demand for live-in caregivers has risen sharply. Foreign caregivers—primarily from countries such as the Philippines, Nepal, India, and Sri Lanka—play an indispensable role in Israel’s eldercare system. These workers provide essential, around-the-clock support that would otherwise be unavailable to many families due to labor shortages and high costs in the domestic care workforce.
Agriculture is a third sector in which foreign workers are vital. Despite Israel’s reputation for technological advancement in agricultural methods, much of the work on farms still requires manual labor, especially in harvesting and planting. Due to its physically intensive nature and seasonal structure, this type of work has not attracted sufficient numbers of local workers. As a result, Israel has long depended on foreign workers, particularly from Thailand, to sustain its agricultural productivity.
Additionally, recent years have seen a growing demand for highly skilled foreign professionals in the Israeli tech sector, especially in fields such as artificial intelligence, cybersecurity, and data science. While Israel is a global leader in innovation and tech, local shortages in specialized talent have led companies to seek out skilled professionals from abroad to maintain competitiveness and growth. The same trend is emerging in healthcare, where hospitals and clinics are increasingly recruiting foreign doctors and nurses to fill critical shortages in specialized fields and underserved geographic areas.
These sector-specific needs underscore the importance of foreign workers to Israel’s economic stability and social infrastructure. As demographic shifts continue and domestic labor availability remains limited in certain occupations, the integration of foreign employees has become not just a supplement to the labor market but a strategic necessity.
Israeli Foreign Labor Market – 2025
Since 2023, a significant shift has taken place in Israel’s labor market policy, largely influenced by regional instability and the outbreak of war that disrupted the availability of both local and Palestinian workers. In response to the mounting labor shortages, the Israeli government has expanded its approach to foreign employment, introducing new frameworks that go beyond the traditionally approved sectors of agriculture, construction, and caregiving.
Historically, the importation of foreign workers into Israel was tightly regulated and restricted to specific fields deemed essential and lacking in local labor supply – most notably, agriculture, construction, and healthcare. These sectors were granted limited quotas under bilateral agreements and tightly supervised programs, ensuring that foreign labor addressed only clearly identified needs without broadly impacting local employment opportunities.
However, the aftermath of the October 2023 conflict created widespread disruption, particularly in regions close to conflict zones and in sectors that had relied heavily on Palestinian labor. Thousands of positions in industry and essential services—ranging from manufacturing and logistics to hospitality, cleaning, and maintenance—were suddenly left unfilled. The traditional labor channels could no longer meet the urgent needs of the economy, leading the Israeli government to re-evaluate its restrictive foreign labor policies.
In early 2024, as part of emergency economic stabilization measures, the government approved the entry of foreign workers into the industrial and service sectors—marking a historic policy shift. This change recognized that the need for foreign labor had extended beyond physically intensive or caregiving roles and into areas that sustain the country’s broader economic functioning. As factories, hotels, restaurants, and logistic centers struggled to meet demand, the inclusion of these sectors in Israel’s foreign labor framework became a national priority.
This development reflects a more flexible and pragmatic labor strategy, acknowledging that global and regional pressures demand a wider reliance on foreign manpower. It also signals a growing understanding that the sustainability of Israel’s economy depends on its ability to adapt and respond to workforce challenges across a more diversified set of industries. As a result, new regulatory pathways and bilateral discussions are underway to facilitate the organized and lawful employment of foreign workers in these newly authorized sectors, while ensuring protections for both foreign employees and the Israeli labor market.
Employer Obligation Towards the Foreign Employee
Employers of foreign workers in Israel (either Direct Employer in the in industry and essential services or a Designated HR Company in the Construction Industry) are subject to a range of legal obligations designed to protect the rights and well-being of the employees during their stay and employment in the country. These obligations apply regardless of the sector and are strictly enforced by Israeli authorities.
The employer is required to pay the foreign worker a lawful salary that meets or exceeds the minimum wage and complies with the terms of the employment contract. Payment must be made regularly and on time, with proper documentation and payslips. In addition to wages, the employer must provide suitable housing that meets the standards set by the Ministry of Interior and Ministry of Health. The cost of this housing cannot be deducted beyond a certain capped amount set by law.
Employers are also obligated to provide comprehensive health insurance coverage for the entire period of employment. This ensures that the foreign worker has access to necessary medical services without bearing the cost. Other responsibilities include covering the cost of a round-trip flight to and from the employee’s home country and ensuring safe and fair working conditions.
The employer must respect the foreign worker’s legal rights, including proper rest days, working hours, and vacation entitlements as defined under Israeli labor law. Furthermore, the employment must be documented through a written contract, in a language the employee understands, outlining all terms and conditions.
Failure to meet any of these obligations may result in legal sanctions, including fines and the revocation of permits. Israeli law views the protection of foreign workers as a matter of public interest, and authorities closely monitor employers to ensure compliance.
Construction: How does it work?
Bringing foreign workers into Israel for the construction industry involves two main pathways: through a bilateral agreement between Israel and specific countries, or via the business-to-business (B2B) route. Both options aim to address the severe labor shortage in the construction sector while ensuring proper regulation and oversight.
Originally, the only option available was recruitment through government-to-government agreements, where foreign workers could enter Israel only under formal bilateral frameworks. However, in 2024, the Israeli government introduced a significant change by allowing some of the more established designated HR companies to recruit workers via the B2B model. This shift enabled faster and more flexible recruitment, allowing experienced HR companies to bring workers into Israel more quickly to meet urgent demands on construction sites.
It is important to note that the B2B recruitment path was not extended to newly approved designated HR companies. Instead, the government limited this option to more mature firms with proven operational capacity and compliance history. This cautious approach aimed to allow newer designated companies time to gain practical experience in recruiting and managing foreign workers under the more structured and supervised bilateral model before operating in the more flexible B2B environment.
A central feature of this system remains the role of the designated HR companies, which are authorized by the government to recruit and employ foreign nationals. While these companies are the legal employers, they lease the workers to various construction firms in Israel. The construction companies do not employ the workers directly but instead contract with the HR companies for manpower services. At the end of each month, the construction firm pays the HR company for the workers’ services, and the HR company in turn pays the workers’ wages.
A critical aspect of this arrangement is that the HR company must pay the workers their salaries on a monthly basis—regardless of whether or not they are currently placed on active worksites. This legal obligation puts financial pressure on the HR firms to ensure constant employment for their workers and necessitates efficient billing and collection systems from the construction companies.
As legal employers, the designated HR companies must also provide all statutory rights and benefits required under Israeli law. This includes full medical insurance, suitable housing, and all other legal entitlements applicable to foreign workers. These measures are designed to protect worker welfare and ensure proper employment conditions.
In summary, foreign employment in Israel’s construction industry has evolved from a strictly government-to-government framework to a dual-track system that includes the more agile B2B model for experienced firms. Designated HR companies remain at the center of the system, bearing the legal, logistical, and financial responsibilities of managing the foreign workforce in this critical sector.
New Options to Industry and Services
In Israel, the employment of foreign workers in the services and industrial sectors was only allowed since 2024 and reflects a new phenomena. The process is regulated through a quota system published per sector and managed by the Population and Immigration Authority (PIBA).
Few times through the year, the Israeli government determines how many foreign workers may be admitted into these sectors and particular profession, based on the country’s labor market needs and economic priorities. These quotas are allocated to specific employers who have demonstrated a legitimate need for foreign labor and have received prior approval, and determine the employee minimum wage, which is always on top of the Israeli minimum wage.
Employers seeking to hire foreign nationals in the services or industrial fields must submit an application to PIBA upon the issuance of the quota – some times with dead line of short few days only, detailing the nature of their business, the positions they seek to fill, and justification for hiring foreign rather than local workers.
Once approved and allocated a quota, the employer receives permits allowing them to sponsor a set number of foreign workers. Only companies with a valid quota may legally employ foreign workers in these sectors.
Unlike the construction industry, where designated HR companies serve as the legal employers, in the services and industrial sectors, the Israeli company that applies for and receives the quota is the direct legal employer of the foreign workers. This means the company is responsible for all employment obligations, including salaries, housing, medical insurance, and all other conditions set by Israeli labor and immigration law.
After receiving the quota, the employer may begin the recruitment process—either directly or through licensed overseas recruitment agencies—subject to the guidelines set by PIBA and relevant bilateral agreements, if any exist. Upon successful recruitment, the workers are issued visas and permits tied specifically to the employer that holds the quota.
It is important to note that the recruiter, employer, or any third party is strictly prohibited from charging the foreign worker more than the maximum amount allowed under Israeli law, which is approximately 1,300 USD. Any demand exceeding this legal limit may be considered a criminal offense and could be classified as human trafficking.
The quota system is designed to ensure that foreign workers are only brought into Israel when there is a proven shortage of local labor, and to regulate their employment under clear, enforceable terms. It also holds employers accountable for the welfare and legal rights of the workers they bring into the country.
Protecting the Foreign Recruiters
Foreign worker recruiters, whether operating in Israel or abroad, assume significant professional risks due to the highly regulated nature of the recruitment process and the strict oversight imposed by Israeli authorities. One of the primary risks involves legal liability. Recruiters must comply with a complex framework of laws and bilateral agreements governing the recruitment, placement, and employment of foreign nationals. Any deviation from these regulations—such as charging unauthorized fees, misrepresenting job conditions, or facilitating the entry of workers without proper permits—can result in severe legal consequences, including fines, license revocation, and in serious cases, criminal charges such as human trafficking.
Another major risk relates to reputational damage. Inaccurate representation of job roles, working conditions, or benefits may lead to complaints from workers or employers, potentially resulting in blacklisting or termination of cooperation agreements with Israeli partners or authorities. The recruitment field is highly dependent on trust and credibility, and even minor missteps can undermine long-term business viability.
Financial exposure is also a concern. Recruiters often invest substantial resources in the sourcing, vetting, and mobilization of candidates. If a worker is denied a visa, rejected by the employer, or returns home prematurely, the recruiter may face unrecoverable costs or refund obligations. Additionally, failure by the Israeli employer to fulfill their contractual obligations may also lead to disputes, delayed payments, or loss of future business.
Finally, recruiters are exposed to operational risks. They must navigate changing regulatory environments, political pressures, quota adjustments, and labor market fluctuations—all of which can disrupt recruitment plans and business continuity.
Our law firm can assist recruiters abroad in mitigating these risks by providing in-depth legal guidance tailored to the unique structure of Israel’s foreign employment system. We advise on compliance with Israeli regulations, clarify the legal obligations of recruiters, and help structure agreements in a way that protects all parties involved. We also guide foreign recruiters through the legal channels available to Israeli employers, including how to fulfill their quotas with employees sourced from abroad.
Unfortunately, we have seen cases in the past where both Israeli companies and intermediaries offered recruitment of foreign nationals before the quota was granted, before work permits were issued, or—particularly in the case of intermediaries—before a binding employment contract with an Israeli employer was in place. These practices expose all involved to serious legal and financial risks. With the right legal support, recruiters can avoid these pitfalls, operate lawfully, and build sustainable, trusted recruitment pipelines to Israel.
