By Amit Acco, Partner |

The recent security challenges in Israel have highlighted significant issues in the construction industry’s dependence on foreign labor. Following Hamas’s mass invasion on October 7 and the intelligence gathered from Gazans with permits to work in Israel, thousands of construction and agriculture workers from the West Bank have been barred from entering the country for work.

As an illustration, on the brink of the conflict, Israel hosted 110.7 thousand foreign workers, comprising approximately 23.1 thousand non-Israeli nationals, 79.9 thousand Palestinians, and 7,616 foreign workers hired by international contractors. While the Palestinian quota was entirely filled, foreign workers and implementing companies covered the remaining quotas at rates of 77% and 63%, respectively. An assessment conducted on December 14 of the same year revealed a significant shift, with Palestinians no longer present, leaving only 20,000 workers remaining in Israel.

Israeli Government Response

The Israeli  government  does not intend to allow these Palestinian workers back after the ongoing war to prevent a potential security risk in the West Bank.

Israel is planning a significant initiative to replace all Palestinian laborers with foreign workers, aiming to address perceived security threats. The reported plan involves bringing in foreign workers from various countries, with proposed numbers as follows: 25,500 from Sri Lanka, 20,000 from China, 17,000 from India, 13,000 from Thailand, and 6,000 from Moldova.
Diplomatic efforts are underway to sign new deals with these countries.

In addition to foreign workers, the government plans to encourage Israelis to work in construction and agriculture while promoting technologies that could reduce the need for manual labor in these sectors.  The reported plan and its details are subject to further developments and discussions.

Future Plans

With a shortage of workers, the industry faces questions about its future, workable solutions, and the lessons to be learned from the current crisis. Certainly, since the 7th October morning, key assumptions about Israel’s workforce fell apart. The construction, nursing, and agriculture sectors struggled due to a lack of foreign workers. Construction and agriculture especially, faced hurdles due to a shortage of skilled labor. Traditional fixes like volunteer help aren’t cutting it for jobs that need special skills.

While steps to bring in more foreign workers are in motion, these new proposed measures take time to put in place. The exit of foreign workers and the absence of Palestinian workers make the situation urgent, requiring rapid and practical solutions.

Kan-Tor & Acco Opinion

It is Kan-Tor & Acco recommendation that the Israeli government implement an urgent and comprehensive strategy to ensure the welfare and rights of foreign employees. This proposed approach involves granting construction companies the flexibility to directly recruit skilled workers from any nation, irrespective of whether Israel has established bilateral agreements with those countries.

Nevertheless, to guarantee the protection of these employees’ rights, we propose that these workers be engaged and managed within Israel by licensed HR companies dedicated to the employment of Foreign Workers in the construction industry. These HR entities will be tasked with ensuring strict adherence to labor regulations and safeguarding the rights of foreign workers:
Compensation and Benefits, Safe and Healthy Working Conditions, Non-Discriminatory Practices and Working Hours and Overtime Compensation.

The concept of utilizing pre-licensed HR companies, exclusively dedicated to ensuring the adherence of foreign employees’ rights within regulatory frameworks, represents a superior approach compared to the previously flawed strategy of directly employing contractors. This approach has proven ineffective in both HR management and compensation disbursements in the past.
The deployment of numerous HR companies, numbering in the short few hundreds, would facilitate governmental oversight, ensuring stringent compliance in this regard.
The heightened focus on foreign nationals stems from their typically vulnerable status, characterized by a lack of familiarity with the language and the rights afforded to them by their employers.

End note

The current labor challenge in Israel’s construction industry demands immediate and thoughtful action. Balancing the need for skilled foreign workers with a focus on professional training for Israelis is crucial. Government support, collaboration with industry stakeholders, and a long-term vision are essential for navigating the construction sector through these challenging times and building a resilient future.