The Labor Market in Israel Flexible, All Too Flexible

As change sweeps through global job markets, a debate is underway about the effect on workers. Are they benefiting? Or is work becoming less secure, with lower wages and the loss of hard-won rights?

At the heart of the debate are nonstandard work arrangements. These include any position that does not fit the traditional view of a secure job with regular wages, holiday pay, and sick leave, as well as pension and national insurance contributions. Part-time, agency and contractor work, temporary positions and self-employment, all come under this heading.

Presenting a facade of impressive economic growth, Israel is heavy on nonstandard arrangements, especially the use of personnel (“manpower”) agencies. These hire workers, place them in companies and pay them. They stand between the worker and the company for which the work is done. The resulting “triangular employment relationship” creates a gray area in which agency workers can easily be exploited.

Israel in a changing global economy

Today’s global economy differs greatly from western economies thirty years ago. As an ILO publication from 1999 puts it: “Economic globalization and technological innovation are now exposing enterprises to harsh competitive pressures… The competitiveness of an enterprise or economy in the globalized market depends largely on its ability to adapt to changes in markets… it is widely believed that, to enhance this ability, the labour market must be made more flexible.”1

Among western economies, a huge increase in the number of agency workers during recent years reflects a belief that they fill a gap that cannot be met any other way. A residual group of those who don’t have permanent work is ideal for emergency labor shortages, seasonal fluctuations and special projects. The trend toward matching such people with ad hoc jobs is often referred to as the “casualization of labor.”

Israel too has undergone these changes. Today it boasts an open, deregulated economy in line with most western countries. While the efforts to liberalize its economy can be traced back to the Emergency Economic Stabilization Plan of 1985, the most significant changes for its labor market occurred in the 1990s: its general federation of labor (Histadrut) was transformed and weakened; there was massive importation of foreign workers; and labor was casualized.2

Personnel agencies have a major role in the casualization of labor. The proportion of agency workers in Israel is higher than elsewhere in the West. A conservative estimate for 2002 is 110,000 or 5% of all employees, compared to 2.5% or less in Europe and the US.3 A study in the year 2000 put the figure higher, with almost 10% of the workforce in precarious employment.4

The state is the largest employer of agency workers. In the late nineties, as part of its liberal drive, the government put on a show of reducing the public sector by laying off civil servants. In 1996 there were 69,000 public employees. By 2002, the number had fallen to 55,073. The reduction was largely a sham: agency workers took up the slack.

A brave new flexible market

Theorists praise the new flexible labor market, pointing out the benefits for employees. Diana Furchgott-Roth, for instance, wrote the following in the Sunday Times about the French students’ demonstrations in March 2006: “What they don’t seem to realize is that additional labour market flexibility would actually help young people… Employers who can sack easily will also be quick to hire.”5

The new flexibility, it is claimed, will encourage people to look for better jobs, resulting in worker satisfaction and productivity. At the same time, the improved matching process facilitated by the agencies will reduce the costs of job-seeking, opening new career options for ever-growing sectors of the workforce.

Conditions on the ground tell a different story. In the gray area created by the triangular employment relationship, the rights of agency workers are often withheld, including pension payments, overtime, holiday pay and compensation. Some are paid below the minimum wage. Others may work for many years de facto without seniority benefits, because the job changes periodically.6

Contracts are written in a manner that deters workers from taking advantage of the new system’s putative benefits. Many contracts bar one from accepting a permanent job without notifying the agency beforehand. The converse does not hold: a worker often receives no advance notice if the work agreement is terminated.7

Health insurance is often withheld from agency workers. According to a 1997 study in the US, only 48.2% of them had it, compared to 87.6% of regular full-time workers. The vast majority of regulars received this from employers, but the employers offered it to only 25.8% of agency workers.8

The relatively powerless position of agency workers leaves them open to exploitation. They cannot “afford” to be sick; otherwise they may receive less work because they have “refused assignments” (a common interpretation of illness). Also, the pace and intensity of work are often much higher than for regular workers: they are afraid to work “badly,” lest the client company report this to the agency.

Workers are well aware of their precarious position: “It feels like you’re supposed to conduct yourself like a regular employee with none of the advantages of it. It is a bit odd to be in a situation where you recognize that more than the work you do for the company, your real worth to them is your disposability.”9

In Israel agency-worker profiles reflect international trends: Around 65% of agency workers are women (compared with about 50% in the regular job market). About 80% perform unskilled labor and have less than an average education. The percentage of those on minimum wage is twice that of regular workers, while 20-40% do not receive minimum conditions as stipulated by law.10

In recent years, Israel’s conflict with the Palestinians has turned out to be a major job-creator for security guards, the one area in which low-tech employment is booming. The guards suffer from many of the problems associated with the triangular employment relationship. If we consider just the 300 or so licensed agencies (for there are many others), they provide about 75,000 guards, of whom some 60% work in the public sector. Wages are often below minimum. This situation is exacerbated by a poorly supervised tender system, allowing companies to submit bids based on unrealistic wage calculations.11

To take one example: Avidar, a major supplier of guards, was recently accused of employing security personnel for Tel Aviv University under questionable work conditions. Employee complaints reaching Kav La’Oved (Worker’s Hotline) included dismissals under false pretences, no overtime payments and long shifts. Avidar claimed that the tightly-budgeted contract with the university meant that it was unable to pay overtime. The university’s liaison for the guards suggested there was a “conspiracy of silence” between the university and Avidar on this issue.12 The agency’s website, by the way, assures its client companies that no employer-employee relationship will be created between them and the workers it sends them.13

The government is unwilling to enforce labor laws

Israel has relatively advanced labor laws. In some of them, however (including the Dismissal Payments Law, the Annual Leave Law and the Sickness Benefits Law), the accrual of rights is based on continuity of employment. This leaves agency workers at a disadvantage, since their jobs are typically discontinuous. Unemployment compensation is especially problematic. Shuffled from job to job, agency workers seldom qualify. The labor courts refuse to recognize them as unemployed while they wait between assignments.14

In an attempt to protect agency workers, an amendment was made in the year 2000 to the Law on the Employment of Workers by Personnel Contractors (1996). Among the amendment’s provisions is this: agency workers must be formally employed by the client company if they have worked for more than nine months. The regulation is frequently bypassed by timely firing and rehiring.

The evidence suggests that the problem lies less with a lack of laws than with enforcement. The State Comptroller’s Report of May 2004 claimed that the Ministry of Industry, Trade and Labor did not make full use of its resources in enforcing the minimum wage. (It has 19 enforcers in the field nationwide!) The Comptroller also criticized the division for not adopting the recommendations of a public commission on the issue.15

Believing that agency workers are economically vital, the government ignores violations of workers’ rights. For example, in 2005, over 350 employees of Hashmira (another major supplier of security guards) sued the agency for labor law violations. Despite this, the Justice Ministry renewed the company’s operating license.16

Some say that revoking an agency’s license could hurt employees most. In the case of Hashmira, according to Sima Ramati, who is secretary of the Hashmira union in the Histadrut, it “also means firing 10,000 workers.”17 However, others recognize the role of labor-law violations in contributing to poverty. Among these is Supreme Court Justice Edmond Levy, who recently included “lack of enforcement of labor law, breach of workers’ right to form unions [and] the widespread existence of unacceptable and illegal employment norms” as factors in the creation of the “poverty trap.”18 This statement is important: here a leading judge recognizes that poverty is not necessarily the result of unemployment. In fact, many of Israel’s poor are working. According to an NII report of 2005, 43.1% of the families below the poverty line have working members.19

Indeed, the government is hardly in a moral position to enforce its laws. As an employer it systematically violates them. In 2005, students from the Hebrew University in Jerusalem checked 17 government ministries and authorities. They failed to find a single agency worker who received all the benefits due by law.20

Agency Workers and Unions

Historically, unions are linked to the old system of stable jobs and bureaucratic structures, and collective bargaining tends to concentrate around specific companies or specific industries. Agency workers, however, move from one company to another and their skills tend to be transferable. They fall outside unions’ organizational drives. Workers used to toil together in one place throughout the day: the factory was an incubator of unionization. Today work is done by individuals with different schedules and different contracts.

A further difficulty is that agency workers can be viewed as competition. Work committees in larger organizations cast a suspicious eye on agency personnel, seeing them as pawns in the effort to weaken organized labor, undermine bargaining power and nullify collective agreements.

In the case of Israel, the Histadrut has been both a trade union and an employer, whose companies often made use of agency workers. In its role as union, it tried to obstruct their use, but it received no support from the labor courts. In the mid-nineties it changed course and began signing collective agreements with manpower agencies. This enabled the agencies to circumvent another legal provision. For in addition to the nine-month rule mentioned above, the amendment of the year 2000 also ordained that agency workers be covered by the same collective agreement as regular employees in the same industrial sector. If the agency has a collective agreement with the Histadrut, however, this provision does not apply. The exception encourages agencies to negotiate with the Histadrut, because they can then offer client companies “better” terms—they can offer them, that is, workers with fewer benefits.

The overall result has been the creation of two classes of workers: “Class A,” consisting of regular workers who enjoy higher wages and full legal rights, plus benefits negotiated by their unions, and “Class B,” consisting of agency workers who do the same jobs on poorer terms.

A smoother path to profit

Research is inconclusive as to whether agency workers really benefit the economy. Yet most governments, employers and unions believe that a flexible labor force is necessary. Legislators fear that tight controls will harm flexibility and thereby the economy too. According to the ILO, “the reduction of legal requirements, over both the recourse to atypical employment contracts and the termination of employment,” was central to labor-law reform during the 1990s.21

As concern for agency workers increases, some suggest as an alternative that governments “subsidize the temporary help firms by paying for the fringe benefits so that these workers would receive approximately the same pay package” as regular employees.22 This means that the government would support the agencies, so that their client companies would continue to enjoy cheap, flexible labor without responsibilities. By lowering the expense of supporting workers, large companies would increase their returns, while the government would use tax revenues to subsidize these extra profits.

The concept of “standard” labor is itself relatively new, resulting from specific conditions of industrial growth.23 In standard jobs, employees are also paid not to work – their wages include “downtime” such as sick leave and holidays; even pension payments are a form of pay for future idleness. Harvey calls this “employment time” as opposed to “work time.”24 Agency workers, however, are paid only for work time—as before the New Deal. The commodity “labor” has been further disassociated from the laborer, and the employer has even less reason to worry about worker welfare – particularly if the state is willing to worry instead.

The new job market, coupled with deregulation, clearly benefits big business at the expense of the workers. It is no surprise, therefore, to find that during the last three years of fiscal growth, the poor in Israel have gotten poorer, or that “the number of Israelis earning minimum wage or less has increased from 27 percent ten years ago, to 34.1 percent in 2005.”25 The number of “Class B” employees grows.

The state, meanwhile, plays its classic role of supporting the capitalist class with convenient legislation and indirect subsidy, ensuring cheap, exploitable labor.


1 Muneto Ozaki (general ed.), Negotiating Flexibility: The role of the social partners and the state, International Labour Office, Geneva 1999, p.

2 See for example Michael Shalev, “Liberalization and the Transformation of the Political Economy,” in Gershon Shafir and Yoav Peled (eds.), The New Israel, Westview, Boulder 2000, pp. 129-159.

3 Rachel Warberger, The Employment of Workers in Manpower Agencies, The Knesset Research and Information Center, June 3, 2002 (Hebrew).

4 Jochanan Stessman and Leah Achdut, “Employment through temporary-work agencies and social security provisions: the Israeli case,” International Research Conference on Social Security, Helsinki, September 25-27, 2000. Stessman and Achdut are researchers at Israel’s National Insurance Institute (NII).

5 Quoted in Stuart Jeffries, “Why are the French so ready to take to the streets?” The Guardian online, March 20, 2006.

6 See Belman and Golden in Fran?oise Carr? et al (eds.), Nonstandard Work: The Nature and Challenges of Changing Employment Arrangements, Industrial Relations Research, Illinois 2000.

7 See Leah F. Vosko, Temporary Work: The Gendered Rise of a Precarious Employment Relationship, University of Toronto Press, Toronto 2000.

8 Polivka et al in Carr? et al, op cit.

9 Worker interviewed by Vosko, op cit., p. 14.

10 Warberger, op cit.

11 Guy Leshem, “Terms of gov’t tenders force security companies to break law,” in Haaretz, July 6, 2006.

12 Tali Raveh, Yonatan Gur and Ohed Karni, “Workers or Slaves,” in Teza No. 112, December 2005, pp. 14-15 (in Hebrew).

13 See

14 See Stessman and Achdut, op cit. p. 9.

15 The Commission noted that “the subject of the enforcement of the minimum wage did not receive the focus that it merited in accordance with the nature of the phenomenon; the [division] did not usually mobilize focused means of enforcement in employment areas known for their violations of the law; the [division] was in conflict with voluntary organizations; and the [division] did not publish quarterly reports for the public and did not even submit these reports to the Labor and Welfare Committee of the Knesset.” See Naama Yashuvi, The State of Human Rights in Israel 2004, The Association for Civil Rights in Israel, July 2003-June 2004.

16 Ruth Sinai, “Despite violations of worker rights, Hashmira wins operating license,” in Haaretz, May 29, 2006.

17 Kav LaOved press release, June 20, 2006.

18 Quoted in Hanna Zohar, “Poverty trap,” in The Jerusalem Post, February 22, 2006.

19 Leah Achdut, Raphaela Cohen and Miri Endweld, Poverty Indices and Income Gaps 2005 – Main Findings, NII – Research and Planning Administration, Israel, August 2006 (in Hebrew).

20 Ruth Sinai, “Not paying overtime,” Haaretz, August 28, 2005.

21 Ozaki, op cit, p. 6.

22 Gannon in Eli Ginzberg et al, Labor Market Intermediaries: A Special Report of the National Commission for Manpower Policy, Special Report No. 22, Washington, 1978, p. 220.

23 It is also worth noting that insecure jobs may be new to unionized blue collar workers and white collar middle managers, but a huge part of the population has always known first hand what it means to be “contingent.”

24 Harvey in Felstead and Jewson, op cit.

25 Ruth Sinai, “Report: Rich, poor gap deepens despite major economic growth,” Haaretz December 17, 2006.


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אנא כתבו את שמכם המלא, טלפון ותיאור קצר של נושא הפנייה, ונציג\ה של מען יחזרו אליכם בהקדם האפשרי.

رجاءً اكتبوا اسمكم الكامل، الهاتف، ووصف قصير حول موضوع توجهكم، ومندوب عن نقابة معًا سيعاود الاتصال بكم لاحقًا

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