Travel Reference
In-Depth Information
is about 60 percent below. In the Haredi world, it is men who do not take jobs; they wish to
devote their time to religious study. In both cases, Israel is losing the productive power of a
large segment of its population at a cost to the overall economy in the form of lower GDP and
higher taxes on the relatively small working population.
As is often the case in wealthy economies, the least desirable jobs are performed by outsid-
ers. In Israel, these were Palestinians from the West Bank and the Gaza Strip through the 1990s,
increasingly foreign guest workers thereafter. Guest laborers work for lower wages than Israelis
will accept, often without social benefi ts and frequently in violation of the law.
The infl ux of outside laborers began after the Six-Day War of 1967, when the border be-
tween Israel and the newly conquered West Bank and Gaza Strip opened up. Working prin-
cipally as day laborers in construction, agriculture, and domestic services, the Palestinians ac-
counted for as much as 10 percent of Israel's labor force.
After the outbreak of the First Intifada in 1987, the fl ow of Palestinian labor was gradually
curtailed. Palestinians were replaced by foreign guest workers from Eastern Europe, Asia, and
Africa. In 2008, 61,000 Palestinians and 203,000 non-Palestinian guest workers worked in Is-
rael, accounting for close to 12 percent of Israel's labor force. About half of these guest workers
resided in Israel without a permit.
Organized Labor
During the Mandate era and the fi rst thirty years of statehood, the Histadrut labor federation
had a major role in the economy, acting not only as a labor union but as an employer, banker,
provider of health, education, and culture, and pension manager. Together with the Jewish
Agency, it served as a quasi-government for Palestine's Jewish population before the State of
Israel came into being and only reluctantly surrendered many of its powers to the new gov-
ernment. In its heyday, the scope of the labor federation's activities was without parallel in the
Western world. In the 1950s, about 70 percent of the country's workforce was organized in
Histadrut-affi liated unions, and its business, controlled through its Hevrat Ha'Ovdim holding
company, accounted for as much as 20 percent of the country's economic output.
As early as the 1950s, the government sought to curtail the Histadrut's expansion. But the
real collapse of the labor-union empire began after the 1977 elections, when the Labor Party,
which was closely allied with the Histadrut, lost power for the fi rst time in Israel's history. The
hyperinfl ation had saddled its business empire with enormous debts while slow economic
growth exposed its ineffi ciencies. The economic problems also led to the demise of the most
heavily unionized industries in the private sector.
Under the weight of debts, the Histadrut was forced to divest its business holdings. It lost
control of Bank Hapoalim in the 1983 bank shares crisis, and in 1995 it was forced to give up
control of the Kupat Holim Clalit health maintenance organization, which deprived Histadrut
of a major source of members and dues. The government took control of its pension funds in
2003. Today, the Histadrut is an ordinary labor-union umbrella group. Most of its members
are employed in the civil service and the remaining state-owned monopoly companies, such
as Israel Electric Corporation and those in the defense industry. The new economy that arose
in the 1990s, led by high technology, has almost no union presence.
