The dark side of Israel’s economy

Israel’s national lore tends to prefer the image of an economic miracle, where Jewish spunk and pluck made the desert bloom and gave rise to an unbeatable hi-tech industry. The reality, however, reveals a far different picture.

The dark side of Israel's economy
An African asylum seeker cleans the area outside tents for homeless refugees in Levinsky park, south Tel Aviv, December 20, 2012. The Tel Aviv municipality, along with several NGOs, set up two tents as a temporary winter shelter for homeless refugees in the park. (photo:

A tiny exclusive Tel Aviv chef restaurant posted a warm message of support on Facebook for its beloved Eritrean cook, who is on strike this week. Another trendy Tel Aviv eatery posted a sign asking its customers to understand why it is serving food on disposable plates. According to Israel’s state-run Channel 1 news, on the third day of strikes and protests by African migrantsת who make up much of the back-kitchen restaurant staff and other unpopular jobs, the Israel Farmer’s Federation and employers in the cleaning, food and hotel industries appealed to Interior Minister Gideon Sa’ar to give the migrants supervised work permits rather than expulsion orders. The employers argued that this would prevent a wave of business shutdowns, as nearly the entire African migrant community is participating in the strikes which are slated to continue indefinitely.

This week’s protests of tens of thousands of migrants who have entered the country illegally from Egypt, often through smugglers, raises a host of human rights and humanitarian issues. But it also exposes a dark side of the Israeli economy. For all its boasting about the start-up nation with a hi-tech sector powerful enough to bulldoze through a global economic crisis, the gaps among the country’s richest and poorest citizens have been well-documented. Less documented is the plight of those who reside below the lowest rung of the ladder: the migrants – referred to almost exclusively as “infiltrators” in the Israeli press and official documents.  They do the dirtiest work, in the worst conditions and with the fewest protections or benefits. Their labor is untaxed, undocumented, and undesirable: like legal foreign workers in Israel, they do jobs that few, if any, Israelis want to do.

Israel’s chugging economic engine may rely on its largest export sector, but hi-tech is a relative newcomer to the marketplace. Cheap labor goes much further back.

The majority of the current wave of migrants have been given a temporary permission to be in the country, and cannot be deported to their countries of origin due to risk of persecution. But applications for asylum are either rejected (just 0.25% of the cases reviewed received refugee status) or they are pending – i.e., not reviewed at all, according to a Knesset research report from 2012. According to the Israel Democracy Institute, the government decided in 2011 that Sudanese and Eritrean migrants are not eligible to submit asylum applications. Although officially prohibited from working, many have found employment through human resource companies providing cleaning, food and service sector employment. The government has warned employers of penalties, but has refrained from enforcement until the construction of a holding center planned for their detention is completed.  This is what Interior Minister explained in his interview to Channel 1 on Tuesday evening, but it is precisely the situation described in a government report from late 2010 – three years ago.

That report, published by the Center for Research and Information of the Israeli Knesset pointed out obvious flaws in the plans back then. The new detention center, for example, was slated to hold up to 8,000 people, but by late 2010 there were already over 30,000 such migrants (at present their numbers are estimated to be over 50,000). The authors also noted:

It must be pointed out that due to a lack of government policy on everything related to the population of infiltrators and asylum seekers and the problem of their registration, it can only be assumed that this population will spread geographically, and as a result, there will be a direct influence on the Israeli economy.

The Knesset’s research committee was no sharp soothsayer for having predicted the economic and social complexities associated with a lack of policy. Ten years ago, the Joint Distribution Committee commissioned a report comparing international policies on foreign workers and migrants, who were then categorized as legal and illegal workers (the latter referred primarily to workers who entered the country legally but overstayed their permits). That report was commissioned for a very similar reason: the government had no clear policy or overall strategy for how to treat foreign workers, ensure humane working conditions, address their status and impact on both the economy and society. I know this, because I was the researcher commissioned to write the report.

At that time, the issue of foreign labor filling major industry needs – in construction, agriculture, domestic/nursing jobs, service industries – was somewhat new. Israel had begun bringing in some foreigners from the early 1990s, and the real influx came after 2000, when the Second Intifada broke out. It was then that Israel began hermetic closures of the West Bank and Gaza, which provided the country’s main source of cheap labor since 1967. But the notion of “Arab labor,” a phrase implying cheap and dirty work, feels like it has been around forever (the concept has since been ironically and brilliantly appropriated by the Arab-Israeli satirist Sayed Kashua).

The dark side of Israel's economy
Rush hour at Bethlehem Checkpoint (photo: Porter Speakman, Jr.)

B’Tselem, an Israeli organization that deals with human rights in the occupied territories, observed that before the Oslo accords in 1993, 115,000 Palestinians worked regularly in Israel with permits. By the time the Second Intifada broke out, 110,000 Palestinians were working regularly in Israel. They comprised roughly one-quarter of the entire Palestinian work force, and their work once supported hundreds of thousands Palestinians. The numbers plunged during the first two years of fighting, cutting off all those dependents, and by 2003, rose to roughly 31,000.

Foreigners from China, Nigeria, Romania, Thailand, Philippines and other countries, flooded in, reaching a quarter of a million in the first half of the 2000s and making up 11% of the workforce. The workers were welcomed at such rates that yet another report charged with creating policy on foreign workers, this time by  the Finance Ministry in 2007, noted that: “The employment of non-local workers in Israel is disproportionate by any standard, the rate is double the acceptable levels in the Western world and even more than that when comparing rates of uneducated labor alone.”

The dependency on cheap labor is often overlooked in Israel’s national lore, which prefers the image of an economic miracle, where Jewish spunk and pluck made the desert bloom.

The reality is that Israel’s economic miracle has depended on paying poor wages for unskilled jobs, long before the current wave of desperate migrants and asylum seekers. The practice creates a false economy in which labor gaps are filled by populations Israel ultimately doesn’t want. Unskilled Israelis are hit hard, but still do not want to accept a job under such conditions. Employers have little incentive to take them, since they have far cheaper options. They become addicted to paying low wages in general, a mentality that reigns not only in unskilled industries but which has penetrated deeply into professional fields. Young graduates – starting lawyers, doctors, academics – suffer economic hardship and deep frustration. Work ethics suffer, economic gaps widen. If Israel summarily deports the migrants or enforces the ban on employment, what will happen to agriculture, service sectors, the food industry? What about those posh, cosmopolitan Tel Aviv restaurants and fancy hotels that are so important for Israel’s global image?

The African migrants are just the latest unlucky group to meet Israel’s economic needs, while being unwanted in its society. The battle over whether they are refugees or job seekers is a red herring: even people running for their lives seek the dignity of employment rather than being forced into crime and indigence. Deportation without transformation of labor standards, ethics and economics will probably only set the cycle in motion for the next group of people desperate for a paycheck.

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