Dependence on Palestinian workers endangers construction, study finds

Keeping construction levels high is a crucial element in reeling in the soaring price of housing.

October 19, 2015 18:27
1 minute read.
palestinian laborers

Palestinian laborers work at a construction site in a settlement near Jerusalem . (photo credit: REUTERS)

Israel’s dependence on Palestinian workers is a danger to the construction sector, according to a BdiCoface study released Monday.

Eleven percent of construction companies are at risk of closing, and crackdowns on the movement of Palestinian labor resulting from the security situation could push some of them over the edge, the study found.

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Keeping construction levels high is a crucial element in reeling in the soaring price of housing, which in recent years has inflated as the result of both inadequate supply and low interest rates.

Of the 235,100 construction workers in Israel in the first quarter of the year, 22% came from the West Bank and 3% were foreign workers.

“The data that arises from the survey present a snapshot of uncertainty, not only among the contractors, but also reflected the general worries in the population in Israel,” said Avner Levy, chairman of the contractors and construction organization in Tel Aviv, Jaffa and Bat Yam.

“It’s difficult to predict how the wave of terrorism will affect it, given the dependence on Palestinian workers.”

Last month, the cabinet approved plans to increase the number of Chinese construction guest workers by 20,000.

The survey estimated that 67% of construction companies faced elevated economic risk, and 11% were near closure.

June saw a record level of home sales in Israel, reflecting two government policies, according to the survey.

Former finance minister Yair Lapid’s attempts to eliminate VAT on housing for some young couples in 2014 led potential buyers to wait.

When the plans fell apart, many rushed back to the market.

This summer, Finance Minister Moshe Kahlon announced plans to increase tax on real estate purchases made for investment purposes.

Ahead of the new tax, many investors rushed to close their deals.

Combined, the factors led to a 63.2% increase in home sales in the first eight months of the year, relative to the same period last year.

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