Facing Labor Shortage, Israeli Industrialists Urge Government to Import Skilled Workers

Manufacturers Association says shortfall amounts to 8,000 workers, despite attractive salaries.

Ora Coren
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Employees work at the new SodaStream factory built deep in Israel's Negev Desert next to the city of Rahat, Israel, that will replace the West Bank facility when it shuts down, Sept. 2, 2015.
A factory near Rahat.Credit: AP
Ora Coren

Israel’s manufacturers are facing such a shortage of labor, despite relatively high wages, that they called on the government on Monday to authorize the entry of foreign guest workers to fill jobs.

“Even though wages in industry are much higher than the nationwide average, there is a severe shortfall of about 8,000 skilled workers after many years of neglect toward vocational education and the failure to train new workers,” said Shraga Brosh, president of the Manufacturers Association, the industrialists’ trade association that issued the call.

A Manufacturers Association study found that in the third quarter of 2015, manufacturing jobs paid an average of 13,442 shekels ($3,435) a month, which is about 39% more than the average wage in Israel and nearly three times the minimum wage. In nominal terms, industrial wages rose 2.3% last year, slightly more than the national average.

Shmuel Donnerstein, who controls Rav Bariach, the maker of high-security doors, told TheMarker recently that he faced such a severe labor shortage for his Ashkelon plant that he can’t expand it to meet demand.

Brosh said the shortfall of skilled workers was weighing on economic growth and exports. “Because of the shortage of skilled workers, many factories have closed their gates in Israel and relocated overseas, where they can easily find excellent staff,” he said.

Brosh said importing workers would serve as a bridge until the government invested more in vocational and technical education, and graduates could fill jobs.

Dedicated, vocational tracks in the Israeli school system were abandoned in the 1970s in favor of a more comprehensive school system, and the remaining technical and vocational elements in high school education were further reduced in scale between 2003 and 2007. This came following concern that young people from lower-income families were being tracked into school programs that would prevent them from getting a higher education and limit their job opportunities.

In 2009, only about 35% of Israeli high school students were in a vocation and technical program.

Although the 2.3% rise in wages in the third quarter wasn’t much higher than the national average, many sectors are being forced to raise salaries more sharply due to the shortfall.

In technology-oriented sectors, wages rose an average 3.9% in the third quarter, adding to a 3.2% rise in the second. In pharmaceuticals, the third-quarter increase was 5.8%. In electronics and medical equipment, meanwhile, where the average monthly gross wage was close to 23,000 shekels, it was 5%. Even in older industries, some sectors have been seeing big pay increases. In printing, pay was up 5.5% in the third quarter.