Construction in Har Homa 311.
(photo credit: Courtesy)
In yet another attempt to solve Israel’s chronic housing shortage, the Treasury this week launched a program aimed at making more land available. The goal is to spark a resurgence of housing construction by issuing 140,000 new building permits in 2011 and 2012.
The Treasury’s program will make it more difficult for intransigent tenants to stop new projects and make it easier to rezone fallow land once used for agriculture. The Treasury’s is just one of many building reform initiatives that have been launched in recent months by the Interior Ministry, Bank of Israel governor and the Construction and Housing Ministry.
All aspire to solve an endemic market failure: Housing prices have steadily risen, yet demand continues to exceed supply. Housing prices are up 40% since the end of 2007 and 21% in the last year. This should have translated into a building boom as contractors scrambled to cash in. But building starts have remained static at about 30,000, lower than the natural annual growth of households, which is 35,000 to 40,000. This has been going on for at least five years.
WHILE THE different reforms deal with the myriad ailments of Israel’s housing market, they ignore one important component. Who precisely will build those 140,000 new housing units in the Treasury’s plan?
The Association of Contractors and Builders (ACBI) has been complaining that there is a shortage of workers in the most labor-intensive aspects of construction, such as pouring concrete and laying floor tiles, fields presently dominated by foreign workers and Palestinians. As a result, instead of it taking 12 months to build a house, it now takes 30 months. And the situation is about to get worse.
At the end of the month, the 8,000 limit on foreign construction workers – most of whom come from China – will be cut to 5,000. The plan is to phase them out altogether by 2012. Contractors say that stiff fines and government crackdowns have practically eliminated illegally employed foreigners.
Back in April, meanwhile, Palestinian Authority President Mahmoud Abbas announced that by the end of the year Palestinians must stop working in settlements in the West Bank – defined to include Jewish neighborhoods in Jerusalem – or face up to five years in prison and a fine of $14,000. In 2009, there were about 25,000 Palestinians legally employed in the building sector; many thousands more are employed illegally.
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Obviously, the easiest solution to these shortages would be to ease
restrictions on foreign workers. That is precisely what the ACBI is
demanding. In the short run, the government has no choice if it takes
seriously the Treasury’s ambitious program. But in parallel, more must
be done to encourage Israelis, particularly young men just out of IDF
service, to work in construction.
The Zionist ideal of “Hebrew labor,” which predates the state, posits
that all honest labor is honorable. Sadly, this ideal was brushed aside
by contractors when, in 1967, cheap Palestinian labor from the West
Bank became available.
In the late 1980s and 1990s, the intifada and suicide bombings led to a
shift from Palestinian to foreign workers. Often these laborers were
exploited. And their influx further acerbated high unemployment among
less educated Israelis.
A concerted effort must now be made to encourage Israelis to replace
foreigners. The time is ripe. Contractors are desperate for new
workers. A Histadrut-backed collective labor agreement signed in
January provides better working conditions. The Defense Ministry, the
Industry, Trade and Labor Ministry and the ACBI have put aside millions
of shekels to encourage Israelis to work in construction.
And there seems to be a readiness on the part of Israelis as well, at
least in theory. Over 3,000 applied to a pilot program launched in 2009
offering a monthly gross salary of NIS 7,000 to young men willing to
work in the most difficult construction jobs that are also the most
vital to contractors. But only 50 completed the six-month course: 43 of
whom found work, but only 35 of them were still working six months
This is just a drop in the bucket. But the figures suggest at least a
chance that the stereotype of the spoiled Israeli who shirks physical
labor can be challenged. A return of Israelis to construction will
revive a Zionist ideal, and help solve the housing shortage.
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