Palestinian
Labor Migration to Israel since Oslo and Beyond
Leila
Farsakh
London
School of Oriental and African Studies, University of
London
Email: lfarsakh@aol.com
JEL
Classifications: O53,
J31, J61
Keywords:
Palestinian
Labor, Labor Substitution, Israeli Labor Markets
Abstract
The
paper analyses the changes in Palestinian labour flows to Israel since 1993. By
using available Israeli and Palestinian labor data, it first explores the nature
of institutional rigidities imposed on labor mobility and the extent to which
Palestinian labour migration to Israel has become regulated by security, rather
than by economic, considerations.
The paper then explores the domestic Palestinian labor market conditions
and analyses Israeli demand and the extent to which it has been influenced by
the entry of foreign workers into the Israeli labor market. Finally, special
attention is given to the growth of Israeli construction sector, particularly in
settlements in the West Bank. The paper reveals that Palestinian labor flows are
not yet over and that they continue to be a function of Israeli demand as well
as of Israel’s demarcation of its borders with the Palestinian
territories.
Introduction
Between
1970-1993, Palestinian labor flows to Israel were a key factor in the
integration of the economy of the West Bank and Gaza Strip (WBGS) into
Israel. They anchored Palestinian
dependence on Israeli goods and trade relations and tied the absorption of
Palestinian labor force to Israeli demand for Palestinian goods and
services. Palestinian daily
commuters to Israel, predominated by male unskilled laborers, represented a
third of the employed population and generated over a quarter of the WBGS GNP
over most of this period (World Bank 1993, Arnon et al 1997).
With
the advent of the peace process however, labor flows no longer appear to play
the same integrating role that they had.
The number of Palestinian workers going to Israel dropped from its peak
of 115,600 in 1992 to less than 36,000 in May 1996. Since the closure imposed on the
Palestinian territories after the Al-Aqsa Intifada erupted on September
29th 2000, a halt was brought to all movement of labor and goods
between Israel and the WBGS. Some authors have argued that the role of labor
flows in integrating the Palestinian economy with Israel is over, given the
political turmoil in the area and the fall it brought to Israeli demand for
Palestinian workers (Amir 2000, Arnon et al 1997)
This
paper maintains that Palestinian labor flows are not over, even if they have
changed in form and in content since 1993.
It argues that Palestinian
migration depends not only on basic economic considerations, but also on
Israel’s redefinition of its economic and territorial borders with each
of the West Bank and the Gaza Strip.
Trends in Palestinian labour flows since 1993 reveal, on the one
hand, that labor links between the Gaza Strip and Israel have been severed, in
contrasts with the pre 1992 situation of full integration between the two
economies (Roy 2001, World Bank 1993).
On the other hand, West Bank workers continue to be employed in Israel
and on Israeli settlements built in the West Bank. These settlements are defined to be part
of the Israeli economy but are territorially situated within the West Bank. Through the expansion of construction in
the settlements and in Israel, particularly in Jerusalem and in the Central
Districts which is at the confines of the West Bank (see Map 1), Israel is
redefining, illegally, its own borders with the Palestinian Territories it
occupied in 1967 [1].
I.
The performance of Palestinian economy since 1993
The
Oslo peace process initiated in 1993 promised to help the Palestinian economy
reduce its 26 years old dependency on Israel (Diwan and Shaban 1999, Astrup and
Dessus 2001). The Economic Protocol (EP), which defines the nature of economic
relations between Israel and the Palestinians within the Israeli-Palestinian
Interim Agreement on the West Bank and the Gaza Strip (Oslo II) [2], sought to
enable the Palestinian economy to grow autonomously, but without clearly
separating or demarcating borders between it and Israel [3].
The
EP actually kept the two economies bound in a de facto custom union that allowed for
the free movement of capital and goods between the two areas, as well as
entitled the Palestinian economy to diversify some of its export and import
sources with third parties [4] (Kleiman 1994, Astrup and Dessus 2001). Moreover,
the agreement allowed the establishment of the Palestinian National Authority
(PNA), for the first time since 1967.
Meanwhile, the EP promised
to “maintain the normality of labour movement between Israel and the WBGS”,
which was considered to be central to the successful growth of the Palestinian
economy, especially in the early stages of its expansion (Kleiman 1994).
It
was hoped that the peace process would stimulate a rise in domestic investment
and industrial growth, an influx of foreign capital and a growth in trade, and a
thereby cause a rise in local employment that will help reduce the reliance on
the Israeli labor market. It was
hoped that the flow of Palestinian labor-intensive goods would eventually
replace the flow of workers to Israel (Diwan and Shaban 1999, Arnon and
Weinblatt 2001).
However, the economic
records of the past 7 years reveal that the Palestinian economy failed to grow
autonomously or to separate from Israel. Per capita GNP in the WBGS fell by 15%
between 1992-1996, and unemployment reached a high level of 28.3% in mid 1996
(Diwan and Shaban 1999). GDP growth was negative in 1995 and 1996, and while it
recovered since 1997, it remained volatile and a function of Israeli closure
policy [5] (IMF 2001). Since the eruption of al-Aqsa Intifada, on September
29th, 2000, GNP per capita was estimated to have decreased by 27% in
2001(World Bank 2001). Unemployment rate rose to over 28% in July 2001, and
poverty increased to 60.4% of the total Palestinian households [6] (PCBS 2001a,
PCBS 2001c). Meanwhile, the WBGS’
attempts to integrate into the regional or the global economy remained limited,
as trade with Israel still provided a market for 96% of Palestinian exports and
a source of 76% of imports in 1998 (Astrup and Dessus 2001). Yet, Palestinian
exports to Israel remained volatile and small [7], growing by less than 0.3%
between 1998-1999 (UNSCO 2000a). The hope that the export of labour intensive
goods will replace the need to export labour has not materialised. Economic
development over the past 7 years have revealed that trade links have not
replaced the importance of labor ties.
II.
Palestinian labor flows to Israel 1993-2000
Five major developments
occurred to Palestinian employment in Israel since 1993. First,
Palestinian labor flows have become erratic. In contrast to the pre 1992 period when
labor flows grew steadily (see Table 1), the number of workers going to Israel
fell from a total of 115,600 workers in 1992 to less than 63,000 in 1996. After 1997, flows started to increase
again and outpaced the peak reached in 1992, reaching a total of 136,000 workers
in mid 2000 (including workers from East Jerusalem). Yet, flows were volatile.
By March 2001 they fell again to less than 55,000 workers (World Bank 2001).
Figure 1. Share of workers employed in Israel
in total employment for the West Bank and the Gaza Strip
1968-2000
Source:
Table 1
Second,
the Gaza Strip could not longer rely on the Israeli labor market to absorb its
labor force, as it did before 1993.
The Israeli labor market absorbed less than 15% of the total Gaza Strip
active labor force in mid 2000, compared to 35-45% before 1993 (Table 1). The West Bank by contrast still exported
18-25% of its labor force to Israel between 1995-1999 (compared with 25-30% in
the pre-Oslo period). In mid 2000, a total of 28,600 Gaza Strip workers were
employed in Israel, which is less than the total number recorded in 1978. (Table
1 and Figure 1).
Third,
access to Israel has become more restricted and difficult, but more so for Gaza
Strip workers than West Bankers.
Ever since 1997, less than 40% of West Bank workers employed in Israeli
enterprises had a permit. In the
case of workers from the Gaza Strip, only those with permits could work in
Israel. Moreover, despite holding
such a permit, the access of Gaza Strip workers to Israel was not guaranteed
(UNSCO 2001, UNSCO 200b).
Fourth,
the
characteristics of Palestinian workers employed in Israel and the settlements
have changed slightly over time. On
the one hand, flows continued to be predominated by male, unskilled and semi
skilled workers. However, the
average age of workers employed in Israel in 1999 was higher than in 1980.
Between 1975-1987, over 42% of WBGS workers in Israel were under the age of 24
(Farsakh 1998). In mid 2000, this
share dropped to less than 31.4% for West Bank workers and 7% for Gaza Strip
workers (PCBS 2001b). Yet, as can
be seen in Table 2, workers in settlements are found to be younger, less
educated and predominantly unskilled compared with workers in Israel. In terms of sectoral concentration, over
53% of workers in 1997 and 1999 were employed in the Israeli construction
sector. These shares corresponds their pre 1991 levels (see Farsakh 1998).
Last,
but not least, employment in illegal Israeli settlements built in the West Bank
and Gaza Strip became important.
Available figures on permits for work in Israeli establishments indicate
that 30% of permits given to West Bankers since 1994 were for work in the
settlements (Table 2). In the Gaza
Strip, fewer than 12% of permits were given for work in Israeli settlements and
industrial zones. Unfortunately no accurate data are available on the number of
illegal workers employed in the
settlements, as many workers conceal their employment in such illegal
construction [8]. However, there are reasons to believe that the actual number
of West Bank workers employed in settlements is higher than reported figures and
that it has continued to rise (Table 1, Figure 1). This is partly because
Israeli regulations have made the access to Israeli settlements far easier than
access to Israel, as will be explained below. If we were to assume that a third of
those workers are employed in settlements [9], then an estimated total of 30,000
West Bank workers would have been employed in such illegal settlements in August
2000, compared with 77,000 in Israel and Jerusalem. Settlements’ expansion threatens the
territorial contiguity of the West Bank and limits its ability to separate from
the Israeli economy (see Map 1).
III.
The determinants of WBGS labor flows
Three
factors in particular continue to determine the prospects for Palestinian
employment in the Israeli economy.
These include the nature of Palestinian labor supply and its incentive to
migrate, Israeli regulations of Palestinian labor mobility, and Israeli demand
for Palestinian workers, particularly in the construction
sector.
Palestinian
incentives to migrate
The incentives to seek
employment out of the WBGS economy has remained strong, especially in view of
the fact that the Palestinian labor force has been growing by over 4.1% per
annum since 1993 and is expected to grow by 4.4% per annum over the next decade
(IMF 2001). By mid 2001, a total labour force of 675,000 persons were reported
to be working or seeking work, which is the equivalent of 45.2% of the working
age population (defined as those 15 years old and over). Participation rates have been
particularly low, recorded at an average of 41.7% in the Gaza Strip and 46.9% in
the West Bank (PCBS 2001c). This
implies that a relatively small working force is sustaining a population growing
at more than 5.1% per annum, which is one of the highest growth rates in the
world today (IMF 2001).
The WBGS economy has also
faced a significant unemployment problem since 1993. In contrast to the period
between 1970-1993 where unemployment rates in each of the West Bank and the Gaza
Strip remained lower than 7% (Farsakh 1998), unemployment rates in the post 1993
era were between 15.1-37% in the Gaza Strip and 10.1-24.2% in the West Bank (see
Table 3). The number of jobless
workers increased particularly in years of intensive closures, especially in
1996, and after September 2000 (see Figure 2). Unemployment usually increases the
incentive to seek a job outside the domestic economy (Harris-Todaro 1970, Massey
et al 1998). As can be seen from Figure 2, unemployment rates and level of
participation in the Israeli labour market are inversely related. They both depend on the level of access
to Israel.
Figure 2 also indicates
important differences between the Gaza Strip and the West Bank. It shows that unemployment rates in the
Gaza Strip remained higher than level of employment in the Israeli economy,
which is another indication of the level of separation taking place between the
Gaza Strip and Israel. The Gaza
Strip could not rely on the Israeli economy to the extent it needed to. On the other hand, if we were to look at
the situation in the West Bank, we find that unemployment rates have been
typically lower than those reported in the Gaza Strip. They have also been lower than the share
of the labour force employed in Israel, indicating a continuous trend of
integration between the Israeli and the West Bank
economies.
The ability of the domestic
WBGS economy to generate enough jobs to absorb its growing labour force, and
thereby to reduce the incentives to migrate, has been mixed. Between 1995-2000,
the domestic economy has succeeded in generating a total of 309,000 new jobs.
These outpaced the growth of Palestinian employment in Israel and helped reduce
unemployment rates between 1997-1999.
As can be seen from Table 3, domestic labour market absorbed more than
two thirds of total employment created over the past 5 years. This contrasts with the situation
between 1967-1993 where the Israeli labour market absorbed two thirds of total
employment growth (Farsakh 1998).
Figure
2
a. Share of
unemployed and of workers in Israel in total West Bank labour force,
1993-2001
b. Share of unemployed and
of workers in Israel in total Gaza Strip labour force,
1993-2001
Notes: The right hand
axis refers to the number of days of closure per year. The left hand axis plots
the percentage of those unemployed and of those employed in Israel. Figures for
days of closure in 2001 refer to the period between January and June only.
Source: Calculated from tables 1 & 3
However, domestic employment
growth in the post 1993 period remained dependent on Israeli closure
policies. The closure imposed on
the Palestinian territories since Al-Aqsa Intifada has led to massive layoff and
high unemployment rates (see Table 3).
Moreover, employment generation capacities varied between the West Bank
and the Gaza Strip. In the Gaza Strip, most of the jobs created were in the
public sector. This absorbed 25-
30% of the domestic employed work force ever since 1995. In the West Bank, the public sector
represented only 18% of total employment (MAS 2000). The productivity of these jobs remained
highly questionable, in view of the drain that they represent on fiscal revenues
and their concentration in the police forces [10]. Meanwhile, the growth in West
Bank domestic employment was not always substantially higher than the number of
jobs created in Israel, as can be seen in Table 3. Between 1998-1999 in
particular, the West Bank absorbed less than 45% of the increase in total
employment. In the Gaza Strip, by contrast, growth of employment in the domestic
economy was more important that in Israel.
The domestic market accounted for 77% of all employment over this
period. The large presence of West
Bank workers in Israeli establishments between 1997-1999, which were years with
few closure days, reflect an increase in Israeli demand for such labour as well
as a relative ease of access.
The third factor influencing
migration incentives are wage levels. Gaza Strip workers employed in Israel
earned more than double what they would earn in the domestic sector, reflecting
the strong incentive to migrate and the lack of integration between the two
economies (Figure 3). The situation
for West Bank workers however was different. The wage differential for workers
employed in Israel versus those employed domestically converged over the years.
By 2000, the wage premium for West Bank workers employed in Israel was only 30%
higher than work in the domestic economy (Figure 3).
Figure
3:
The ratio of domestic to
Israeli earned wages for male Palestinian workers employed in the domestic and
the Israeli construction sector and the economy at large,
1996-2000
Notes: Israel/WB-const,
Israel/GS-const: wages earned in Israel as a ratio of wages in the West Bank and
in the Gaza Strip in the construction sector. Israel/WB-Tot, Israel/GS-Tot:
wages in Israel as a ratio of wages in the West Bank and the Gaza Strip in all
sectors. Source: PCBS,
Labour Force Surveys, Annual Reports for 1996-2000.
Ramallah.
Institutional
barriers
Palestinian
employment in Israel since 1993 became dependent on Israeli regulatory
constraints, and particularly on Israel’s permit and closure policies. Israel’s
permit policy consists of regulating the entry of workers into its area on the
basis of security consideration, rather than on the basis of economic force of
supply and demand [11]. Imposed
since 1991, the permit policy made entry of WBGS workers into Israel conditional
on obtaining a security clearance from the Israeli military establishment, as
well as on acquiring a request of employment from an Israeli employer (PHRC
1992, Law 1999). The Oslo process institutionalized this system, and made it
more complicated. Since 1993,
Israel restricted permits to married men over the age of 28. It also shortened
the duration of the permit to a period of two months, which were not always
renewable. Moreover, these permits bound the workers to a specific firm and
place of employment, thereby restricting their mobility.
In
principle the permit policy applied to workers seeking to find a job in Israel
as well as on the settlements.
However, since 1993, Israel has made the conditions for issuing a permit
for work in the settlements easier than for work beyond the Green
Line. Workers seeking a job in a
settlement did not need to be married or older than 18 years. They were also not
restricted to specific hours of work. Moreover, from the employer point of view,
workers’ permits for settlements were cheaper than for those employed beyond the
1967 borders. This is because
Israeli employers in the settlements were exempted from paying Palestinian
workers social security benefits to which they were entitled if they were
employed in Israel. These amounts up to 25-30% of gross wages paid for legal
Palestinian working in Israel (Farsakh 1999, Kav Laoved 1997,
2000).
The
success of the permit policy in regulating labor flows has only really been
possible when combined with Israel closure policy. In particular, Israel’s
imposition of the closure policy has been the most effective measure in
restricting the mobility of workers and in demarcating boundaries between
Palestinian and Israeli areas.
Imposed since 1993 as a security measure against suicide attacks,
Israel’s closure policy consists of cutting the flows of goods and labor between
the WBGS and Israel as well as between the WBGS and the rest of the world. In a situation of internal closure,
Israel restricts mobility between the various parts of the West Bank itself and
prevents any contact between the West Bank and the Gaza Strip. Between
1993-2000, Israel closed its borders with the WBGS for 484 effective days, which
is the equivalent of nearly 3 months of closures a year (UNSCO 2001). During
such periods no worker could get to his job in Israel, or in the settlements. As
can be seen from Figure 2, the number of Palestinian workers going to Israel
decreased as days of closure increased.
Israeli
permits and closure policy, however, do not explain on their own why West Bank
workers found it easier to access Israel and the settlements than Gaza Strip
workers. The reason for why the West
Bank could rely more on the Israeli labor market than the Gaza Strip
is
rather tied to Israel’s territorial
policy in each of these two Palestinian areas. Ever since 1978, Israel has shown to be
more interested in fostering territorial and economics with the West Bank than
with the Gaza Strip [12]. This different Israeli territorial interest is best
reflected in its settlement policy. Between 1972-1993 Israel built more than 123
settlements in the West Bank hosting 126,000 Israelis. In East Jerusalem a total
of 126,000 Israelis were living in 10 settlements surrounding 130,000
Palestinians (FMEP 1999). In the
Gaza Strip, by contrast, Israel built 16 settlements and the settler population
did not include more than 4800 Israelis in 1993. With the Oslo process, Israel enhanced
its territorial claim over the West Bank (including East Jerusalem) by building
over 49 new settlements posts and by increasing the settler population from
250,000 to a total of 360,000 settlers between 1993-2000(FMEP 2001). In the Gaza Strip, by contrast, the
settler population increased by less than 2000 persons over the same period. The
expansion of settlements in the West Bank had an important role in fostering
demand for Palestinian labor, and thereby in helping to keep labour links
between the West Bank and the Israeli economies.
The
fact that Israel was more interested territorially in incorporating larger part
of the West Bank than of the Gaza Strip is also reflected in the way the Oslo
process treated each of the two Palestinian areas. The Oslo Process has given the
Palestinian Authority fuller control over the Gaza Strip than in the West
Bank. By mid 2000, the Palestinian
Authority controlled 85% of the land and 98% of the population in the Gaza Strip
compared with 41% of the area in the West Bank (i.e. area A and B) (FMEP 2000).
Israel, by contrast, continued to control fully area C, which cut 59% of the
West Bank into various cantons that cannot easily dispense from their links to
Jerusalem, to Israeli settlements, or to building sites on the 1967 Green Line
border (see Map 1). Meanwhile, Israel choose to demarcate its border more
clearly with the Gaza Strip by establishing the Eretz and Karni checkpoints and
by meticulously monitoring any illegal crossing. It institutionalized a
separation that it did not as strictly apply to the West Bank. With the West
Bank, Israel rather kept the borders porous, thereby enabling West Bank workers
to sneak illegally to work beyond the 1967 borders.
Demand
for Palestinian workers in the Israeli economy
Palestinian labor flows to the
Israeli economy are not solely determined by political constraints, but also by
the nature of Israeli demand. In the 1980s, various segments
of the Israeli economy became dependent on the supply of low cost Palestinian
labor, especially as WBGS workers tended to concentrate in lows skills
occupations shunned by Israelis.
Palestinian workers were not found to displace Israeli workers or to
effect negatively Israeli unemployment rates (Semyonov and Lewin-Epstein,
Farsakh 1998). The wages of a Palestinian
worker were typically 20-40% lower than the wage
of an Israeli employed in the same job (Kleiman 1992). The employment
of WBGS workers in Israel was found to be positively correlated to the growth of
Israeli GDP between 1970-93 (Khaleefeh 1996).
However, the entry of overseas
workers into the Israeli labor market since 1991 is argued to have reduced
Israeli demand for Palestinian workers.
By 1998, a total of 150,000-200,000 overseas workers, with and without
permits, were estimated to be employed in Israel (ICBS 1998, Gesser et al
2001). This is nearly double the
number of Palestinian workers employed in Israel in that year. Foreign workers
are argued to provide a substitute to Palestinian workers since they tend to
concentrate in low skilled jobs in which WBGS dominate [13] (Amin 2000, Batrum
1998). However, given the absence of disaggregate data on the skills,
educational background and productivity of foreign workers compared with
Palestinians, it is not possible to determine to what extent the formers are
substitutes to the latter.
What is clear is that the intake of overseas workers is tied with the
closures imposed on the WBGS. It
increased in years in which closures were most intensively exerted on the
WBGS. The number of permits
issued to overseas workers in all sectors dropped from 90,192 permits to 70,172
in 1999, which was a year in which less than 24 days of closure were imposed
(IMOL 2001, UNCTAD 2001).
In order to understand the
reason for the continuous absorption of Palestinian workers in Israel in the
1990s, it is necessary to analyze Israeli demand, particularly in the
construction sector, where the majority of WBGS workers are concentrated. During
the mid 1980s, WBGS workers represented over a third of all workers employed in
this sector (Figure 4). They occupied an important niche in the sector by
dominating mainly low and semi- skilled elementary construction jobs (also
referred to as wet jobs).
Palestinian workers were particularly attractive given that their wages
were found to be 50% lower than the wages of unskilled Israeli in construction
in the 1990s (ICBS 1999). The
availability of WBGS workers is believed to have contributed to keeping
construction costs low and in making the sector particularly labor intensive
(Bar-Nathan et al 1998, Amir 2000).
The
demand for Palestinian workers in the Israeli construction sector has been tied
with the growth of the sector, the pattern of its geographic distribution and
with the ability of cheap labor to access places of work. Available data reveal that the growth of
the Israeli building industry has been large enough to stimulate the demand for
all kind of workers. Between
1990-1998, the building industry grew by over 8.7% per annum, faster than the
growth of the country’s GDP [14]. As can be seen from Figure 4, the number of
foreign workers more than tripled between 1993-1996, increasing from 4,100 to
59,700, while the number of WBGS workers came to represent half of foreigners by
1996 (Bank of Israel 2000). This was a period marked by intensive closure. Yet
after 1997, the flow of West Bank workers recovered, while the number of foreign
and Israeli workers dropped. After
1998, Palestinian workers came to represent over 25% of all employees in the
Israeli construction sectors (a total of 59,1000), slightly higher than the
number of foreign workers (Figure 4) (Bank of Israel 2000). While the Palestinian workers did not
reoccupy the central role that they had in the 1980s, they are still in
demand.
Figure
4: Percentage distribution of workers in the Israeli construction sector, by
ethnic group 1975-2000.
Source:
Bank of Israel 2000, Table 2.A.38, ICBS, Statistical Abstract of Israel, various
issues, tables 12.9, 12.7
The
geographic distribution of Israeli construction has contributed to the
continuous absorption of Palestinian workers. Since 1992, 30-41% of all newly built
houses were constructed in the Central District, which is an area adjacent to
the 1967 borderline with the West Bank [15]. Access of Palestinian workers to
construction sites in this area is relatively easy since these sites are often
at a 5-km distance from some parts of the West Bank towns and villages
[16]. The expansion of the Central
district is linked to the government’s declared plans since 1991 to shift the
economic and demographic weight of the country away from Tel Aviv and the
coastal axis, and towards the Center of the country and around Jerusalem (Dunsky
and Golani 1992). Part of this plan is also to incorporate particular segments
of the West Bank into what is the Central district of Israel (Shahar 1992).
Construction
in Israeli settlements in the West Bank and East Jerusalem has also perpetuated
the demand for Palestinian workers (Figure 5). Settlements are of relative easy
access for Palestinian workers, particularly in period of no closure.
Contractors and workers do not have to cross-checkpoints or wait long hours to
reach their place of work in the settlements. Meanwhile, Israel built over 49
new settlement outposts between 1993-1999 and an average of 2300 new housing
units per year in the West Bank and Gaza Strip over that period (FMEP 2000, ICBS
2000). In East Jerusalem a similar
number of houses has been built annually over the same period (FMEP 2000) [17].
Moreover, over 186 miles of Israeli bypass roads have been paved and completed
between 1994-1997 (Peace Now 2001). Since 1995, the annual number of new
dwelling under construction in settlements has continued to grow while in Israel
it dropped (Figure 5). In 1998, 9%
of all Israeli construction was undertaken in the settlements. Yet, the Israeli
settler population in the West Bank (including East Jerusalem) represents less
than 4.2% of the total Israeli population [18].
The
expansion of these settlements cuts at the heart of the territorial contiguity
of the West Bank, while at the same time further incorporates certain land of
the West Bank into the Central district of Israel (See Map 1). Interestingly
enough, the number of new houses under construction in the settlements peaked in
the years preceding the initiation of the peace process in 1993 and again during
the negotiation for the final status negotiations in 1998-1999 (Figure 5).
During the Al-Aqsa Intifada, in the last quarter of 2000, 954 new public funded
housing units were initiated in the settlements, which is the equivalent of over
10% of all public housing starts in Israel (FMEP 2001). In the first half of 2001, construction
in the settlements represented 32.6% of nationally tendered projects and 9.5% of
all private housing starts (FMEP 2001).
Figure
5. New dwelling units being built in Israel and in Israeli Settlements in the
West Bank and Gaza Strip
Notes:
The data refers to number of dwellings whose construction has begun. Left-hand
axis refers to the number of new dwelling being built in the settlements on the
WBGS. Right hand axis refers to the number of total houses being built in
Israeli controlled areas.
Source: Table 4, based on data from
ICBS, Statistical Abstract of Israel,
1993, 1999, tables 16.4 & 16.5
Demand for Palestinian workers
is also linked to their cost and how they compare with other workers. However, it is not obvious that foreign
workers can replace the demand Palestinian workers for three main reasons. First, foreign workers are not always
cheaper than WBGS workers. Available data indicate that it is cheaper for an
Israeli employer to hire a legal
overseas worker (i.e. with a permit) rather than a Palestinian worker. This is because Israeli regulations
deprive overseas workers of social security benefits to which legal Palestinian
workers in Israel are entitled [19] (Kav Laoved 1997). However, foreign workers are not cheaper
than Palestinians who are employed in Israeli settlements in the WBGS, and for
which such benefits are excluded [20].
Concerning
the cost of illegal workers (i.e. those without a work permit), Amir (2000)
argues that the wage of illegal foreign workers in construction is lower than
the wages of an average Palestinian worker. The average hourly wage of a WBGS worker
was of the order of $2.5 in 1997 (PCBS 1998). Foreign workers are reported to earn
effectively $1.96-2.5 per hour (Amir 2000:8). On the other hand, Palestinians employed
in the settlements earn on average $2.2 per hour [21]. In other words, they are cheaper than
Palestinian workers in Israel, but not necessarily more expensive than foreign
workers.
The
second factor that explains the continuous demand for Palestinian workers by
Israeli employer is linked to the geographic distribution of Israeli
construction and to the accessibility of workers to work sites. There is reason
to believe that Palestinian and overseas workers distribute in different
geographic areas. Overseas workers
are found to concentrate in major Israeli cities such as Tel Aviv (Gesser et al
2001). On the other hand, Israeli
regulations facilitated the supply of Palestinian workers to settlements and
border regions, while making it more costly for them to get to Tel Aviv or
Northern areas of Israel. Palestinian contractors and workers found it easier to
access Israeli construction sites within the West Bank, or along the Green Line
and in the Central District of Israel, especially in years of low closures (see
Map 1). As explained earlier construction in settlements, Jerusalem and the
Central district represented over 50% of all construction growth since
1992.
Last,
but not least, the prospects West Bank labor employment outside the domestic
economy is tied to the pattern of labor recruitment in the Israeli construction
sector. Foreign workers have not
been always accessible to all types of Israeli construction firms. The Israeli Ministry of Labor regulates
the supply of overseas workers in close coordination with the Israeli
Association of Contractors and Builders.
This Association, which defines the recruitment and terms of employment
of these workers, has directed overseas laborers mostly towards large
construction firms, thereby depriving smaller construction companies of such
workers (Amir 2000). Many smaller
firms had thus to revert to illegal channels of recruitment of foreign labor,
mainly through illegal labor recruitment firms, or have tried to employ
Palestinian workers. Illegal hiring of foreign workers, though, can entail a
number of risks, especially in view of the Israeli government’s decision to fine
heavily enterprises hiring illegal workers (Kav Laoved
2000).
The
supply of Palestinian workers to Israeli construction firms does not pass
through private recruitment firms.
Rather, it is organized through a system of Palestinian
subcontractors. Construction output
in Israel is typically undertaken through a series of subcontracted tasks (Amir
2000, Bar-Nathan et al 1998). The
mother firm that wins the bid for a construction site does not undertake the
whole building works, but rather subcontracts the various works (plumbing,
infrastructure, skeleton work, tiling, etc.) to smaller subcontractors. Palestinian subcontractors have come to
play a pivotal role in accomplishing low skilled subcontracted jobs ever since
the 1980s. They provide their main Israeli contractor with workers needed for
the job, while at the same time free the construction firm from the
responsibility of directly paying the workers or keeping them on site once the
project is over. They are also accessible to any firm of any size.
From
the Israeli firm point of view, the subcontracted arrangement increases the
competitiveness of the sector while at the same time frees the main construction
firm from the burden of workers’ control and payments. While foreign workers have also been
found to be increasingly involved in subcontracted arrangements with Israeli
firms (Amir 2000), it is not yet clear how far foreign subcontractors can
replace Palestinian subcontractors. Israeli contractors have often built
long-standing trust relation with Palestinian contractors with whom they speak
in Hebrew. It will take some time still for such relations to be established
with foreign companies. Moreover, from the Israeli government's point of view,
Palestinian contractors and workers are preferred to foreigners because they
return home at the end of a day's work.
They thus do not burden the Israeli society with costs of accommodation
or integration as foreign workers do.
IV.
Conclusion
Palestinian
labor flows to Israel are yet not over.
Since 1993, developments in the pattern of WBGS commuting migration show
that a process of separation and redefinition of economic and territorial
boundaries has been taking place between the Israeli and the WBGS economies. On
the one hand, the labor links between Israel and the Gaza Strip have been
severed and the two economies have been separating. This separation, though, has not been
the result of an internal capacity of the Gaza Strip economy to absorb its
growing labor force or to reduce it dependence on the Israeli product and labor
markets. Rather the separation
between the two economies has been the result of Israel’s successful restriction
of Gaza Strip labor outflows. The
success of Israeli restrictions is attributed not only to Israel’s permit and
closure policy, but also to Israel’s clear demarcation of its borders with the
Gaza Strip.
On
the other hand, the labor links between Israel and the West Bank have been
maintained and the two economies have not yet separated. The West Bank continues to rely on the
Israeli labor market to absorb its growing labor force, albeit at fluctuating
levels and depending on Israel’s closure policy. The fact that Israel has not
defined its borders clearly with the West Bank, the way it did with the Gaza
Strip, also helps explain why the flow of West Bank workers persisted during the
interim period. Meanwhile, the growth of the construction sector in Israel,
particularly in Central areas that border the West Bank and in the settlements,
has maintained a demand for West Bank workers despite the arrival of overseas
workers. The expansion of these
areas will determine the final status borders between Israel and the West
Bank. Until these are defined,
Israeli demand for Palestinian workers might well continue.
The
Al-Aqsa Intifada in September 2000, and the closure imposed since on whole of
the Palestinian territories, might well indicate that borders will be finally
demarcated. They suggest that the
role of labor in integration the West Bank and the Israeli economies might also
be over soon, for political rather than economic reasons. However, between July and September 2001
Israel announced the construction of further 10 settlements in the area and a
total of 42,000 Palestinians were reported to work in Israeli areas [22]. Such
developments suggest that the process of territorial integration through the use
of cheap Palestinian labor might continue, at least not until the final status
peace agreement is reached.
ENDNOTES
[1] According to the 4th Geneva Convention which applies to the WBGS which Israel occupied in 1967, an occupying power has no right to change the demographic character of the area it occupies or to incorporate part of the land it controls. Israel’s annexation of East Jerusalem and the construction of Israeli settlements in the rest of the West Bank and Gaza Strip are thus illegal from an international law point of view. They also compromise the territorial integrity of the WBGS, which the Oslo process promised to preserve (Article IV, Oslo I).
[2] The Economic Protocol, referred to as the Paris Protocol, forms annex V of the Interim Agreement signed on September 28th 1995 (Oslo II). The Palestinian-Israeli Declaration of Principles on Interim Self-Government Authority (DOP) signed on September 13th 1993, and the Interim Agreement on which it is based, are the central documents of the Oslo peace process.
[3] These issues were deferred to the final status negotiations. See article V.3 of the Palestinian-Israeli Declaration of Principles on Interim Self-Government authority (DOP).
[4] The list of goods that the Palestinian economy was allowed to import from non-Israeli sources included lists A1, A2, and B.
[5] It grew by less than –2.4% in 1995 and –3.2 in 1996. In 1999 it was recorded at 6.0% (IMF 2001).
[6] The figure on unemployed refers to all those who did not work for an hour during the week of the survey (this is the ILO definition). If the number of workers discouraged from searching for jobs were added to this figure, the total share of unemployment would be of the order of 35.5% in June 2001 (PCBS 2001c). Poverty is defined as all households (two adults and four children) earning less than $1642 per month, which is less than $2.1 per day (PCBS 2001a).
[7] They represent less than 23% of total trade with Israel (UNSCO 2000a)
[8] Workers are reluctant to admit that they work in settlements, ever since the PNA declared in 1996 that such work is illegal and will be penalized.
[9] Which is the ratio given for workers with permits (see UNSCO 200b).
[10] It is estimated that 55,000 jobs out of 80,000 jobs created in the public sector between 1994-1999 were in the police forces (IMF 2001).
[11] Farsakh (1998)
[12] Ever since the Drobles Settlement Master Plan in 1978 and the Camp David Agreement in 1979, Israel has decided to consolidate its settlements in the East Jerusalem and in its metropolitan area, as well as in the rest of the West Bank (Aronson 1996).
[13] Official data also reveal that 25% of all overseas workers are concentrated in the agricultural sector (ICBS 2000, table 12.6). This is higher than the share occupied by WBGS workers (legal and illegal). PCBS (2000c) reports that only 12% of all WBGS workers employed in Israel work in agriculture. Overseas workers are also found to concentrate in the service sector, particularly in domestic services as well as in semi skilled jobs such as nursing (Gasser et al 2001). These are sectors in which Palestinians are not present.
[14] Based on data calculated from the Bank of Israel 2000, table 2.A.37. The growth of the sector was mainly instigated by the intake of over 980,000 new immigrants over this period, an intake that lead to an increase of 31% in total Israeli population by the end of 1999.
[15]
Calculated from Source: ICBS, Statistical Abstract of Israel, 1993, 1996,
1999, tables 16.4 and 16.5
[16] Particularly in the case of towns such as Qalqilia, Tulkarem and villages around the Latrun area and around Modiin along the Green Line.
[17] In Maale Adumin, a settlement in the metropolitan district of Jerusalem, over 700 new units were accepted for construction in November 2000. This settlement had a total population of 22,000 settlers in 1999 (FMEP 2000).
[18] Calculated from ICBS, SAI 2000, tables 2.2 and 5.5
[19] These benefits represent 27% of legal workers’ gross wages in Israeli construction (Kav Laoved 1997)
[20] Overseas workers and Palestinians employed on Israeli settlements in the WBGS are not entitled to pension and end of service bonus to which Palestinian workers in Israel are entitled. They are given basic national insurance coverage, which is paid by the employer, and amounts to less than 1% of gross wages. Workers also get health insurance, which is mainly paid by themselves (Kav Laoved 1997).
[21] PCBS 2000 unpublished data on workers' wages in the settlements.
[22] See the Peace Now
(2001) and PCBS (2001c).
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2001
Table 1: Palestinian Employed in the West Bank and Gaza
Strip (WBGS)* by Place of Employment, ('000 and %)
|
Year |
|
WB employed
in |
|
|
GS
|
employed
in |
|
|
Total
OT |
|
|
| |||
|
|
Domestic |
Israel |
Total |
% in
Israel |
Domestic |
Israel |
Total |
% in
Israel |
Domestic |
Israel |
Total |
% in
Israel |
| ||
|
1970 |
99.9 |
14.7 |
114.6 |
12.8 |
52.8 |
5.9 |
58.7 |
10.1 |
152.7 |
20.6 |
173.3 |
11.9 |
| ||
|
1971 |
91.2 |
25.6 |
116.8 |
21.9 |
51.5 |
8.2 |
59.7 |
13.7 |
142.7 |
33.8 |
176.5 |
19.2 |
| ||
|
1972 |
90.3 |
34.9 |
125.2 |
27.9 |
46.1 |
17.5 |
63.6 |
27.5 |
136.4 |
52.4 |
188.8 |
27.8 |
| ||
|
1973 |
87.8 |
38.6 |
126.4 |
30.5 |
45.4 |
22.7 |
68.1 |
33.3 |
133.2 |
61.3 |
194.5 |
31.5 |
| ||
|
1975 |
91.9 |
40.4 |
132.3 |
30.5 |
46.5 |
25.9 |
72.4 |
35.8 |
138.4 |
66.3 |
204.7 |
32.4 |
| ||
|
1976 |
92.6 |
37.1 |
129.7 |
28.6 |
48.3 |
27.8 |
76.1 |
36.5 |
140.9 |
64.9 |
205.8 |
31.5 |
| ||
|
1979 |
93.0 |
39.8 |
132.8 |
30.0 |
45.3 |
34.3 |
79.6 |
43.1 |
138.3 |
74.1 |
212.4 |
34.9 |
| ||
|
1980 |
94.2 |
40.6 |
134.8 |
30.1 |
46.4 |
34.5 |
80.9 |
42.6 |
140.6 |
75.1 |
215.7 |
34.8 |
| ||
|
1984 |
104.0 |
50.1 |
154.1 |
32.5 |
47.0 |
40.2 |
87.2 |
46.1 |
151.0 |
90.3 |
241.3 |
37.4 |
| ||
|
1985 |
103.7 |
47.5 |
151.2 |
31.4 |
49.2 |
41.7 |
90.9 |
45.9 |
152.9 |
89.2 |
242.1 |
36.8 |
| ||
|
1986 |
114.5 |
51.1 |
165.6 |
30.9 |
50.5 |
43.4 |
93.9 |
46.2 |
165.0 |
94.5 |
259.5 |
36.4 |
| ||
|
1987 |
114.0 |
62.9 |
176.9 |
35.6 |
54.4 |
46.0 |
100.4 |
45.8 |
168.4 |
108.9 |
277.3 |
39.3 |
| ||
|
1988 |
119.0 |
64.0 |
183.0 |
35.0 |
53.5 |
45.4 |
98.9 |
45.9 |
172.5 |
109.4 |
281.9 |
38.8 |
| ||
|
1989 |
115.4 |
65.4 |
180.8 |
36.2 |
59.2 |
39.5 |
98.7 |
40.0 |
174.6 |
104.9 |
279.5 |
37.5 |
| ||
|
1990 |
128.0 |
65.0 |
193.0 |
33.7 |
61.0 |
43.0 |
104.0 |
41.3 |
189.0 |
108.0 |
297.0 |
36.4 |
| ||
|
1991 |
123.4 |
56.0 |
179.4 |
31.2 |
65.5 |
42.0 |
107.5 |
39.1 |
188.9 |
98.0 |
286.9 |
34.2 |
| ||
|
1992 |
132.1 |
72.5 |
204.6 |
35.4 |
71.6 |
43.1 |
114.7 |
37.6 |
203.7 |
115.6 |
319.3 |
36.2 |
| ||
|
1993 |
147.7 |
53.6 |
201.3 |
26.6 |
84.4 |
30.4 |
114.8 |
26.5 |
232.1 |
84.0 |
316.1 |
26.6 |
| ||
|
1995 |
186.7 |
47.3 |
234 |
20.2 |
68.9 |
4.6 |
75.0 |
3.3 |
255.7 |
51.9 |
309.0 |
16.8 |
| ||
|
1996 |
221.0 |
44.0 |
265 |
16.6 |
86.3 |
10.0 |
97.0 |
8.1 |
307.3 |
54.0 |
362.0 |
14.9 |
| ||
|
1997 |
243.9 |
59.1 |
303 |
19.5 |
101.4 |
13.3 |
121.0 |
11.0 |
345.3 |
72.4 |
424.0 |
17.1 |
| ||
|
1998 |
275.1 |
86.9 |
362 |
24.0 |
122.2 |
23.5 |
145.0 |
16.2 |
397.4 |
110.4 |
507.0 |
21.8 |
| ||
|
1999 |
286.0 |
100.0 |
386 |
25.9 |
140.4 |
26.1 |
166.0 |
15.7 |
426.5 |
126.0 |
552.0 |
22.8 |
| ||
|
2000 |
323.4 |
107.5 |
430 |
25.0 |
157.2 |
28.6 |
185.8 |
15.4 |
480.5 |
136.1 |
615.8 |
22.3 |
| ||
|
|
Notes: Figures for the West
Bank exclude East Jerusalem between 1968-93 and include it
afterwards. |
| |||||||||||||
|
|
Figures refer
to total employment (includes also the underemployed, but excludes the
unemployed). 1994 figures are not available. | ||||||||||||||
|
|
PCBS, Labor data refer to
yearly averages, except for figures for 2000 which refer to July-September
labour Force Surveys (no.18) | ||||||||||||||
Sources: calculated
from ICBS, Statistical Abstract of Israel, various issues. ; PCBS 2000,
Labor Force Survey various issues
Table 2: Economic Characteristics of
West Bank and Gaza Strip (WBGS) workers employed in Israel compared with those
employed on Israeli settlements in the West Bank (WB), 1998 and 2000
|
|
1998 |
|
2000 |
| |
|
%
Distribution |
WBGS workers in Israel
& settlements |
WB workers in
settlements only |
WBGS workers in Israel
& settlements |
WB workers in
settlements only | |
|
|
|
|
|
| |
|
Age
distribution |
|
|
|
| |
|
15-24 |
29.9 |
40.2 |
24.9 |
43.4 | |
|
25-34 |
26.4 |
38.5 |
24.0 |
34.6 | |
|
35-44 |
23.6 |
14.8 |
23.3 |
17.7 | |
|
45 and
older |
25.8 |
6.5 |
25.8 |
4.3 | |
|
|
|
|
|
| |
|
Years of
schooling |
|
|
|
| |
|
0-6 |
36.0 |
24.2 |
33.8 |
21.6 | |
|
7-9 |
28.7 |
35.0 |
31.8 |
43.2 | |
|
12-10 |
25.0 |
32.5 |
24.5 |
31.6 | |
|
13 |
8.1 |
8.3 |
7.9 |
3.6 | |
|
Sectoral
distribution |
|
|
|
| |
|
Agriculture |
10.2 |
23.1 |
9.0 |
19.5 | |
|
Industry |
12.2 |
18.6 |
14.5 |
17.1 | |
|
Construction
|
55.2 |
42.1 |
55.5 |
52.9 | |
|
Services |
22.4 |
16.2 |
21.0 |
10.5 | |
|
|
|
|
|
| |
|
Occupation |
|
|
|
| |
|
Skilled |
44.1 |
39.2 |
48.3 |
37.3 | |
|
Unskilled |
47.3 |
54.1 |
41.1 |
58.4 | |
|
|
|
|
|
| |
|
Notes: |
|
|
|
| |
|
Skilled workers refers
to those define as craft workers and machine and plant operators. (PCBS
definition) | |||||
|
Data refers to
July-September labour survey in 1998 and 2000 |
|
| |||
|
Source: |
|
|
|
| |
|
PCBS 2001, Labour
Force Survey, no.18, 2000, at
www.pcbs.org/english/labor/round18/lbr18_05.htm;
| |||||
|
lbr18_07.htm,
lbr18_09.htm; lbr18_11.htm |
|
|
| ||
|
PCBS 2001, selected
data on West Bank workers in Israeli settlements, unpublished
data. |
| ||||
Table 3: Palestinian Labor
Force in the WBGS 1995-2001 (figures in ‘000, unless otherwise
noted)
|
|
|
West
Bank |
|
|
|
|
|
|
|
change in number |
of
employed |
|
|
|
|
|
|
Year |
Domestic |
Israel |
Total |
No. of unemployed
|
%
unemployment |
size of labour
force |
|
|
1995-1996 |
34.3 |
-3.3 |
31.0 |
77.0 |
19.6 |
342.0 |
|
|
1996-1997 |
22.9 |
15.1 |
38.0 |
74.0 |
17.3 |
377.0 |
|
|
1997-1998 |
31.2 |
27.8 |
59.0 |
52.0 |
11.5 |
414.0 |
|
|
1998-1999 |
10.9 |
13.1 |
24.0 |
44.0 |
9.5 |
430.0 |
|
|
1999-2000 |
37.3 |
7.5 |
44.0 |
38.0 |
7.2 |
468.0 |
|
|
2000-2001 |
-66.5 |
-77.0 |
-143.4 |
115.4 |
24.2 |
477.0 |
|
|
1995-2000 |
136.6 |
60.2 |
196.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaza
Strip |
|
|
|
|
|
|
|
change in number |
of
employed |
|
|
|
|
|
|
Year |
Domestic |
Israel |
Total |
No. of
unemployed |
%
unemployment |
size of
labour force |
|
|
1995-1996 |
17.4 |
5.4 |
22.0 |
55.0 |
32.5 |
152.0 |
|
|
1996-1997 |
15.1 |
5.5 |
24.0 |
47.0 |
26.8 |
168.0 |
|
|
1997-1998 |
20.8 |
10.2 |
24.0 |
39.0 |
20.9 |
184.0 |
|
|
1998-1999 |
18.2 |
2.6 |
21.0 |
35.0 |
16.9 |
201.0 |
|
|
1999-2000 |
18.6 |
2.9 |
22.0 |
35.5 |
15.1 |
223.5 |
|
|
2000-2001 |
-40.0 |
-25.0 |
-65.0 |
73.3 |
37 |
198.0 |
|
|
1995-2000 |
90.1 |
26.5 |
113.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total West
Bank |
and Gaza
Strip |
|
|
|
|
|
|
|
change in number |
of
employed |
|
|
|
|
|
|
Year |
Domestic |
Israel |
Total |
No. of
unemployed |
%
unemployment |
size of
labour force |
|
|
1995-1996 |
51.7 |
2.1 |
53.0 |
132.0 |
23.8 |
494.0 |
|
|
1996-1997 |
38.0 |
20.5 |
62.0 |
121.0 |
20.3 |
545.0 |
|
|
1997-1998 |
52.0 |
38.0 |
83.0 |
92.0 |
14.4 |
599.0 |
|
|
1998-1999 |
29.1 |
15.7 |
45.0 |
79.0 |
11.8 |
631.0 |
|
|
1999-2000 |
55.9 |
10.4 |
66.0 |
72.5 |
10.1 |
690.5 |
|
|
2000-2001 |
-106.4 |
-102.0 |
-208.4 |
188.7 |
28 |
675.0 |
|
|
1995-2000 |
226.8 |
86.7 |
309.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes: the number and figures on unemployment and labour
force refer to reported figure at end of year. | |||||||
|
Except for
2000 figures which refer to the third quarterly labour survey, the data
provided here refer to yearly averages | |||||||
|
Figures for
2001 refer to April-June labour force survey |
|
|
| ||||
|
Source:
PCBS, Labor Force
Survey, various issues. Ramallah |
|
| |||||
