Estimated NIS 700 million missing in ‘Deposit Law’ funding for asylum seekers

Widespread abuse of 2017 legislation requiring employers to deposit 20% of paychecks sees asylum seekers struggling to make ends meet, unable to withdraw funds when leaving country

Eritrean migrant Russom Weldu Weldeslasie works at a restaurant in Tel Aviv, Israel, August 8, 2018. (Caron Creighton/AP)
Eritrean migrant Russom Weldu Weldeslasie works at a restaurant in Tel Aviv, Israel, August 8, 2018. (Caron Creighton/AP)

Companies that employ asylum seekers have failed to pay an estimated NIS 700 million ($194 million) into special deposit funds mandated by the state as a means of encouraging asylum seekers to leave Israel, according to a new report by the NGO Kav LaOved, Hotline for Refugees and Migrants and Calcalist.

The Deposit Law, which came into effect on May 1, 2017, requires companies that employ asylum seekers to deduct 20 percent of their paychecks and deposit it into a special fund that only becomes available to the employees if they leave the country.

However, the Calcalist investigation revealed that employers have failed to pay more than 70 percent of the amount that should be in the funds. In many cases, companies refrained from paying any money to the accounts and pocketed the sums.

The purpose of the Deposit Law is to encourage asylum seekers to leave the country by making their day-to-day life more difficult, according to the law’s sponsors and the Interior Ministry. “After the failure to expel infiltrators, this law is the only legal tool we have today to encourage infiltrators to leave voluntarily,” MK Yoav Kisch (Likud) said, in a hearing about the deposit law on May 2018 that also highlighted lax enforcement and widespread abuse.

“My life was destroyed because of this law,” said Tomas Yohannes, 35, an asylum seeker from Eritrea who works at a warehouse in the center of the country. He said that as a single man making around NIS 6,000 he can barely get through the month, and has no idea how families are dealing with the situation. “Nothing is left over. People don’t have anything to eat. They are destroying our life,” he said.

There are about 35,000 asylum seekers in Israel, the vast majority from Sudan and Eritrea, who entered to Israel starting in 2005. Many are fleeing persecution in their homelands, but right-wing politicians say most of the asylum seekers are only in Israel for economic opportunities.

In 2018, Prime Minister Benjamin Netanyahu ramped up plans to forcibly deport almost half of the asylum seekers in Israel to Uganda and Rwanda, a program that had previously been undertaken clandestinely. In April, he eventually agreed to a United Nations High Commission for Refugees plan to resettle refugees in other countries. But, bowing to pressure from activists, he canceled the plan hours later, and the asylum seeker community has continued to live in a legal limbo that allows them to work, live, and access social services in Israel with strict conditions.

According to the Deposit Law, asylum seekers’ employers must deduct 20% of an individual’s salary and put it in a special deposit fund, which is only available when they leave the country. However, there is little to no oversight over these funds from Israeli authorities, and asylum seekers have almost no opportunities to check their accounts to ensure that the proper amounts have been deposited.

In addition to the 20%, employers are responsible for depositing an additional 16% of the salary to the fund, the same way employers pay a similar amount into pension plans for Israeli workers. Mizrahi-Tefahot Bank oversees the deposit accounts, but is not obligated to send reports or summaries about the accounts to the individuals, and the accounts are not covered by the Law of Oversight Over Financial Services in Israel.

Asylum seekers generally work menial jobs at minimum wage in the restaurant, hospitality, construction, or cleaning industries. According to the Interior Ministry, the average monthly salaries of asylum seekers before taxes and deductions was NIS 6,389 ($1,790) in November 2018, and NIS 4,375.5 ($1,226) after taxes and the deduction of the 20% deposit.

Eritrean migrant Ghrmay Negassi works at a barbershop in Tel Aviv, August 8, 2018. (Caron Creighton/AP)

If an individual subject to the Deposit Law is correctly remunerated by their employer and has worked consistently since the law came into effect, their deposit account should now total more than NIS 50,000 ($13,000).

For many asylum seekers already struggling to make ends meet on minimum wage jobs, the deposit law has been devastating.

“I want to tell Netanyahu, stop playing with our lives, I’m a human being and we need to be treated like human beings,” Yohannes, the warehouse worker, said. “There’s always something to make things difficult for us, like the Holot [detention center], then the Deposit Law, or making the visas shorter and shorter so now we have to renew our visas every month.”

He said most asylum seekers want to leave, and do not need the State of Israel to make it harder for them in the meantime. “How can we save up money to leave if they are taking it away from us?” he asked. “To go to Canada [as a recognized refugee], you need money. Where will it come from?”

According to a poll from the Worker’s Hotline a year after the Deposit Law went into effect, the vast majority of asylum seekers, 89%, said the Deposit Law had forced them to buy less food for their families. And 94% of the respondents said they had started working longer hours.

The law has also forced asylum seekers to cut corners in other ways; for example, moving their children to cheaper, unregulated daycare centers with inadequate staffing for up to 12 hours per day.

Children from families of African migrants gather at a so-called day-care center in southern Tel Aviv, on May 28, 2015. (Jack Guez/AFP)

As a result of the Deposit Law, thousands of asylum seekers began to look for under-the-table work, especially in construction, where workers are often not compensated correctly or forced to work in unsafe conditions. According to the poll, 60% of asylum seekers previously employed legally started looking for under-the-table work.

During the legal appeal against the Deposit Law in 2018, the state revealed that as a result of the law, approximately 50% of working males in the asylum seeker community are making less than minimum wage.

KavLaOved made 2,500 requests to obtain more information about the deposit accounts for individuals since the law came into effect, but the Population, Immigration and Border Authority inspected just 42 cases, according to the report. Despite widespread abuse, PIBA warned just 10 employers about failing to pay the correct deposit amount in 2018, and fined only one company, the Hotline said.

Population, Immigration, and Borders Authority spokeswoman Sabine Hadad said those numbers were incorrect — that the Authority has opened “hundreds” of criminal investigations into companies on the basis of non-payment, and that “many” companies received warning letters informing them of non-payment issues. She added that the Authority will send additional letters in the coming days warning companies to comply with the law. In March, the Population Authority enacted a 30-day grace period, enabling non-complying companies to retroactively deposit the required funds without penalty, though Hadad refused to say how many companies took part in the amnesty offer.

The Kav LaOved and Hotline for Refugees and Migrants report found that in 15% of the cases they checked, employers did not pay any money into the deposit funds, and in 30% of the cases, employers paid a lower amount than was legally required. But the NGOs, which also serve minority workers, including foreign workers from Nepal and the Philippines, acknowledged that that was a conservative estimate.

According to the Interior Ministry, companies paid NIS 276 million (some $76.5 million) into deposit funds between May 2017 and February 2019. But the Calcalist investigation calculated that, with the number of asylum seekers still working legally and the estimated number of hours worked during this period, it should total NIS 986 million ($273 million), a gap of 72%, or around NIS 700 million ($194 million).

A Bank Mizrahi branch in Jerusalem (Miriam Alster/Flash90)

In 2018, more than a year after the law was enacted, PIBA spokesperson said that 400 asylum seekers had successfully withdrawn the money from their accounts before leaving the country, despite the fact that thousands of asylum seekers left the country during this period.

One of the issues is that the only Mizrahi bank where an individual can withdraw the deposit account is at the airport, and the branch follows normal business hours. If an asylum seeker’s flight out of the country is scheduled for a Saturday, for example, they have no way to access that money. Hadad said the Population Authority was “unaware” of any instances in which asylum seekers leaving the country were unable to withdraw funds. She said that the Authority would reexamine the bank’s hours if it felt that was necessary.

The law is also not realizing its intended consequence: the number of asylum seekers leaving Israel on a monthly basis has actually decreased by 14% since 2016, according to the Interior Ministry. In 2016, an average of 270 asylum seekers left the country each month; that was down from an average of 232 in 2018.

“The implementation of the law has been marked by multiple failings, and the negligent handling of the funds has resulted in the de facto confiscation of millions of shekels from workers by their employers, who fail to deposit the money in the Deposit Fund,” the report said.

“The outcome of the law is the deduction of a fifth of the meager wages of asylum seekers, one of the most vulnerable groups of workers in the Israeli labor market,” it said.

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