Israel Brings in Chinese Workers at the Expense of Everybody

The importing of foreign laborers has been linked to massive corruption, indentured servitude and the ossifying of the construction industry. The Chinese might be coming all the same.

Doron Golan

Is the Israeli government corrupt? We have no proof, but clearly the government, in its apathy, is abetting hundreds of millions of dollars in corruption. The decision to ignore corruption of that scale had to be made at the top of the Finance Ministry.

On Sunday, the cabinet will vote on a resolution to let Chinese construction workers back into the country. The first article states: “The government resolution from July 2011 must be amended to let in foreign construction workers from China without a bilateral agreement.”

So even though the government is aware of suspicions of what amounts to human trafficking, it's proposing that we bring Chinese workers back in by abolishing the one barrier to such trafficking — a bilateral accord.

The proposal is being sponsored by the finance minister and his housing chief. It's being fast-tracked; it was only written a week ago and most of the relevant ministries haven't yet discussed it properly.

An interesting bit of background is a study on worker imports from 2008 to 2011 by five ministries — finance, economy, interior, justice and foreign affairs. Note the involvement of the justice and foreign ministries, because of a petition against trafficking workers by the Kav La'oved workers' hotline.

A second threat arrived from the U.S. State Department: to put Israel on a blacklist of countries engaged in human trafficking. Both threats were based on testimony that to receive an Israeli work permit, foreign workers must pay bribes — illegal fees to manpower companies in China and Israel.

Kav La'oved collected testimonies on rising bribe payments, which it presented in court. Things came to a head in 2008; allegedly each Chinese worker had to fork over $30,000 to win an Israeli work permit — a vast sum making a laborer and his family latter-day indentured servants.

In this way the manpower companies allegedly pocketed about half a billion dollars in bribes a year. Israeli law prohibits the charging of foreign workers any fee other than their flight costs ($1,000 per worker), which is collected in the country of origin. If the calculation is right, and yes it’s still only a suspicion, the importing of foreign workers has become Israel's most corrupt industry.

Kav La'oved's information is supported by Israeli police findings about manpower companies charging illegal fees. And foreign workers who committed crimes begged in court to be spared expulsion, saying they wouldn't be able to pay the debt and they and their families would be in mortal danger. A Filipina nursing aide committed suicide after being told of her imminent expulsion.

The importing of foreign workers is bad for the Israeli economy, according to a paper by the Bank of Israel and Finance Ministry. The Bank of Israel says this practice discourages Israelis from working in construction and agriculture (nursing aid was not examined). The ultimate proof: When permits for foreign workers were cut back, Israelis — mainly Israeli Arabs — filled the hole. Some 40,000 Israelis joined the construction industry in a decade.

The paper showed how the importing of foreign workers lowers pay for menial work, the main livelihood for the uneducated and poor. Thus it utterly contradicts the government’s policy for fighting poverty. Second, the Bank of Israel proved that the importing of workers diminishes productivity, in agriculture as well as in construction.

Ignoring the rules

The Israeli construction industry is clearly one of the most backward in the West. The data show that the lag began in 1967, the year of the Six-Day War. That's when the gates opened to cheap Palestinian construction labor. The industry stopped investing in technology and relied on cheap labor, lowering efficiency. The state had no answer to the High Court petition.

The July 2011 decision aimed to gradually reduce the quota of foreign construction and agriculture workers to zero. Workers could no longer be imported by private manpower companies; only the state could do it, through a bilateral agreement with the country of origin.

But the section ruling that the quota would be lowered to zero was simply ignored. The quota was lowered but not eliminated, and the section on imports through bilateral agreements was attacked by a very powerful lobby.

Builders and farmers strongly objected, wanting Chinese workers for construction and Thai workers for agriculture. The countries of origin objected and refused bilateral agreements. One wondered what motive nations like Thailand, the Philippines or China had for refusing to sign an agreement designed to protect their people's human rights.

Note though that the corruption suspicions began with manpower companies in the countries of origin, some of which may have seeped into Israel. Most of the money was apparently collected in the countries of origin and may have reached high up in the government. In any case, the three countries from which most foreign workers reached Israel refused to cooperate to clean up the business.

The Israeli government then showed extraordinary resolve and creativity. It told Thailand it would import farm workers from Sri Lanka instead.

Israel’s farmers wailed that they couldn’t do without their Thais and that Sri Lankans were lousy workers. The state stood firm and after two harrowing years the Thai government signed an agreement letting workers be sent to Israel.

The Thai workers are happy: They come to Israel with rights and without debts; there's even a hotline for them. Not so in construction. From 2011, China has resolutely refused to enter into an agreement. Recent talks fell apart after Beijing insisted that the Chinese workers not work in the West Bank.

Failing to reach an accord, Israel tried its luck in Eastern Europe and signed agreements with Bulgaria, Moldova and Romania; talks are also underway with Ukraine. Israel also reopened its gates to Palestinian workers and intends to talk with the Jordanians too.

Thus in recent years the Israeli construction industry added about 3,000 workers from Eastern Europe (and 2,000 more are due). It also added 45,000 Palestinian workers alongside the tens of thousands of Israeli workers — but going by recent developments, that's not enough.

Chinese efficiency

Although builders can obtain legal workers from Israel, the PA, Romania, Bulgaria and Moldova, and maybe soon Ukraine and Jordan, they insist they want Chinese workers. But with that $30,000 debt on their backs that Kav La'oved talks about, these workers are basically indentured servants. It's a form of modern slavery; they'll take any work, labor for long hours and never complain.

No wonder the builders like them so much. It also speaks of the change in relations between Israeli farmers and Thai workers. Now that the Thai workers are arriving without debt and can complain, the farmers are starting to complain. They're suggesting importing workers from Vietnam — without a bilateral agreement, of course.

The background to the issue is of course Israel's housing crisis. The builders say Chinese workers are crucial for the new apartment towers. They say a Chinese team takes half the time to build a story compared with Palestinians, Israelis and East Europeans; employing Chinese shortens the construction time for apartment towers by 25%, shaving an average of 50,000 shekels ($12,900) from the cost of each apartment.

These figures are from the proposal the government is to discuss Sunday, though the ministries of finance, economy and interior and the Bank of Israel are skeptical about them. This week the Central Bureau of Statistics reported on record housing starts, even though no Chinese construction workers had been imported for four years. Even without the Chinese, the builders could build more apartments.

Yes, Israel is putting up more towers and yes, they require higher skills, but Israelis should be trained rather than the government merely importing Chinese workers. Israel’s builders must be forced to embrace technology rather than rely on cheap labor. Yet the government is about to resume the import of Chinese workers.

If the Israeli housing crisis really is about the shortage of skilled workers, the Bank of Israel has an idea: Instead of importing Chinese workers who discourage weak Israeli workers and ossify the construction industry, import construction companies. They would expose the Israeli companies to competition.

The Finance Ministry didn’t like the idea, saying it would hurt Israeli builders and cost jobs. That's true, but it’s also true that bringing in modern construction companies would lower costs and speed up residential construction.