A blueprint gone bad

By SAM SER
Exact numbers are hard to come by, but figures from the Central Bureau of Statistics and other government sources indicate a peak of some 300,000 foreign workers here in 2001. The trend can be traced to 1993, when an economic boom drove up demand for low-skilled labor while, simultaneously, security fears over Palestinian workers put a clamp on supply. By the early part of this decade, as unemployment soared past the 11 percent mark and foreign workers made up more than a 10th of the labor force, the country's reliance on foreigners went from an afterthought to a major talking point and the target of intense criticism within the government. In 2003, as finance minister, Binyamin Netanyahu raised the tax that employers paid for foreign workers' salaries. The move was meant to make foreign labor less economical for contractors, and to make hiring Israelis seem less expensive, by comparison. "Many foreigners occupy jobs like a tenant occupies a room," Dr. Michel Strawczynski, deputy head of research at Bank of Israel, said in 2003, defending the government's crackdown on foreign workers. "When the foreigner leaves his job, it becomes vacant like a room does." By expelling illegal foreign workers from the country and reducing the number of legal foreign workers allowed to enter, the government's hope has been that a plethora of employment "rooms" will be vacated, and that Israelis will seek to occupy them. But they haven't. Although Strawczynski credited the expulsion of tens of thousands of foreign workers for a strong increase in Israelis employed in construction five years ago, that phenomenon has proven since then to have been an anomaly. Contractors complain that they are suffering from a shortage of about 50,000 workers - a figure that, not coincidentally, roughly equals the number of foreign workers the construction industry has lost to the government's cutbacks in quotas. To some extent, demands to reinstate the high levels of foreign workers can be attributed to the financial interests of manpower companies that "supply" employers with cheap laborers. But much of that self-interest has been exposed, and has died down accordingly, while genuine efforts to recruit Israelis have consistently failed. In 2004, just two years into a 10-year plan to train unemployed Jews for construction work, the Building Contractors Association pulled the plug on the program after only 75 people showed interest. A similar course, run by the Industry, Trade and Labor Ministry that included Arabs, drew well over 800. With that kind of turnout, industry leaders despaired of ever seeing Israelis replace the foreign legion of laborers that had been sent packing. "In some cases," Strawczynski allowed back in 2003, at the height of the deportations, "the job-room analogy does not hold true. When the foreigner leaves, he takes his job with him." The question is why this is so. Why have efforts to attract Israelis to jobs in construction failed until now, and why is Tidhar's "Aharai" program working? "More than anything," Strawczynski explained, "it is a function of money. The more the foreigner gets paid, the better the chances that his job will be similar to a room which can be vacated for an Israeli." That's one reason Netanyahu raised taxes on employers of foreign workers. But it's also why failing to pay Israelis higher wages for the work that foreigners were doing doomed the effort from the start. Until now, beginning construction workers in Israel earned about 10-15% less than the average salary, while their Western European and US counterparts made 10-15% more than the average salary. Previous government incentive programs only partially closed this gap, which is largely why those programs failed. Tidhar's model, in which new workers earn salaries and other financial incentives that can compete with the job market as a whole, seems to be the first model that can break that losing record on recruitment.