Finance Ministry says ban on Palestinian workers could cost economy billions

‘We are in very dire straits,’ chief of contractors association tells lawmakers. ‘The industry is at a complete standstill’

Sam Sokol is the Times of Israel's political correspondent. He was previously a reporter for the Jerusalem Post, Jewish Telegraphic Agency and Haaretz. He is the author of "Putin’s Hybrid War and the Jews"

File: Palestinian construction workers from the West Bank village of Abadiya, during their coffee break at a house under renovation in the Jewish settlement of Alon, south of Jerusalem, on February 16, 2016. (Hadas Parush/Flash90)
File: Palestinian construction workers from the West Bank village of Abadiya, during their coffee break at a house under renovation in the Jewish settlement of Alon, south of Jerusalem, on February 16, 2016. (Hadas Parush/Flash90)

The government’s decision to prohibit the entry of most Palestinian workers from the West Bank since October 7 could cost the economy billions of shekels a month if it continues, according to the Finance Ministry.

“We calculated what the economic damage would be if Palestinians do not go to work…and it is estimated at approximately NIS 3 billion ($830 million) per month,” a ministry representative told the Knesset Committee on Foreign Workers on Monday.

Since Hamas’s October 7 shock assault on Israel, more than 150,000 West Bank Palestinian laborers who usually enter Israel for work have largely been unable to do so.

More than 10,000 foreign workers, primarily from Thailand, fled the country following the attack and media reports have said that Israel may need more than 30,000 foreign workers to fill the labor gap, which has been exacerbated by the mobilization of hundreds of thousands of Israeli reservists for the war against Hamas.

Last week, it was announced that between 8,000 and 10,000 Palestinian laborers from the West Bank will return to their jobs in Israeli West Bank settlements and businesses.

The decision to allow them to return to work came after considerable pressure from factory and business owners who are suffering financially as a result of the loss of much of their workforce.

Likud MK Eliyahu Revivo attends a Knesset committee meeting on June 12, 2023. (Yonatan Sindel/Flash90)

“We are in very dire straits,” Raul Sargo, president of the Israel Builders Association, told the committee on Monday. “The industry is at a complete standstill and is only 30 percent productive. Fifty percent of the sites are closed and there is an impact on Israel’s economy and the housing market.”

Earlier this month, the high-level security cabinet declined to vote on a proposal to allow Palestinian laborers to enter Israel from the West Bank. Prime Minister Benjamin Netanyahu, who apparently supported the move, did not bring the issue to a vote due to reported disagreements between security cabinet ministers and fears he would not have a majority.

“The State of Israel must decide whether it is assisted by Palestinian hands or not,” Likud MK Eliyahu Revivo, chairman of foreign workers committee, declared. “As long as no solutions are provided, the state is still dependent on Palestinian workers. The government is dragging its feet on this issue.”

Deputy Agriculture Minister Moshe Abutbul of Shas agreed, stating that “there should be a clear decision on this issue,” adding that, following government efforts to recruit laborers abroad, “there should be a surplus of foreign workers, rather than a shortage.”

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