Israel calls on foreign firms to revive construction sector hit by Palestinian layoffs | Economy

The Israeli Ministry of Construction and Housing last week invited foreign construction companies to carry out residential construction work in Israel.

The Israeli economic newspaper Globes reported that the move aims to increase the number of companies operating in Israel (construction companies that come to Israel with their employees and workers) and implement projects with their own teams.

The current move, which aims to increase the size of the foreign workforce in the construction sector in Israel, differs from the efforts made to attract workers from abroad that have been carried out since the beginning of the war on Gaza in an unsuccessful manner, according to the newspaper.

The publication of the invitation has angered Israeli developers and contractors; Raul Srugo, head of the Israel Builders Association, said last week at the annual Magdilim real estate conference, “This could be the death knell for our industry.”

He added that the government was out of touch with reality, and sarcastically suggested that the Israeli government be replaced by a foreign government. Globes asked: Do contractors really have anything to worry about? Could more foreign construction companies really drive them out?

Numbers

Globes quoted the following data from the Israeli Ministry of Construction and Housing:

• 11 foreign construction companies are currently active in the construction industry in Israel, most of them from China, and these companies currently employ 9,200 people.
• The Ministry of Housing’s database of foreign companies includes 13 actually registered companies, two of which are inactive.
• Since the end of 2017, when foreign companies began operating in Israel, and until the end of the first quarter of 2024, 274 projects have been completed in the residential sector, including 96,509 new apartments, at a rate of 17,500 apartments per year.
• There are 180 projects under implementation, including 33,120 new apartments.
• Figures from the Central Bureau of Statistics show that from the beginning of 2018 until the end of the first quarter of 2024, 327,020 homes were completed in Israel, although the final number may be slightly higher. The data indicates that foreign construction companies delivered 29.5% of the apartments built since the beginning of 2018.

foreign government

“It is clear that this initiative will harm Israeli construction companies,” said Gil Kata, owner of the Israeli Kata Group, according to the newspaper. “This could not only come at the expense of our projects, but it would also mean that our senior employees would be unemployed. If entire companies came from abroad with their employees, we would not need our senior employees,” he said.

As the Israeli government struggles to bring in a large number of workers from abroad to replace the Palestinian workers who are not allowed into Israel, many Israeli construction companies are striving to shorten the process by obtaining permits to bring in workers from abroad themselves.

“In Israel, every moment something changes,” says Kata. “During the 9 months of war, contractors have already changed direction 3 times due to a lack of workers.”

Palestinian workers compensation

According to Globes, the new call launched by the Ministry of Construction and Housing aims to add up to 10 new companies to the database of foreign construction companies, allowing them to build in Israel for 5 years.

According to the newspaper, the Ministry of Construction and Housing’s invitation is limited to companies that submit an application to be included in the database in the residential sector only.

“The contractors’ protest, to me, is either baseless or confusing,” Yehuda Morgenstern, director general of the Ministry of Construction and Housing, was quoted as saying. “We all understand and know that since October 7 there has been a severe shortage of workers, and we have created a set of solutions to shorten the procedures (for bringing in workers), and we all see how much time it takes us to bring in foreign workers through bilateral agreements, which is the direct route.”

“So companies that can bring 1,600 workers to Israel, at one time, can contribute a lot to the industry and stimulate it,” he added.