'Cheap Palestinian workers impact local labor wages'

The low cost of employing Palestinian workers is likely have an adverse impact on the wage of unskilled Israeli workers, says Bank of Israel.

April 1, 2010 03:51
2 minute read.
Palestinian construction workers (Ariel Jerozolims

Palestinian workers 6311. (photo credit: Ariel Jerozolimski)


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The Bank of Israel warned on Wednesday that the low cost of employing Palestinians without a work permit may have a negative effect on the salary of unskilled Israeli workers and widen social gaps.

“In the last few years, with the waning of the intifada, the number of Palestinian residents of Judea and Samaria working in the Israeli economy (in Israel and the settlements in Judea and Samaria) increased,” said the central bank, in an excerpt from its annual report, to be published in April.

“The difference between the cost of a reported work day in Israel and the wage of a worker without a permit constitutes an incentive to employ Palestinians who do not hold a work permit. The low cost of employing Palestinian workers is likely have an adverse impact on the wage of unskilled Israeli workers, as well as negative social consequences.”

According to data of the Interior Ministry’s Immigration Authority, the average cost of a reported day’s work in Israel was about NIS 210 in 2008, whereas the daily cost of a worker without a permit is significantly lower, at about NIS 124.

“This gap provides a real incentive for employers to hire non-permit-holding residents of the territories,” said the report. “It is important to make order in the methods of employment, by tightening law enforcement among employers of workers without permits, and also among those who employ workers with a permit but who do not make the full employers’ payments specified under Israeli labor law.”

Permits to work in Israel are issued according to quotas and after security checks, whereas permits to work in Israeli settlements in Judea and Samaria are issued more freely.

A great majority of those without permits work within Israel itself, where the daily wage of about NIS 124 is high compared with that in the Palestinian economy, of about NIS 85. That said, the daily rate of a worker with a permit is higher, about NIS 141.

Permit holders are older, the share of unmarried men among them is lower, and they work more days per month than those without permits, the central bank found. As a result, their net monthly wage is about 34 percent higher than that of non-permit holders.

The central bank emphasized that employment in Israel was highly important to the Palestinians. Palestinians working in Israel constitute more than 14% of the total number of Palestinian employees in Judea, Samaria and east Jerusalem, and their total wage bill in 2008 was estimated at $649 million, more than 10% of the Palestinian GDP.

As a result of an increase of more than 20% in the number of Palestinians employed in Israel’s economy in 2007/08, there is a significant increase in income and demand in the Palestinian economy, according to a report by the Palestinian Finance Ministry.

The number of Palestinian workers from Judea and Samaria in the Israeli economy reached about 44,000 in 2008, of whom 25,000 had work permits and 16,000 didn’t, and the remainder had Israeli identity cards or foreign passports.

In addition, there are about 32,000 residents of east Jerusalem counted by the publications of the Palestinian Central Bureau of Statistics.

The workers from Judea and Samaria (excluding east Jerusalem) constitute about 2% of the total number of employees in Israel’s business sector.

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